When cryptocurrency first appeared on the market, it was an obscure subject. There were only a handful of coins. Nowadays there are thousands of cryptocurrencies (over 13,000, in fact, according to CoinMarketCap). Some are more popular such as Bitcoin, Ethereum, and Dogecoin. However, there are less known cryptos such as Fusion or Binance Coin. Crypto is a nascent market, with a lot of changes going on, therefore in a constant flux. Even though there are currently thousands of cryptos, they all fall under three main types of cryptocurrencies.
Bitcoin was created in 2008 by Satoshi Nakamoto – a pseudonym of a person whose identity is still a mystery. This was the beginning of a technological movement. Also, it introduced a new advanced technology called blockchain. Bitcoin is a digital currency and allows you to send money to other people. Bitcoin is also decentralized. One does not need a third party to make transactions and use the currency. Something else, people are able to make anonymous transactions. The underlying blockchain technology makes that possible.
Some altcoins are very similar to Bitcoin with a few small changes. But there are other altcoins such as Ethereum and Chainlink, that are entirely different and built upon a new technology. These types of altcoins introduced the idea of a smart contract. Smart contracts automatically execute transactions. Transactions take place when all of the conditions in the agreement are met. These conditions are previously agreed upon and written into the contract when it is created. Smart contracts do not have a third party involved. A contract could be the sale of a business or the sale of a stock. The introduction of smart contracts also allows people to build applications on these blockchains. These apps are known as dApps or decentralized apps.
Tokens are completely different in the sense that they don’t have their own blockchain. They are a form of currency on dApps. When using dApps people can make a purchase using tokens or they can receive deals and benefits. The best part about dApps is that there is no need for a middle man taking a commission or reselling your data.
Ultimately, there are many different types of cryptocurrencies that exist today. However, there are three main types that they fall under. They each have different purposes and functions. You can transfer money, build applications, and make purchases on those applications. Cryptocurrency is versatile and has the potential to serve many different needs today and in the future.