Bitcoin is just one among many other cryptocurrencies. In this article, learn about different types of cryptocurrency, including Bitcoin.
Just like in a family where the firstborn tends to be the one who is known most, the same case applies to cryptocurrencies. Bitcoin is like the firstborn among cryptocurrencies. Bitcoin is widely popular because of this and its drastic rise and success. Many people think about Bitcoin when somebody mentions cryptocurrency.
However, Bitcoin is a trailblazer in a world that has continued to grow and expand over the years. Today, the cryptocurrency market has different types of cryptocurrencies from which crypto investors can pick. But it is essential to understand some types of cryptocurrencies, including their features, so you can select one that meets your expectations.
This article will discuss only three of the most successful types of cryptocurrencies, including;
Bitcoin is the leading and oldest cryptocurrency. Satoshi Nakamoto launched Bitcoin in 2009 as an alternative to government-issued fiat currency. As such, Bitcoin is primarily a digital currency whose purpose is to act as a means of payment and a store of value. And this is true as many transactions take place using Bitcoin today.
Blockchain technology anchors Bitcoin. Blockchain technology is a decentralized public ledger that supports peer-to-peer transactions without the involvement of intermediaries. In other words, as a decentralized digital currency, Bitcoin is not subject to government control. Moreover, as a peer-to-peer technology, Bitcoin transactions don’t involve intermediaries like banks.
Today, Bitcoin has millions of users, and hundreds of millions of Bitcoin transactions occur daily. For the general user, Bitcoin acts as means of payment in businesses that accept Bitcoin payment. For others, though, Bitcoin is an investment asset, so they invest in Bitcoin trading. Check out bitcodes-ai.com to learn more about Bitcoin trading.
Tether is quite different from your typical cryptocurrency. That’s because it is a stablecoin. A stablecoin is a type of cryptocurrency that with fiat money pegging it. In the case of Tether, the US dollar pegs it as collateral. The reason for this is to stabilize the price of the stablecoin. Cryptocurrencies tend to be highly volatile.
Tether offers stability and confidence because investors feel it is not a speculative investment like other cryptocurrencies. Because of this, most cryptocurrencies tend to trade using Tether. Moreover, Tether has often strongly influenced the entire crypto ecosystem.
Many crypto investors believe that if Tether collapses, then the larger crypto ecosystem will be affected. For example, when Tether momentarily lost its peg to the dollar in May 2022, all other cryptocurrencies dived. And this shows the critical role of stablecoins in the larger cryptocurrency world.
The second largest cryptocurrency is Ethereum, which initially emerged in 2015. Ethereum stands out in the world of crypto because of its primary purpose. Rather than being a digital currency, the Ethereum network enables its users to develop decentralized applications like non-fungible tokens (NFTs).
Ethereum is a network with Ether (ETH) as its native currency. Ether was not the original intention of Ethereum. Nevertheless, it is Ethereum’s form of payment. As such, Ether has grown both in terms of value and availability. Unlike Bitcoin, which has a capped limitation of 21 million coins, Ethereum doesn’t have a restriction on the amount of Ether.
There are thousands of cryptocurrencies, and it would be impossible to look at each. However, considering three main ones, this article provides a glimpse into understanding what types of cryptocurrencies we have and what to expect from each. You can explore more types.