Cryptocurrency is the digital currency which makes use of cryptography for the purpose of security. The exchange of these cryptocurrencies takes place over the internet. Also, it does not have any involvement of the existing banking and governmental institutions. The exchanges of the cryptocurrency will let the customers trade cryptocurrencies for basically other assets or it will allow the trading between various digital currencies.
Which are the different types of cryptocurrencies that are available?
Basically, there are three main types of cryptocurrencies which include the following:
this is a digital currency which you can send to people. This works just like the money in our bank accounts with the only difference being that it is virtual and is not physical. Also, bitcoin is not dependent on any bank or a third party that will have a control over it. The main perks of using bitcoin include the following:
- The conversion of bitcoins into cash is much simple and easy. Due to its popularity, you can easily exchange your bitcoin for fiat currency. Also, it is considered that Bitcoin has the highest trading volume of all the other cryptocurrencies.
- Bitcoin is accepted widely and you can almost purchase any item using it through the various sellers who accept this cryptocurrency.
Some of the altcoins will use a totally different algorithm to Bitcoin. The examples of altcoins include NEO and Ethereum which are completely different in comparison to Bitcoin. Since NEO and Ethereum were designed as huge platforms so that apps can be built on a blockchain. This is actually a new way by which cryptocurrencies are being created. We see applications of Ethereum all across the globe, including beauty and medical industry disruption. Some benefits of using Ethereum are:
- Most of the projects are being built on Ether and they take many years to get developed. Also once they are completed they will be huge projects.
- Ethereum can actually process transactions in a few minutes as compared to Bitcoin whose transactions will take upwards of about 10 minutes.
Tokens ( which are used for the apps):
This is the third type of cryptocurrency, which do not have their own blockchain. They are used on the applications that are decentralized (dApps). The dApps are built so that they can smart contracts, that is the reason why they use tokens. Tokens will always have a price for which they can be sold for and this is one reason as to why so many people buy them. Some people will buy these tokens so that they can sell them for a higher price in the future rather than buying them to use them on the dApp.
How can these cryptocurrencies be useful to you?
Lower fees: they do not actually have any fees for the transaction for cryptocurrency exchanges since the miners will be compensated by the network.
Theft of the identity: cryptocurrency makes us of a mechanism that will let the holder of the cryptocurrency send exactly he or she wants to send to the other person with no further information.