There are now quite 3000 cryptocurrencies alive , with each falling into one among the three major categories: altcoins, tokens, and Bitcoin.
In this article, we’ll explain the differences between these cryptocurrencies. we’ll also check out a number of the common subtypes used for cryptocurrencies, like ‘stablecoins’ and ‘privacy coins’.
After reading this, you ought to have an honest understanding of all the main types of crypto and be ready to differentiate between them easily. Let’s get started!
The three main sorts of cryptocurrency
Bitcoin (BTC) was the primary cryptocurrency to be created and remains the world’s leading cryptocurrency by market cap. Bitcoin may be a global peer-to-peer electronic payment system that permits parties to transact directly with one another without the necessity for an intermediary like a bank.
The Bitcoin whitepaper, which outlined how this revolutionary new currency would work, was released in 2008, and therefore the Bitcoin network launched in 2009. Since its launch Bitcoin has experienced no downtime, allowing anyone to transfer value at any time and from anywhere.
Bitcoin’s creator goes by the pseudonym Satoshi Nakamoto, their real identity remains unknown to the present day. it’s also unclear whether Nakamoto represents one person or a gaggle of people who worked on the Bitcoin project.
Bitcoin is usually considered the digital alternative to both fiat currencies and gold. that’s because Bitcoin are often spent and saved a bit like traditional money, but is additionally a scarce finite resource and thus good store useful like gold.
The release of Bitcoin and its open-source code in 2008 paved the way for thousands of other cryptocurrencies to be created. These new coins are dubbed ‘alternative coins’ or ‘altcoins’ as they’re alternatives to Bitcoin.
While some do serve an identical purpose to Bitcoin, other cryptocurrency types like altcoins actually encompass a good range of various uses. for instance , Ethereum (ETH), the world’s first programmable blockchain, enables developers to create and deploy decentralised applications (DApps) and smart contracts.
Unlike Bitcoin and Altcoins, tokens aren’t ready to operate independently and are hooked in to the network of another cryptocurrency. meaning they are doing not have their own underlying DLT or blockchain, but instead, are built on top of an existing cryptocurrency’s blockchain.