Chapter 4. Types of cryptocurrencies
There are many different types of cryptocurrencies. Some of them are the most famous and popular, while others are less common.
Below we will look at some of the most common types of cryptocurrencies:
1. Bitcoin: Bitcoin is the most popular and well-known cryptocurrency. It was established in 2009 and uses blockchain technology to ensure the security and anonymity of transactions.
2. Ethereum: Ethereum is the second most popular cryptocurrency after Bitcoin. It also uses blockchain technology, but has a wider range of applications, including the creation of smart contracts.
3. Litecoin: Litecoin was created in 2011 and also uses blockchain technology. Its transactions are faster than Bitcoin’s and it has lower fees.
4. Bitcoin Cash: Bitcoin Cash was created in 2017 as a result of the division of Bitcoin into two separate cryptocurrencies. It has a larger block size, which allows you to process transactions faster.
5. Ripple: Ripple is designed to ensure fast and reliable transfer of money between countries and banks. It uses its own blockchain technology, but is not decentralized.
6. Tezos: This is a cryptocurrency created in 2018, which is based on the technology of self-managed smart contracts. Tezos also allows coin holders to participate in the management of the network and make decisions about its development.
7. Cardano (Cardano): this is a blockchain platform and cryptocurrency created in 2017. Cardano offers a new approach to scaling the blockchain, which allows you to quickly process large volumes of transactions.
8. James Coin (Jamecoin): James Coin is a new cryptocurrency created in 2022. It uses a unique technology «Proof of Friendship», which ensures the security and protection of user data.
Many cryptocurrencies are used not only as a means of exchange or storage, but also have other functions. For example, the Ethereum cryptocurrency was created to execute smart contracts. Smart contracts are computer programs that allow two or more parties to make a deal without having to trust each other. The Ripple cryptocurrency, on the other hand, is used for currency exchange and money transfer to other countries.
There are also cryptocurrencies that are created for certain purposes, for example, for charitable organizations or environmental projects. Such cryptocurrencies are usually called tokens and can only be used within a specific project.
Cryptocurrencies can also be classified according to the method of mining – the process of creating new coins. Some cryptocurrencies, such as Bitcoin and Litecoin, can be mined by solving complex mathematical problems, while others, such as Ripple and Stellar, were created in advance, and their number cannot be increased. Each of these types of cryptocurrencies has its own characteristics and advantages. The choice of which cryptocurrency to use depends on your goals and needs.
Other types of cryptocurrencies include such as stablecoins and utility tokens.
Stablecoins are cryptocurrencies associated with a particular fiat currency or commodity, such as gold or silver. They are backed by reserves and have a stable price, which makes them more predictable than other cryptocurrencies.