Know The Different Types of Cryptocurrency

2009 – the year when Bitcoin was introduced to the digital world, there wasn’t any competition in the newly formed digital currency space. But now, there are literally thousands of different types of cryptocurrency out there. In fact, as of March 2022, there are about 18,465 active cryptocurrency types.

Several new types of cryptocurrency are now beginning to emerge as competitors to bitcoin, usually known as “altcoins,” or alternatives to Bitcoin. So, suddenly the race to create different types of cryptocurrencies is on, which is more intended to provide several new features and functionality.

So, if you are planning for an investment in the crypto world, it’s vital to be familiar with the different types of cryptocurrencies available. Because, as per the recent research, it is believed that out of all these thousands of different cryptocurrency types available globally, only a few are known to the people.

That’s quite obvious! Because if you look for how many types of cryptocurrency are there, you will get numerous results and choosing out of them is really a daunting task. However, it can be easier if you separate them into different categories of cryptocurrency.

But, don’t worry! Out of thousands of these different types of cryptocurrencies, we have listed the 10 most popular cryptocurrencies types available in the digital currency world to ease your efforts. So let’s get find out:

10 Most Popular Type Of Cryptocurrencies

There isn’t any best cryptocurrency since each cryptocurrency type has different built-in features based on the developer’s design. So, here’s an outline of some of the most popular cryptocurrency examples and how each is being used.

1. Bitcoin

Bitcoin – the first cryptocurrency founded by a person or probably a group by the pseudonym Satoshi Nakamoto. There is over 18.8 million Bitcoin tokens inflow as of September 2021, against a capped limit of 21 million.

Bitcoin was designed to be autonomous from any government or central bank. Instead, it depends on blockchain technology, a decentralized public ledger containing every Bitcoin transaction’s digital record. In addition, Bitcoin established the basic system of cryptography and agreement, i.e., peer-to-peer authentication, which is the base of most forms of cryptocurrency types today.

Bitcoin miners use well-configured and powerful computers to authenticate blocks of transactions and generate more bitcoins, which is a complex and laborious process known as proof-of-work (PoW). In this process, each transaction is stored permanently on the blockchain, which helps authenticate and safeguard each bitcoin and the network.

2. Ethereum

Like Bitcoin, Ethereum is another example of a cryptocurrency that operates on the blockchain network. Still, Ethereum was designed as a programmable blockchain, which means it wasn’t built to support a currency but to allow the network’s users to construct, publish, monetize, and use applications known as “dApps.” Ether (ETH) is the native Ethereum currency, developed as a form of payment on the Ethereum platform.

ETH is also created using a proof-of-work system. But unlike Bitcoin, there is no such perimeter to the number of ETHs that can be made. As a result, Ethereum has stimulated many initial coin offerings since many ICOs used the Ethereum blockchain.

3. Binance Coin (BNB)

Binance is another cryptocurrency example, which is one of the biggest cryptocurrency exchanges worldwide, and Binance Coin (BNB) is a type of cryptocurrency token created to be used as a channel of exchange on Binance. Initially built on the Ethereum blockchain, it now lives on Binance’s blockchain platform.

BNB was developed as a utility token in 2017 that permitted traders to get concessions on trading fees on Binance. Still, it can also be used for payments, booking travel tours, entertainment, online services, and even financial services.

BNB is one popular cryptocurrency type built with 200 million tokens, around half of which were made available to financiers during its ICO. Every quarter, Binance buys back and then permanently destroys or burns some coins it holds to force demand. In July 2021, Binance accomplished its 16th burn, which is about 1.29 million BNB, approximately equal to $394 million.

4. Solana

Solana also works on the blockchain platform that creates the type of cryptocurrency called Sol, which is one of the most volatile cryptocurrency types. The Sol cryptocurrency was trading at about $191.00 on September 10, 2021, which was worth $3.42 one year ago.

Solana has made strides in decentralized finance (a.k.a. DeFi). Its smart contract technology runs on the platform according to predetermined conditions (like paper contracts, but without intermediaries).

5. Cardano (ADA)

Cardano is also one of the categories of cryptocurrency that relies on proof-of-stake (PoS). As a result, the complex PoW calculations and high electricity usage needed for mining coins like Bitcoin aren’t essential, potentially making its network more sustainable.

Cardano’s cryptocurrency is known as ADA, named after Ada Lovelace – a 19th-century mathematician. The focused applications of Cardano are based on identity management and traceability, which can be used to streamline the collection of data from different sources and potentially prevent fraud and counterfeit goods.

Cardano is another popularly used cryptocurrency type built in five phases toward attaining its objective of building the network into a decentralized application (dApp) platform with a multi-asset ledger and provable smart contracts. Each phase in the Cardano roadmap is secured by its research-based framework and peer-reviewed insights, which have helped create its academic reputation.

6. XRP

XRP is also one well-known cryptocurrency example established by Ripple Labs, Inc., a global money transfer network used by financial services companies. XRP is a type of cryptocurrency that works on the Ripple network. You can purchase XRP cryptocurrency as an investment, as a coin to exchange for other types of cryptocurrencies, or to finance transactions on Ripple.

Unlike Bitcoin and other different types of cryptocurrency, XRP can’t be mined; instead, there are a limited number of coins. Also, XRP doesn’t depend on a complex digital verification process via blockchain as Bitcoin and others do. Instead, the Ripple network utilizes an exclusive system for validating transactions in which contributing nodes conduct a poll to authenticate transactions. This makes XRP transactions quicker and more economical than Bitcoin.

7. Tether

Tether was the first cryptocurrency type promoted as a “stablecoin,” one of the categories of cryptocurrency known as fiat-collateralized stablecoins. This is because the value of the Tether is pegged to a fiat currency.

Like other stablecoins, the Tether offers users transparency, stability, and lower transaction charges. However, Tether is not a speculative investment like some types of cryptocurrency; instead, it can be used by investors who want to prevent the extreme volatility of the crypto market. As of February 2021, 57% of cryptocurrency trading was handled with Tether cryptocurrency.

Tether cryptocurrency is pegged to the U.S. dollar, and it apparently maintains a 1:1 value with the dollar, even though this claim has come under some analysis. Furthermore, Tether, Ltd. provides no guarantee for any recovery of tethers; i.e., Tethers cannot be replaced for dollars.

8. Dogecoin

Dogecoin is commonly known as the first joke cryptocurrency; it was introduced in 2013 to poke fun at Bitcoin. However, the currency caught people’s attention and invested a fair amount. In April of 2019, Elon Musk’s tweet showed a positive view of Dogecoin, which further elevated Dogecoin’s profile as a genuine cryptocurrency type.

Dogecoin is a type of cryptocurrency that runs on a blockchain network using a PoW system same as Bitcoin and Ethereum do. But the number of coins that it can mine is limitless. But, despite its place as one of the biggest coins by market cap, it trades at the lowest price, about 24 cents, as of September 2021.

9. Polkadot (DOT)

Polkadot is another popularly used cryptocurrency type, co-founded by Gavin Wood. He is also a co-founder of Ethereum, taking a blockchain network’s abilities to another level. The blockchain cryptocurrency is named dot.

Polkadot operates using two blockchains – one is a “relay” network, where all the transactions are permanent, and another is “parachains” – a parallel network of user-created blockchains. Parachains can be tailored for multiple uses like developing apps, supporting other coins, and benefiting from the main blockchain’s security.

Polkadot is different from other types of cryptocurrencies because its primary aim is to resolve the problem of interoperability by constructing bridges between blockchains. Of course, Polkadot is not alone acting as a medium to help blockchains talk to one another, but it has quickly become one of the improved networks.

10. USD (USDC)

USD Coin (USDC) is a stablecoin, a type of cryptocurrency that operates on the Ethereum blockchain along with several others. Since it is pegged to the U.S. dollar like the stablecoin Tether (USDT), a USDC is worth one U.S. dollar — the assured 1:1 ratio makes it a stable exchange form.

The goal of a stablecoin like USDC is to make transactions quicker and more economical. In addition, some investors believe that USDC is more transparent: its reserves are scrutinized by the American arm of Grant Thornton, LLC – a global accounting firm. On March 29, 2021, Visa announced the use of USDC on its payment network.

The Takeaway

While Bitcoin launched the crypto craze a little more than a decade ago, today, investors may want to familiarize themselves and invest in thousands of different types of cryptocurrencies.

But it doesn’t matter how popular the cryptocurrency is and how many types of cryptocurrency are there; they aren’t like real-world fiat currencies, like the dollar, euro or yen. Those are tangible currencies governed by central authorities. You can exchange any fiat currency for goods and services.

But Cryptocurrencies which include different types of coins, e.g., stablecoins, utility coins and tokens (programmable assets), serve numerous purposes. This guide to the top 10 different types of cryptocurrency will give you a grounding in what are the most popular types of cryptocurrencies and how and why they differ from one another.