Discover the most popular types of cryptocurrencies and learn how they work, including Bitcoin, Ethereum, Ripple, and more. Explore the technology behind these digital currencies and how they are changing the financial landscape.
Popular Types of Cryptocurrencies and How They Work
The advent of Bitcoin in 2009 marked the beginning of a new era in the financial world. The advancement of cryptocurrency has seen the introduction of several cryptocurrencies, like bitcoin, with use cases that make them almost impossible to ignore.
The cryptocurrency market is expanding rapidly, and you can get lost in the myriad of cryptocurrencies if you do not know how they work.
The popular terms often used for cryptocurrencies are “coins” and “tokens”. There is a big difference, however, between the two. While a coin refers to a cryptocurrency built with its blockchain, like Ethereum and Bitcoin, a token refers to a cryptocurrency created on existing blockchains.
For instance, several cryptocurrencies are currently running on the Ethereum blockchain. Those categories of crypto are referred to as tokens. Other cryptocurrencies with their own blockchain are Solana (SOL), Tron (TRX), Litecoin (LTC), Ripple (XRP) etc.
In the past, only bitcoin was mostly perceived as the original king of coins, and as such, other digital currencies were regarded as alternative coins, otherwise known as altcoins.
Today, the cryptocurrency market has grown beyond measure as thousands of cryptocurrencies have been created. Most of these crypto, however, are not in an outright competition with bitcoin, but they have their own use cases and specific problems they seek to solve in finance.
Examples of these include Ethereum (ETH), Cardano (ADA), Bitcoin cash (BCH), Chainlink (LINK), Polygon (MATIC), Aave (AAVE) and so on.
Stablecoins
Stablecoins are cryptocurrencies that are pegged to the value of an asset. For example, Tether (USDT), a common stablecoin, is pegged to the dollar, and so its value is expected to be equivalent to one unit of the dollar.
Although there may be some fluctuations in price at certain times due to market conditions and uncertainty amidst traders, it has an almost constant price.
Meme coins are created for fun. They grow on exposure to social media, and most people invest in them to the degree of their popularity. These coins have a variety of uses; their use of logos and images that appeal to crypto investors who are looking to bank quick short-term profit is what makes them unique.
Some common meme coins we have in the market now include Dogecoin (DOGE), Shiba Inu (SHIB), Floki (FLOKI), etc.
Top Cryptocurrencies in 2023 by Market capitalization
Bitcoin (BTC)
Ethereum (ETH)
Binance Coin (BNB)
XRP
Cardano (ADA)
Dogecoin (DOGE)
Solana (SOL)
Tron (TRX)
Polkadot (DOT)
Polygon (MATIC)
How Many Types of Cryptocurrencies Are There
Currently, there are over 22,932 cryptocurrencies in the market, according to coinmarketcap. The crypto market is expanding daily, and more coins and tokens are created.
Each of these coins will either fall into the category of a stablecoin, meme coin, or an altcoin with a specific use case.
Different coins also have differing market capitalization depending on their total market share. In the case of making a decision as to investing in a coin, taking its market capitalization into note is essential.
More coins are also anticipated as cryptocurrency is rapidly gaining adoption in several countries.
It is always important to carry out a thorough background study on cryptos before investing in them. There are also many crypto platforms where you can buy or sell your digital assets with your credit card or through other available means as specified by the platform.
Always remember that the extent to which a particular coin can be considered for a long-term profitable investment choice is to the degree to which it profers solutions to problems in real-life scenarios.
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