The cryptocurrencies are a virtual form of currency that can use for trading and buying new things that you can buy with FIAT currency (normal currency). This method of payment is really different than the traditional payment method where the payment gateways are different and even the currency is different because it is completely decentralized and doesn’t come under the jurisdiction of any government body. Hence the rates of transfer and the value of each cryptocurrency are different. The whole system of cryptocurrency is controlled by a technology widely known as Blockchain.
The system that governs the cryptocurrency is really popular and is considered as one of the secure methods of storing and transacting. There are many different versions of Blockchain that makes each cryptocurrency different than each other. This difference in technologies occurs to satisfy the different needs of users and this can create certain advantages and disadvantages for the cryptocurrencies. But before you look for the advantages and disadvantages of cryptocurrencies you must know about different types of cryptocurrencies that are present in the market. Here are some different types of cryptocurrencies that can help you understand the potential of cryptocurrency in a better way.
There are mainly three types of cryptocurrencies that have influenced the market on a core level. They are Bitcoin, Altcoins, and Tokens. These three cryptocurrencies define the cryptocurrencies as we know it and here is a detailed description of each type of cryptocurrencies in the market.
Bitcoin
Bitcoin is the genesis of cryptocurrencies and even the Blockchain technology. It was the first cryptocurrency ever introduced in the market. The Bitcoin was created as a mode of payment for different services and goods that were not available on conventional markets. This was later adopted by people that caught the eyes of traders and investors. This made cryptocurrencies an industry grew drastically which made Bitcoin the face of cryptocurrencies.
Merits
• Bitcoin is the biggest cryptocurrency in the industry.
• The supply of Bitcoin is limited to only 21 million Bitcoins out of which 17 Bitcoin has already been mined by the users.
• Bitcoin is much easier to cash in comparing to other altcoins.
• More stores and online platforms accept Bitcoin more than other altcoins and cryptocurrencies.
Demerits
• Bitcoin market fluctuates a lot.
• There are chances that a better cryptocurrency can replace Bitcoin.
• There are many people in Dark Web that uses Bitcoin for purchasing illegal items.
Altcoins
Altcoins is a term used for any cryptocurrency that uses Blockchain which is not Bitcoin. Therefore to summate, Altcoins are any other coin than Bitcoin which is governed by Blockchain. The difference between Bitcoins and altcoins is the use of Blockchain and hashing algorithm that each coin uses. There are many altcoins that are quite successful that uses a different version of Blockchain that is better than Bitcoin in some ways. Ripple, Bitcoin Cash, Litecoin, and, Dogecoin are some of the popular altcoins in the market.
Merits
• Altcoins are much faster and cheaper than Bitcoin.
• They are gradually gaining ground amongst many major corporations as a payment module.
• The network is much more efficient than other types of Bitcoins.
Demerits
• Despite their efforts, altcoins are still behind Bitcoin.
• The technology is only a slight improvement of Bitcoin so the security and efficiency of the coin are still questionable.
• Even though many altcoins are decentralized, a few cryptocurrencies are not such as Ripple.
Tokens
The tokens are also a type of cryptocurrency, the factor that separates tokens from other types of cryptocurrencies is the absence of Blockchain in the system. These coins use other technologies such as smart contacts that replace the Blockchain. These tokens are used in decentralized applications and they handle the token with the help of smart contacts. These tokens also have the same applications such as crypto coin where you can pay for services, purchase things using these tokens. The best examples of Token coins are Ethereum and EOS which are the two of the most prominent token based cryptocurrency in the market.
Merits
· The speed of transaction and process is unparallel compared to Bitcoin and altcoins.
· Many Token coins such as Ethereum can help their users build other decentralized apps with the help of Token coins.
Demerits
· There are a lot of Token coins in the market when compared to Bitcoin or Altcoins which can cause market fluctuation at a certain point in time.
Here are the types of cryptocurrencies that are available in the commercial market which are easily available on many online cryptocurrency exchange platforms. These facts, merits, and demerits can help you figure out what kind of crypto coin is suitable for your investment needs. Happy Investing!
