Today, many people around the world are increasingly familiar with cryptocurrency. Cryptocurrency is a digital money technology that is being carried out by traders. This technology uses cryptography to secure the currency from counterfeiting.
The price of cryptocurrency is influenced by the buy and sell strength of the users of the cryptocurrency. Cryptocurrency also has a variety of types.
Bitcoin is the first type of blockchain. Then, there are many other blockchains, called altcoins. Some examples are NEO, Litecoin, and Cardano. The last type is tokens / dApps, such as Civic (CVC), BitDegree (BDG), to WePower (WPR).
Let’s Check Out 3 Types of Cryptocurrency that You Need to Know:
Bitcoin
According to Investopedia, Bitcoin is a digital currency created in January 2009. You can use Bitcoin to exchange goods and services online.
It can be in the form of gifts, or for the purchase of goods and services. Its essence is the same as a country’s currency, like the Dollar. However, Bitcoin is in the form of digital currency, without gold backups.
Besides, Bitcoin uses blockchain technology that does not require third parties to verify transactions. Therefore, you do not need any identity for payment transactions or Bitcoin receipts.
When someone sends Bitcoin, the transaction will be verified and stored on the blockchain. Information on the blockchain will be encrypted. After that, the Bitcoin recipient will use the private key to decrypt it again. The computer network of many Bitcoin miners will process thetransaction.
Altcoins
At present, there are more than thousands of altcoins in the world. However, most altcoins are only an alternative version of Bitcoin with few changes.
However, not all altcoins mean alternative versions of Bitcoin. Some are different from Bitcoin because some use different algorithms.
Tokens / dApps
The third type of cryptocurrency is tokens. The token used in the decentralized application (dApps) does not have its own blockchain.
Tokens are not merely physical assets such as property. However, it can be a payment tool in dApp. It also can be a discount, commission, and so on. Therefore, tokens will have a value with some options that you can use in dApps.
DApps itself is built from other blockchains such as Ethereum and NEO. Therefore, token transactions are still verified by the nodes of the blockchain. This means that you can only pay fixed transaction fees using Ether or NEO.
In order to make transactions on dApps, you must have an Ether or NEO, or other altcoin types on which dApps are built.
Read more: 6 Factors Affecting Cryptocurrency Market Movements (1)
