0
0
The invention of Bitcoin quickly brought cryptocurrency into the spotlight. With growing popularity, a range of cryptocurrencies spurred in the market. They all rely on similar decentralized and immutable ledger technology. Yet, there are some critical differences between them that you must know before purchasing any.
So, first, understand the key differences between various types of digital currencies.
Cryptocurrency Coins vs Altcoin vs Tokens
Crypto coins or cryptocurrencies use their independent blockchain infrastructure, basically Bitcoin. Hence, they’re also called blockchain’s native currency.
However, an altcoin is any coin other than Bitcoin, such as Dogecoin, Tether, and USD Coin. Although they’re still cryptocurrencies, they may function similarly or differently from Bitcoin.
On the other hand, tokens or crypto tokens are units of value that blockchain-based organizations create on top of existing blockchain infrastructure. For example, many tokens use the crypto native to the Ethereum blockchain network Ether (ETH), such as CryptoKitties, DAI, COMP, LINK, etc.
Let’s check out the top five cryptocurrencies and their practical uses.
Bitcoin (BTC)
Created in 2008 by Satoshi Nakamoto, Bitcoin is the world’s first and most valued cryptocurrency. It functions on its blockchain, a permanent ledger that allows everyone to see the number of bitcoins associated with a public address.
Bitcoin’s pre-programmed system allows for a limited 21 billion bitcoins, which boosts its value.
As of August 17, 2024, this cryptocurrency has the largest market capitalization at 2.17 trillion USD. Hence, many even call it “digital gold.” Bitcoin’s steady growth makes it a great investment choice among crypto holders.
Use Case:
Countries with political instability and limited access to banking facilities have recently embraced Bitcoin. For example, El Salvador and the Central African Republic legally recognized Bitcoin.
Smartphones and internet convenience allow citizens to use digital wallets for cross-border remittances. That said, people in those regions transact via Bitcoin as a store of value that saves them transportation and transfer costs.
Ether (ETH)
Today, Ethereum is the second-largest and uncapped cryptocurrency. Founded in 2015, it runs on the public Ethereum blockchain platform. It has been a game-changer for the crypto industry by introducing DApps, smart contracts, and an ERC20 standard.
Smart contracts are integral to Ethereum’s functionality. Ether’s decentralized system auto-executes smart contracts without any possibility of third-party interference and fraud.
Use Case:
Ether allows users to develop, program, and sell NFTs. Today, artists can earn royalties by launching unique NFT merchandise. Further, gamers use Ether to buy tools or new outfits to improve their gameplay.
Solana (SOL)
Anatoly Yakovenk launched Solana in 2020. Due to its lightning-fast transactions, this cryptocurrency gained massive traction within a few years.
Solana uses aProof-of-History (PoH) mechanism to speed up the transaction processing time. Like Ethereum and Bitcoin, SOL functions on a high-speed blockchain system that executes 50,000 transactions per second.
Use Case:
The Solana blockchain has a dApps ecosystem, which enables developers to create scalable, cheaper, and innovative DeFi apps. Besides, you’ll find Solana-based free-to-play games in the market, such as Panzerdogs, Mini Royale, and Aurory.
Tether (USDT)
Tether is a type of stablecoin designed to have a less volatile price. Pegged by US dollars, it stabilizes other cryptocurrencies when the market fluctuates. Thus, USDT allows crypto holders to sell when prices are high and buy more when they are low.
Use Case:
Investors often move their money into Tether during market volatility to protect against losses. Nowadays, you can also use USDT to play real money casino games.
Just make sure to sign up only on a reliable casino site. You can review by searching with the prompt – is Slots and Casino legit? You’ll see this online casino operator accepts various cryptocurrencies, including Tether. Similarly, there are many more sites allowing deposits and withdrawals via USDT.
Binance Coin (BNB)
Initially issued as an ERC-20 token on the Ethereum platform, BNB is now native to the world’s largest cryptocurrency exchange, Binance. This cryptocurrency also uses decentralized application (DApp) technology to provide access to various financial services.
Use Case:
Binance Coin is a versatile cryptocurrency that can be used for many purposes, including cryptocurrency trading, crypto staking, access to loans, and insurance coverage.
BNB owners can also use this crypto coin to pay trading fees on Binance at reduced transaction and trading costs. Besides, it’s one of the most used crypto coins for buying various goods and services. With reduced transaction fees, more users started using Binance Coin for payments.
FAQs
1. What are the types of cryptocurrencies?
Typically, there are three types of cryptocurrencies: crypto coins (Bitcoin), altcoins, and tokens.
2. How many types of cryptocurrencies exist today?
As per CoinMarketCap, there are over 23,000 cryptocurrencies in the market.
3. Is it safe to use crypto?
Yes, absolutely. Cryptocurrencies use blockchain technology to secure every transaction. This concept of a decentralized system makes the financial system safer. However, crypto investment involves inherent risks due to its volatile nature. So, ensure thorough research before buying any digital currency.
4. Where to buy and sell crypto?
You can trade cryptocurrencies using dedicated crypto exchanges and apps, including Coinbase, Gemini, Kraken, Binance.US,Bisq, and Cash App.
Bottom Line
Undoubtedly, the popularity of cryptocurrencies is having a profound impact on the global economy. Although it won’t replace traditional money, these digital currencies are here to stay. They are valuable tools for users and financial systems. However, don’t invest more than you can afford to lose as they are highly volatile.
