Before we start diving into Cryptocurrency…
You may be familiar with Blockchain and Bitcoin in the context of cryptocurrencies. However, they are part of a broader category known as Distributed Ledger Technology (DLT), which we will explore to provide a more comprehensive understanding.
Distributed ledger technology refers to the technological infrastructure and protocols that enable multiple parties to simultaneously access, validate, and update transaction records across a decentralized database. DLT serves as the foundational technology that blockchains are built on top of. The distributed nature of DLT allows all users to view any changes made to the ledger and identify who made those changes.
Please note:
"All blockchains are a type of distributed ledger, but not all distributed ledgers are blockchains.
Blockchain is the most well-known distributed ledger technology (DLT), but there are other prominent DLTs beyond Blockchain. Examples include Ethereum, XRP, IOTA, Cardano, and Solana.
What are Cryptocurrencies :
The "crypto" in cryptocurrencies refers to the cryptographic techniques that enable the creation and processing of these digital currencies.
Cryptocurrencies are also united in their commitment to decentralization - they are typically developed by teams who build in mechanisms for issuance (often through a process called mining) and other controls.
Where Do Cryptocurrencies Come From?
Cryptocurrencies operate on a DLT, a record of all transactions updated and held by currency holders.
The units of cryptocurrency are generated through a process known as mining, which involves cryptocurrency miners using computational power to solve complex mathematical problems that validate transactions and add new blocks to the blockchain. This mining process results in the creation of new coin units.
How many Types of Cryptocurrencies are In the Market?
Simple answer is so many. We are going to only talk about 7 most common ones.
1. Bitcoin
It has since become the most well-known cryptocurrency in the world. Bitcoin (BTC) is a decentralized cryptocurrency, earned by blockchain miners and available on various exchanges, that enables direct transactions without third-party involvement.Its popularity has inspired the development of many other cryptocurrencies.
2. Ether (ETH)
Ether (ETH), the specific cryptographic token of the Ethereum platform, serves multiple purposes. It compensates validators who stake their coins for blockchain work, functions as an off-chain payment method, and is an investment vehicle for speculators.
3. Tether(USDT)
A leading stablecoin, aims to curb volatility by pegging its value to an external reference, offering a smoother price fluctuation for users who might be wary of the dramatic swings seen in cryptocurrencies like Bitcoin.
4. XRP
XRP, the native token of the XRP Ledger, was established by Ripple in 2012 as a payment system. It employs the XRP Ledger Consensus Protocol, a unique consensus mechanism that doesn’t rely on proof-of-work or proof-of-stake. Instead, transactions are signed and submitted by client applications to ledger servers for evaluation and potential inclusion in the ledger.
5. Cardano (ADA)
Cardano (ADA) is a unique “Ouroboros proof-of-stake” cryptocurrency, developed through rigorous research by experts in engineering, mathematics, and cryptography. Its advanced blockchain capabilities have earned it the title of an “Ethereum killer”. However, it’s still in its early stages with much potential in DeFi applications.
6.Solana (SOL)
Solana (SOL), the cryptocurrency on the Solana blockchain, has seen a significant price increase since its launch. As of July 22, 2023, with a market cap of $8.4 billion and a value of around $21, it ranks as the eighth-largest cryptocurrency.
7. IOTA (MIOTA)
IOTA (MIOTA) is a distributed ledger tailored for the Internet of Things (IoT), using its cryptocurrency, MIOTA, for transactions. Its unique feature is Tangle, a node system for transaction confirmation, which IOTA claims to be faster and more efficient than traditional blockchains.
How To Get Them?
Users can also obtain units of cryptocurrency by purchasing them from brokers. They can then store their cryptocurrency in cryptographic wallets, which allow them to securely transact and spend their coin balances. The transactions are recorded on the public blockchain ledger, which is maintained and validated by the decentralized network of currency holders.
Why need to invest in cryptocurrency?
Cryptocurrencies, by eliminating centralized intermediaries, have the potential to reshape finance and empower individuals. They enable direct peer-to-peer transactions through advanced cryptography, providing individuals with full control over their money via secure digital wallets. Transactions can be faster, more efficient, and offer better privacy.
For investors, cryptocurrencies represent a new asset class with significant growth potential. They also bring financial services to underserved communities, making transfers more accessible globally. As adoption increases, cryptocurrencies promise a transformative impact on the financial landscape.
Overall, cryptocurrencies are an innovative technology with the potential to transform finance as we know it. For investors and individuals, they offer faster, cheaper, more user-controlled digital transactions. As adoption spreads, the possibilities are very promising.
Reference:
https://www.investopedia.com/terms/c/cryptocurrency.asp
https://www.investopedia.com/tech/most-important-cryptocurrencies-other-than-bitcoin/
https://www.investopedia.com/terms/c/cryptocurrency.asp
https://www.investopedia.com/terms/d/distributed-ledger-technology-dlt.asp
