Cryptocurrency is a kind of digital or virtual currency that is secured by encryption. Whereas traditional currencies are issued by central banks and governments, they are based on decentralized networks driven by blockchain technology. This decentralized nature allows transactions to be secure and transparent. With the increasing growth of the digital world, different kinds of cryptocurrencies have been developed, each with a specific purpose and function.
Types of Cryptocurrencies
Bitcoin
The first cryptocurrency and most well-known is Bitcoin (BTC) which was developed in 2009 by an unknown entity who used the pseudonym Satoshi Nakamoto. Using blockchain technology, it records transactions on a decentralized, peer-to-peer network without a central authority in a transparent and safe manner. Bitcoin was initially valued nothing but by October 26, 2010, it had increased from $0.10 to $0.20. It has grown significantly throughout the years, and it is currently $83,912.26. Due to its decentralized structure and growing popularity, it is a major force in the world of finance.
Altcoins
Altcoins, or alternative cryptocurrencies, refer to all digital currencies other than Bitcoin. Since the majority of digital assets originate from one of these two networks, some people describe altcoins as all cryptocurrencies other than Bitcoin and Ethereum (ETH). Despite using blockchain technology, its features, consensus processes and applications could differ slightly from those of Bitcoin. As some altcoins are made for payments, others provide privacy, smart contracts, or steady value.
Some of the altcoins
Ethereum: Ethereum (ETH) is the second-largest cryptocurrency by market capitalization after Bitcoin and the most well-known altcoin, launched in 2015 by Vitalik Buterin and other co-founders. It is a decentralized platform that enables decentralized apps (DApps) and smart contracts, while Bitcoin is primarily used as a store of value.
Other Notable Altcoins
Solana (SOL), Cardano (ADA), Binance Coin (BNB), and Ripple (XRP) are a few more popular altcoins. Interest in cryptocurrencies has increased as a result of Donald Trump's recent declaration of his executive order on digital assets. Trump’s plan to create a U.S. government reserve of XRP, SOL, ADA, ETH, and BTC is seen as a significant development for these altcoins.
Stablecoins
Stablecoins are a kind of decentralized digital money that, in order to keep its value steady, is linked to another asset, usually a fiat currency like the US dollar or a reasonably safe asset. They are designed to provide an alternative to the high volatility seen in popular cryptocurrencies making them more suitable for everyday transactions and reducing risk for users. Tether (USDT), USD Coin (USDC), TrueUSD (TUSD), and Binance USD (BUSD) are a few examples of stablecoins.
Memecoins
Memecoins are also often internet-joke, meme or trend-based. They first appear as less serious and more enjoyable than large financial tools and are typically supported by active online communities. Some well-known memecoins include Dogecoin, Shiba Inu, and others. While they can be exciting, memecoins are considered risky and can be highly volatile in the market.
In India, meme coins have become very popular, accounting for 13 per cent of all cryptocurrency investments, according to a CoinSwitch 2024 report. Dogecoin (DOGE) continues to dominate, accounting for 55 per cent of meme coin investments, while PEPE emerged as the top performer with a 1373 per cent return in 2024.
Security and Utility Tokens in Crypto
Security tokens are governed similarly to conventional securities and signify ownership of actual assets. They offer an online option for investing in assets like stocks and real estate.
On the other hand, utility tokens are used to access certain blockchain network functions or services. They allow users to interact with decentralized apps (dApps) and participate in platform-specific activities, but they do not confer ownership rights.
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