Future of Money or ‘digital gold’ are a few terms associated with cryptocurrency as it has transformed the finance industry for good. Over the years, if we look at investment trends, cryptocurrency has risen in popularity for multiple reasons.
The finance industry has made leaps and bounds, especially in introducing cryptocurrency as a new means of multiplying wealth.
One of the primary reasons everyone is keen on investing in cryptocurrency today is the lack of restrictions such as the central monetary authorities like the government or bank and financial security.
Compared to the traditional mode of transaction, crypto and related exchanges are accessible and easy to liquidate.
Crypto offers investors an opportunity to seek a high return on investment as the currency cannot be subjected to dilution from inflation by any regulating body, whether political or government agencies.
Among the several types of cryptocurrencies that have a track record of holding and increasing in value over time is Bitcoin.
The original, oldest, and one of the most popular cryptocurrencies, Bitcoin, was created by Satoshi Nakamoto.
Bitcoin allows transaction ease, and that too within a few minutes. It is used to purchase items from platforms designed to assist cryptocurrency payments.
Before we discuss other cryptocurrency types, it is crucial to understand the difference between a token and a coin.
Tokens are digital assets that have more uses than coins. For instance, players who buy mana for purchasing virtual goods can also create and monetize content.
In comparison, coins like Bitcoin are only used to store value and are a means of exchange during business-related transactions.
The type of crypto that piques your interest depends on its features and your financial goals.
1. Ethereum
After Bitcoin, the most common name you are likely to hear in the cryptocurrency world is Ethereum, for all the right reasons.
Ethereum has several benefits: it enables investors to send payments through the internet without the bank’s involvement or a third party. It is an open-source blockchain, allowing developers to create other types of cryptocurrencies.
The key indicator of a project with a probability of staying afloat for the long term depends on the number of people invested in it.
Similar is the case with Ethereum; the amount of stacked Ethereum over the years currently stands at over 7 million due to countless investments.
Media attention plays a pivotal role in cryptocurrency price hikes. The spotlight and the expert’s prediction of Ethereum beating Bitcoin to the top have significantly impacted its value.
The number of people considering investing in a particular type of cryptocurrency is based on the extent of understanding of the blockchain’s programming language. Therefore, every buyer wants to invest in Ethereum due to its easy programming language.
Those skilled in Python and C++ have no issue learning Solidity, the programming language of Ethereum.
2. Tether
It belongs to a fast-growing breed of cryptocurrencies known as stable coins, designed to have a less volatile price when linked with an external digital asset. Tether is backed by an equivalent number of US dollars that prevents it from experiencing pricing volatility, unlike other crypto types.
Aside from the US dollar, Tether also issues tokens pegged to currencies such as euros, Chinese yuan, and gold. So, how exactly does Tether work?
When a user deposits flat money into the Tether reserve, which sells the government issue currency to buy USDT, Tether issues the digital amount in token form.
Consider the example where a user deposits 100$ and, in return, receives the same amount in the form of 100 tether tokens.
Tether tokens are available to users on platforms such as Omni, Bitcoin, and Liquid. Investors often confuse Tether with Bitcoin, but the difference is that Tether is a centralized cryptocurrency, whereas Bitcoin is decentralized.
3. Binance
Binance coin, the largest cryptocurrency exchange in the world, is issued by the Binance exchange and traded with the BnB symbol.
Although the particular type of crypto was initially created to pay for discounted trades, it is now used for purchasing various goods and services.
Previously it ran on the Ethereum blockchain; however, with time, it has become a native coin of the Bitcoin chain.
As it launched during the initial coin offering, the intention behind more than half of the funds raised during the process was to finance the Binance coin’s branding and marketing.
Various uses of the Binance coin include buying virtual gifts, making credit card payments, carrying out transactions, and donating to charities.
The good news is that when buying Binance coins, the transaction fees for this particular exchange are less if they choose to pay in BnB. By now, you must be thinking, what is BnB?
It is the process of removing a particular cryptocurrency from circulation to reduce its supply. The outcome is that it creates a deflationary effect, and the likelihood of the crypto’s valuation increases, benefiting the holders.
4. Cardano
Often termed as ‘the Ethereum killer’ and a third-generation cryptocurrency, Cardano, is subdivided into two layers to maximize the transaction speed and incorporates native tokens to improve every ADA holder’s experience.
The elements crucial to Cardano’s development were growing costs, sustainability, and scalability. The native token Ada is given as a reward to users participating in the stake pool for work done for the blockchain.
Anyone should consider investing in Cardano because it reaches outside the cryptocurrency sphere to associate itself with top brands, universities, and governments.
As mentioned earlier about the increased transaction speed, Cardano processes more than 250 transactions per second compared to the 5 TPS on the Bitcoin blockchain.
5. Solana
With functions similar to Ethereum and Bitcoin, Solana is the native coin of the Solana platform. What makes Solana unique is that it is capable of carrying out 50,000 transactions per second. The particular feature has grabbed every investor’s eye seeking to trade instantly.
The high transaction speed is due to the use of proof of history, a unique algorithm to validate transactions.
Since Solana is an open-source blockchain with an innovative contract capability, developers, aside from developing decentralized apps, use it for several purposes. These include mining and selling NFTs and creating decentralized finance platforms.
Solana pay, a free-to-use payment framework, allows payments in stablecoins to be accepted directly from the customers through the Solana network.
Conclusion
With time, several types of cryptocurrency have made a name for themselves in the digital finance space. It’s certainly worth an individual’s thought and time to thoroughly break down every crypto to determine which is the most suitable for investment.
Many often fail or lose their money due to a lack of knowledge, so whether you are an old player or someone whose interest has recently developed, learning a thing or two about cryptocurrency is a sure way of preventing financial loss.
Cryptocurrency has proven that it is here to stay and is the most secure platform to reap numerous financial benefits.
