Cryptocurrencies today are utilized for crypto transactions online while essentially cryptocurrencies are different from traditional currencies because they aren’t controlled or managed by any authority including governments.
To this date, there are over 10,000 different cryptocurrencies, accessible on the crypto market for investors. If you’re new to the crypto world and you’re confused by the different types of crypto and the sheer number of options are available for your portfolio in this article we will cover the different types of cryptocurrencies.
Coins vs Tokens
The different types of cryptocurrencies are separated into two categories – the first category includes Bitcoin and they’re known as coins which means other altcoins also are associated with this category. The second category encompasses crypto tokens.
Bitcoin is the first cryptocurrency to ever be created on the market and it is based on blockchain technology which utilizes specific protocols in order for Bitcoin to operate as a decentralized cryptocurrency.
Altcoins (the name is derived from the term alternative to Bitcoin) are other cryptocurrencies that are based on a blockchain network similar to Bitcoin and have similar attributes as the original digital currency.
Bitcoin has a restricted supply of 21 million coins and similarly other altcoins that were created after Bitcoin also have a limited supply. This is an important aspect of the currency because it is a factor that impacts the dynamic between the supply and the demand and this relationship is crucial for the value in the long run of the cryptocurrency.
In addition, they also use the same framework as Bitcoin and they have different attributes to Bitcoin. For example, they can have shorter processing times or lower transactions fees. But, essentially, they are built in a similar way as Bitcoin on a decentralized, peer-to-peer-based system. The first altcoin Litecoin was developed not long after Bitcoin entered the market in 2011
Invest in Crypto
If you also want to invest in BTC and other cryptocurrencies you can easily create an account on an online trading site like BitQT where you can trade right away and you only need about 20 minutes to create and set up your account.
In addition, this app is also mobile-friendly and accessible on mobile devices. When it comes to the technology that powers these cryptocurrencies, they only collaborate with top robot brokers and the platform is highly secure, so you can rest assured that your data is safe here.
Overall, altcoins have the same purpose as Bitcoin to be used to transfer funds over the Internet and they are built on top of the same decentralized structure however they can modify it to suit the individual goals of that particular currency.
The crypto tokens can be utility tokens, security tokens, and value tokens. The main difference between crypto tokens and altcoins is that they can be created through initial coin offerings. Even though they can also be used for the transfer of money online they also have different purposes and they are utilized as decentralized applications created on their own blockchain network.
Some examples are Tether, Chainlinks ‘LINK” token DGX, and others. You can use crypto tokens not just as a means to transfer funds over the internet, but also for investment purposes, security purposes, and trading, among other goals.
In conclusion, the crypto space is rapidly evolving thanks to various technological innovations and as the crypto market expands and grows, we expect many different cryptocurrencies as well as tokens to become accessible to the users. So, as an investor, it’s important to learn as much as you can about the crypto market and to keep up with the latest news in this field.