There are different types of cryptocurrency and tokens, each with its own unique characteristics and purposes. Today we will discuss cryptos and uses by providing popular crypto samples!
What is Cryptocurrency?
A cryptocurrency is a digital or virtual asset that is generally used to buy various things. Cryptocurrencies use cryptography to protect and verify transactions and to regulate the creation of new units. Only people who meet specific criteria can change entries in the database where cryptocurrencies are kept.
Cryptocurrencies are virtual or digital tokens that make use of cryptography to secure all transactions and control new units’ creation. Decentralized by nature, cryptos are not under any financial institutions or government control. This makes them an increasingly popular choice for payments and investment. Bitcoin was the first cryptocurrency, designed in 2009. Since then, many types of crypto have arisen in the market.
What is a Token?
A token is a digital asset that is securitized on a blockchain. In many cases, a token is simply a cryptocurrency built on top of an existing blockchain such as Ethereum. However, tokens can represent other assets such as loyalty points or IOUs. Initial Coin Offerings (ICOs) are one of the key characteristics that distinguish tokens from cryptocurrencies.
What is an Initial Coin Offering (ICO)?
An ICO is a form of crowdfunding in which a firm seeks out investors by releasing exclusive digital currency for exchanges, classically for Bitcoin. ICOs are a relatively recent creation, but they have quickly become one of the most popular subjects of conversation among blockchain enthusiasts.
Many people consider ICOs as unlawful securities that give entrepreneurs an unwarranted amount of money, while others believe it is a new way for startup firms to raise capital. The U.S. Securities and Exchange Commission (SEC) has lately made a decision about the legal status of tokens generated in the infamous DAO ICO. In addition to raising money, ICOs can also be used for a variety of other purposes, making certain parts of venture funding more accessible and opening opportunities for fraud.
Types of Cryptocurrency
There are many types of cryptocurrency, but some of the more popular ones include Bitcoin, Ethereum, Litecoin, and Ripple.
Bitcoin: Bitcoin is the original cryptocurrency and is still the most well-known. It was created in 2009 by an anonymous person or group using the pseudonym Satoshi Nakamoto. Bitcoin transactions are recorded on a public ledger called a blockchain. Bitcoin is decentralized, indicating that it is not subject to government or financial institution control.
Ethereum: Ethereum is a cryptocurrency created in 2015 by Vitalik Buterin. In addition to being a decentralized, public ledger, it can also be used for creating decentralized applications (dApps). Ethereum transactions are recorded on a public ledger called a blockchain.
Litecoin: Litecoin is a cryptocurrency created in 2011 by Charlie Lee. It is similar to Bitcoin in that it is a decentralized, public ledger; however, it differs in that it has faster transaction times and a larger supply of coins. Litecoin transactions are also recorded on a public ledger- blockchain.
Ripple: Ripple is a cryptocurrency created in 2012 by Jed McCaleb. In contrast to other cryptocurrencies, Ripple is not decentralized; instead, it is controlled by a company called Ripple Labs. Unlike public ledgers, Ripple Labs maintains a private ledger for recording transactions.
There are many other types of cryptocurrencies, but these are some of the more popular ones.
What is a Decentralized Application (dApp)?
A dApp is a decentralized application that runs on a blockchain. Ethereum, for example, is a platform that allows developers to build dApps. dApps are often open-source and have no central authority. This means that they are not subject to government or financial institution control.
What is a Smart Contract?
A smart contract is a contract that is written in code and stored on a blockchain. Smart contracts are self-executing, meaning they will automatically execute the terms of the contract.