Cryptocurrencies have come a long way since Bitcoin was first created in 2009. By now, the number of cryptocurrencies has grown. These digital currencies are used for multiple reasons. While cryptocurrencies are popularly utilized for payments, others trade cryptocurrencies to make a profit. Nowadays, companies like BDSwiss give you the ability to trade cryptocurrencies using various trading platforms.
Since these digital currencies are becoming more and more popular, different types of cryptocurrencies have been released. Each type of cryptocurrency has its pros and cons. This article will provide you with information on various cryptocurrency types. In this way, you’ll gain an understanding of the options you have.
1. Bitcoin (BTC)
Bitcoin is the most popular type of digital currency that is based on the white paper made by Satoshi Nakamoto – the true identity of whom is still unknown. In simple terms, Bitcoin is a virtual currency that allows users to send and receive payments without revealing their identity.
Pros:
– It is the most liquid cryptocurrency.
– It is gradually becoming widely accepted as a payment method.
– Using Bitcoins makes international transactions easier.
– It comes with low transaction fees.
– Privacy and anonymity are protected with Bitcoin in comparison with traditional currencies.
– Bitcoins are scarce, which imbues them with an intrinsic value similar to that of precious metals such as gold.
– It is not regulated by a central bank, which means it is independent of political influence. It will be difficult to freeze or hold Bitcoin units in periods of legal investigations due to its decentralized nature.
Cons:
– It is very volatile. Bitcoin is not immune to extreme price swings over a short amount of time.
– Activities involving Bitcoin within the black market may result in the damage of Bitcoin’s reputation and, ultimately, usefulness.
– Bitcoin does not support refunds and chargebacks.
2. Litecoin (LTC)
Launched in 2011, Litecoin was made by Charlie Lee. It is based upon a global payment network that is open source. Litecoin utilizes “scrypt” in its “proof of work” algorithm. It is similar to Bitcoin in a lot of ways. Litecoin processes a block and confirms transactions at about 2.5 minutes, which is faster than that of Bitcoin, which is about 10 minutes.
Pros:
– It is considerably faster than other cryptocurrencies.
– It is a cheaper option than Bitcoin with near-zero transaction fees.
– It brings a relatively higher sense of trustworthiness and reliability compared with Bitcoin because it was formulated by a former employee of Google, who has exemplified outstanding leadership skills by focusing on Litecoin full time.
Cons:
– Due to a ton of similarities between the two, Litecoin is prone to losing to Bitcoin, a more popular option, when the latter makes significant improvements on their speed.
3. Ethereum (ETH)
Ethereum is a software platform that is decentralized. The blockchain of Ethereum differs from that of Bitcoin. It is focused on running programming codes of decentralized applications. Miners of Ethereum operate to earn Ether, a specific cryptocurrency. App developers utilize the said Ether for payment of transaction fees and services within the Ethereum network.
Pros:
– Ethereum utilizes the Turing language within the blockchain. It allows for the exchange of simple and complex contracts within the network while simultaneously getting rid of third parties.
– Similar to Bitcoin, the Ethereum network is open and decentralized as well.
– The Ethereum network makes possible the execution of a Smart Contract – a way to utilize cryptocurrencies to formulate agreements between parties within a blockchain network where the presence and trust of a third party are not necessary.
– It leads to a relatively lower amount of fees and expenses because paid intermediaries are put off of the equation.
Cons:
– Transaction speeds are sluggish compared with those of other cryptocurrencies.
– There is a lack of documentation when it comes to Ethereum code, which hampers developers from making it better.
4. Monero (XMR)
Monero is a private, secure, and untraceable currency system. It utilizes a specialized type of cryptography to make sure that transactions are kept 100% private, untraceable, and unlinkable. Monero has been fully developed due to donations and community efforts. It allows total privacy through its feature called “ring signatures.”
Pros:
– A person can exercise total control over transactions since identities are kept private. Transactions cannot be linked and traced towards a specific identity.
– Every deal is considered fungible.
– Transactions can be transparent if a person chooses to do so.
Cons:
– Monero has a relatively lower acceptance rate because it is less user-friendly compared to popular cryptocurrencies such as Bitcoin.
Conclusion
Cryptocurrencies come in various types. The four digital currencies outlined above are not an exhaustive list. One thing is common for all cryptocurrencies – they all have their advantages and disadvantages that make them viable for a specific purpose. It is recommended for would-be cryptocurrency users to implement due diligence in their undertakings with these digital currencies.