Cryptocurrency is essentially a digital currency used as a medium of exchange. It uses cryptographic technology that allows users to conduct secure transactions. The generation of new units is controlled and in most cases limited.
It was created in 2008 by Satoshi Nakamoto, the pseudonym of the anonymous programmer, or a team behind him.The interesting thing about cryptocurrencies and what has made them extremely useful is that they are completely decentralized. This is done using blockchain technology or a public transaction log that is visible to anyone. The first cryptocurrency blockchain was Bitcoin, which was followed by many more, reaching a point where more than 1,500 different ones were generated. The ones created later are called altcoins, and there is also a third type of cryptocurrency called tokens or
dApps. Here you will find information about all three types as well as how to obtain and use them.
Bitcoin
As already mentioned, Bitcoin is the first cryptocurrency to exist. The open source software was launched in 2009. New Bitcoins are created through mining, the process of creating new blocks on a blockchain by grouping transactions. They can also be traded and exchanged for other cryptocurrencies or fiat money in general. Miners use the Proof of Work (PoW) algorithm to verify transactions made on the network.This means that the reward for the new block goes to whoever verified it first. Although it ushered in a whole new use of blockchain technology, it also has its problems. Since it is a very valuable cryptocurrency, it is very vulnerable to fraud and hacking, and some even believe that it is a scheme in itself. Another problem you might encounter when you start mining is the extremely high energy consumption of this process. However, Bitcoin is one of the top coins in the market and has a limited supply of
.21 million BTC to ensure overall price stability.
Altcoins
Altcoins are considered an alternative version of Bitcoin, hence the name. They are usually created as a fork of another network, or some of them can also be created standalone. There is an immense number of altcoins and the number continues to increase and has already exceeded 1600. While some of them are just slightly modified versions of the Bitcoin network, there are some that may be completely different. Some may use algorithms other than Proof of Work, making
mining more efficient or essentially making coin generation much faster.Additionally, some altcoins improve Bitcoin’s anonymity by adding protections and improvements. Some of the most popular examples of altcoins are Ethereum, Litecoin, Ripple, etc. Additionally, some altcoins are different in that they were not created with the idea of being used as a digital payment method. In fact, some of them act as platforms for creating new applications.
Tokens/dApps
Tokens are very different from Bitcoin and even altcoins. Perhaps the main difference is that tokens do not have a specific blockchain. They are actually based on an already existing chain of another currency. Like Bitcoin and most altcoins, they can be traded, but to achieve many different benefits, they don’t necessarily have to be any type of currency. They are typically created using a blockchain transaction template generated using the same applications that can be created using some
altcoin platforms or so-called decentralized applications (dApps).Decentralized applications are designed to use smart contracts, which essentially automatically generate a transaction after certain conditions are met. To create and distribute such tokens, you can go through an Initial Coin Offering (ICO) process. This is essentially a crowdfunding process where investors contribute any type of currency to the project in exchange for the cryptocurrency token they are investing in. They believe in the future success of the project and the resulting profits. as soon as it is published.
