CRYPTOCURRENCY
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CRYPTOCURRENCY
What is cryptocurrency?
Cryptocurrency is a digital or virtual currency designed to work as a medium of exchange.
Many companies have issue their own coins, often called tokens, and these can be traded specifically for the goods or service that the company provides.
Cryptocurrencies work using a technology called blockchain which is a decentralized technology spread across many computers that manages and records all transactions.
Cryptocurrencies are not the same as stocks of a company!
Additionally, you can think of them as tools on the blockchain, in some cases serving as a resource or utility function. Other times, they are used to digitize the value of an asset.
Bitcoin was the first of the many to appear that got international recognition and now, it is one of the highest valued cryptocurrencies, next is Ethereum.
Ethereum can do the same things and much more. It reaches a whole new level in an already booming technology. Ethereum is basically not only a cryptocurrency but also a centralized platform with its own virtual language. Using this platform, as a more functional and flexible tool, developers can create new blockchain applications.
Moreover, Ethereum uses smart contracts and includes a digital currency of the same name, but only as a by-product. The smart contract is essentially what it sounds like. It’s a contract that self-fulfills and executes whatever algorithm you have put into to make reaching an agreement between the negotiators easier.
The common properties of cryptocurrencies generally include:
- Borderless: You can send and receive cryptocurrency from anywhere in the world.
- Durable: Cryptocurrency can be used over and over again without degrading.
- Irreversible: Transactions cannot be reversed and units cannot be spent twice.
- Permissionless: You do not need to provide information, nor permission, to create a wallet and own a cryptocurrency.
- Pseudonymous: No personal names or identifying information needs to be attached to the transactions.
Your journey into cryptocurrency starts with downloading a wallet.
The Different Types of Cryptocurrency
“Tokens” and “coins” are two words that are used commonly in the cryptocurrency space. Unfortunately, many people begin to use them interchangeably and think of them as related terms.
However, these are two completely different things and should be understood by anyone who wants to learn more about cryptocurrency.
It’s important to realize that not all tokens are the same, though, as cryptocurrencies can be further classified into different categories of digital assets. The payment token is one of the most important types of tokens, as it represents the purest form of a cryptocurrency. Security and utility tokens are the two most commonly referred to classifications of coins.
You will also hear “Altcoin Coin” … Altcoins (alternative coins) are all other cryptocurrencies launched after the success of Bitcoin.
Stable Coins
Stable coins make up a unique category of coins in the market that are poised to bring stability and trust back into the cryptocurrency market and are pegged or backed by some other asset such as fiat money or another algorithmically-controlled system.
This keeps the value of that coins stable and lowers the threat of high volatility. Some forms of stable coins are tied to a commodity like a bar of gold or a barrel of oil. Other forms of stable coins even exist as self-correcting, algorithmically-controlled systems.
Essentially, stable coins hold the promise of a half-step between traditional assets and crypto assets, taking the best from both worlds while resulting in a much more accessible and efficient form of finance.
Tether is one of the most prominent stable coins, which is a blockchain-based cryptocurrency whose coins in circulation are backed by an equivalent amount of traditional fiat currencies, like the dollar.
Security Token
Security tokens represents assets which can serve as stand-ins for real physical underlyings, companies, earnings streams, or an entitlement to dividends or interest payments. In terms of their economic function, the tokens are analogous to equities, bonds or derivatives.
Utility Token
Utility tokens provide access to the goods & services that the project will launch in the future. Also, they can be used as a type of discount or premium access to the goods & services of the project. Usually type of token that’s given out during crowdsales as a project executes an ICO. If a company creates a utility token, it is essentially creating a kind of digital coupon that can be redeemed in the future for special access or discounted fees for their service or product
Payment Token
Payment tokens represent the purest form of cryptocurrencies, serving as mediums of inherent value similar to established fiat currencies. They aren’t considered securities but they are means of payment. With regards to the entire cryptocurrency market, payment tokens are not too common. In fact, most cryptocurrencies are either utility or security tokens, with the exception of the few payment tokens.
Tokens are digital assets, issued by a blockchain-based project, which can be used as a payment method inside of its ecosystem, performing similar functions with coins. However, the main difference is that it also gives the holder a right to participate in the network.
A coin (including altcoins) is a form of digital money created through encryption techniques which store value. They are tied to a public blockchain, may be sent, received or mined, and do not perform any functions beyond acting as money.
Understand Blockchain
The easiest way to understand blockchain is to think of it as a fully transparent and continuously updated record of the exchange of information through a system which nobody fully owns.
This makes it decentralized and extremely difficult for anyone to single-handedly hack or corrupt the system, pretty much guaranteeing full validity and trust in each exchange of information.
Understand Blockchain
The easiest way to understand blockchain is to think of it as a fully transparent and continuously updated record of the exchange of information through a system which nobody fully owns.
This makes it decentralized and extremely difficult for anyone to single-handedly hack or corrupt the system, pretty much guaranteeing full validity and trust in each exchange of information.
What is a Crypto Wallet?
Cryptocurrency is a digital or virtual currency designed to work as a medium of exchange.
Cryptocurrencies, are the tokens used within blockchains to send value and pay for transactions. Additionally, you can think of them as tools on the blockchain, in some cases serving as a resource or utility function. Other times, they are used to digitize the value of an asset.
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No information on this website should be considered financial advice!