Cryptocurrency is a digital currency used for widespread transactions in virtual spaces and sometimes the real world.
All cryptocurrencies are protected by encryption technology, which protects them from issues such as counterfeiting and identification by third parties. Cryptocurrencies cannot be tracked by governments and users can remain anonymous at all times.
Simply put, cryptocurrencies exist on blockchain technology, a decentralized control mechanism that is a public distributed ledger of transactions. Each block contains information about a transaction and is connected to the blockchain, which makes every transaction verifiable.
All cryptocurrencies are "mined," which is basically a computer solving a complex mathematical problem. Generally speaking, all cryptocurrencies follow either of two mining protocols – Proof of Work and Proof of Stake. The former is more competitive than the latter and has a much greater impact on the environment. But most cryptocurrencies follow a proof-of-work protocol.
While digital currencies, unlike fiat currencies, do not exist in the real world, some of them are incredibly valuable. Crypto is viewed as an investment and is also used to trade digital assets such as non-recoverable tokens (NFTs). Cryptocurrency is becoming increasingly accepted in the business world, with some companies and auction houses accepting it as a form of payment.
While some governments and financial institutions are skeptical about the future of cryptocurrencies, some countries, such as El Salvador, have declared at least one of them legal tender.
It is estimated that more than 18,000 digital currencies exist in the cryptocurrency market today. However, only a few have a certain level of reputation as investors. These include Bitcoin, the world’s first cryptocurrency, and Ethereum, the currency that pushed NFTs into the mainstream.
Bitcoin
Bitcoin (BTC) is the first and most famous of all cryptocurrencies. It was created in 2009 by Satoshi Nakamoto, a pseudonymous person, or a person whose true identity remains unknown to date.
Nakamoto described the idea of blockchain in a white paper. As we all know, blockchain is the cornerstone of everything related to cryptocurrency.
Bitcoin, while highly volatile, has the highest value and trading volume of any digital currency on the market today. In fact, Bitcoin is so popular that it is now synonymous with the cryptocurrency itself.
Ethereum
Ethereum is an open source blockchain platform and its cryptocurrency is called Ether (ETH). Blockchain is popular among developers for features such as smart contracts.
Ethereum is one of the most important digital currencies and also plays an important role in the world of non-fungible tokens (NFTs). Almost all NFT transactions are conducted in Ethereum, and the NFT itself exists on the Ethereum blockchain.
Its white paper was released in 2013 by founder Vitalik Buterin. In 2014, Ethereum was officially listed for 42 days. Today, Ethereum is the second-largest cryptocurrency by market capitalization.
Stablecoin Tether
Tether (USDT) is a stablecoin, a cryptocurrency whose value is pegged to the U.S. dollar at a 1-to-1 ratio. This means its value is always $1. It was launched in 2014 under the name Realcoin. Over the years, Tether has become the third largest cryptocurrency and the largest stablecoin by market capitalization (market capitalization).
It’s also worth noting that Tether is not as decentralized as most other cryptocurrencies, including Bitcoin. It is also controlled by a company, Tether Limited, which created the coin.
Due to its stability, despite its theoretical nature, it is favored by investors who are more concerned with volatility.
Binance Coin
Binance Coin (BNB) allows holders to pay fees and trade on the Binance exchange, one of the largest crypto exchanges in the world.
BNB can also be traded or exchanged with other cryptocurrencies, including Bitcoin and Ethereum, and can also be used for regular transactions such as travel bookings and payment processing.
The coin was launched in 2017 and initially existed on the Ethereum blockchain. It later became part of Binance Chain, Binance’s own blockchain.
Stablecoin USDC
USD Coin, symbolically identified as USDC, is a stablecoin backed by the US dollar. Like Tether, its price is always $1.
USDC was created by a global financial company called Circle and is backed by a multi-layer 1 blockchain. These include Ethereum, Solana, Algolan, and Stellar.
Cryptocurrencies are managed by member consortiums such as Circle and Coinbase. The coin can also be used for global transactions. Like Tether, what attracts investors is the stability of the USD coin.
Dogecoin
Of all cryptocurrencies, Dogecoin (DOGE) has a very interesting history. It actually started as a joke, with a meme featuring the Japanese dog breed Shiba Inu. But today, it’s as serious as any other cryptocurrency.
The open source cryptocurrency was created in 2013 by Jackson Palmer and Billy Markus. One of its most famous patrons is Tesla CEO and SpaceX co-founder Elon Musk.
Dogecoin uses the same proof-of-work technology as Litecoin.
Solana
Solana is the result of its co-founder Anatoly Yakovenko’s 2017 white paper describing historical proofs, which verified the sequence and passage of time between events.
Solana is a blockchain and its cryptocurrency is also known as Solana (SOL). While the cryptocurrency is one of the strongest by market capitalization, the blockchain has features comparable to Ethereum, including smart contract capabilities. This is why Solana can run NFTs, decentralized finance (DeFi), and decentralized applications (DApps).
Cardano
Unlike Bitcoin or others that follow a proof-of-work protocol, Cardano is a proof-of-stake blockchain platform and one of the first cryptocurrencies to adopt the system. It uses a peer-reviewed blockchain protocol called Ouroboros. The creators claim that Cardano is “the first to be built on peer-reviewed research and developed through an evidence-based approach.”
A proof-of-stake system reduces transaction time and energy usage, meaning it is better for the environment than a proof-of-work system.
Cardano’s encryption is called ADA. Blockchain supports smart contracts as well as decentralized applications.
