Almost everyone has heard something about cryptocurrency by now, or at least about Bitcoin. But not many people know what cryptos actually are and the different types that exist in this industry.
A cryptocurrency is a digital asset that uses cryptography to work as a payment or storage value, with transactions and coin ownership being stored in a digital ledger via encryption. Most cryptos are not backed by any physical value, aside from stablecoins, which are cryptos that have their value based on fiat money or precious metals. Several popular stablecoins are Tether, Paxos Standard Token, USD Coin, PAX Gold, and TrueUSD.
Transaction data is recorded on a network called the blockchain. By using advanced mathematics, this data is secured on the ledger, and it cannot be modified by anyone once it has been recorded.
Another feature that is distinctive of cryptocurrencies is decentralization. This means that no single person or entity is able to control the entire network. The ownership of the network is divided between the thousands of users who own or mine the coin. This makes it hard for one person to seize control of a cryptocurrency and manipulate its value for his own interest.
Another advantage of decentralization is that all parties remain anonymous, which has been proven, as no one has been able to identify the creator of Bitcoin to this date.
Jump Ahead To:
Bitcoin was the first cryptocurrency created, and along with its birth came the first blockchain. The coin was launched in 2009 by an anonymous developer or developers that went by the pseudonym of Satoshi Nakamoto.
Bitcoin has grown over the years to be the most popular and expensive crypto, with people comparing its value to gold. In a way, both assets have some similarities, such as a store of value, a limited supply, and more can be made through mining.
After Bitcoin was launched, many more cryptos have been created based on the initial source code of its blockchain. A copy of a blockchain is called a fork, and there are many Bitcoin-forked coins, such as Bitcoin Gold, Bitcoin Cash, Litecoin, and so on.
Other blockchains with their afferent coins were also developed, such as Ethereum, Cardano, Qtum, and many others.
All these cryptocurrencies have their own unique tweaks brought to the initial Bitcoin code. Litecoin was made faster, Monero and Zcash have various anonymity features, Ethereum has an increased transaction speed, automated transaction verification, and supports dapp and smart contract development.
All coins that are not Bitcoin are referred to as altcoins. Most coins that derived from BTC can be mined, although some have implemented their own protocols for issuing new coins, such as Proof of Stake, where new coins are produced through staking.
Coins vs Tokens
Another type of crypto is the token. Tokens are also digitally encrypted assets that exist on a blockchain. But they are more akin to shares, while Bitcoin and altcoins are generally stores of value.
Tokens usually have different roles in their blockchain’s ecosystem, such as allowing the user to access certain features, paying for transaction fees, and so on. Another role of tokens is to attract finance for the execution of a company project, as investors buy them through a token sale, also known as an ICO. These tokens can only be purchased. The price of these tokens highly depends on how well the project performs. If the business is a success, the token’s price goes up, if not, the price plummets.
This is because tokens just confirm their holder’s right to a share of revenue, similar to a debt warrant. However, both altcoins and tokens can be used for investment.
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Be it Bitcoin, altcoins, or tokens, 1xBit welcomes all players that are ready to increase their crypto stash by playing amazing games and betting on hundreds of events!