A cryptocurrency is a form of Digital Currency – so can be used to buy goods and services like other currencies. But all the transactions happen online. These currencies are decentralized, thus not issued by any central authority. In simple words, the government cannot interfere or manipulate these currencies.
These currencies are decentralized, thus not issued by any central authority. In simple words, the government cannot interfere or manipulate these currencies.
Cryptocurrencies do not rely on banks to verify transactions. They work on ‘blockchain technology’ which does not use a single server to keep a record of all transactions; Instead, the recordings are spread across multiple computers for simultaneous management.
In a blockchain, transactions are recorded on a ledger by interconnected blocks. Blockchain is a security measure for cryptocurrencies because of the data stored on one block is tampered with, it will not match the subsequent blocks. The ledger is shared by hundreds and thousands of computers at once. Since no central authority is involved, it is an unregulated currency, making it different from other digital forms of payment.
What Are The Different Types Of Cryptocurrencies?
Bitcoin is the most popular cryptocurrency in the world. For many years it was used as a synonym for cryptocurrency. It was the first cryptocurrency to exist in 2009, and its current market capitalization stands at $735.3 billion.
But bitcoin is only one of the many cryptocurrencies that exist. As of April 2021, there are over 10,000 cryptocurrencies. Some popular ones are:
- Litecoin: It was started in 2011 by Charlie Lee, a former Google employee. The goal behind creating Litecoin was to improve the technology of bitcoin. Litecoin offers faster transactions and lower transaction fees than Bitcoin.
- Ethereum: It has the second largest market capitalization after Bitcoin. It is a blockchain with its own cryptocurrency of the same name.
- Dogecoin: This cryptocurrency started out as a joke based on the popular Doge internet meme. The investment began in the currency, and now holds a market capitalization of approximately $44 billion. Other popular cryptocurrencies include Binance Coin, Cardano, and Tether.