Ever since Bitcoin made its appearance into the world back in 2009, the world of money and investments hasn't been the same.
Before the existence of cryptocurrencies, people used to rely on banks to hold and trade their money. For example, if you wanted to buy something on an e-commerce site, the site would have to go back to your bank to corroborate your account number and solvency before doing the transaction.
With the rise of cryptocurrencies this no longer happens. This means that transactions can be made directly from peer-to-peer which of course comes with multiple pros and cons (and risks).
If you are interested in learning more about the world of crypto and the way it works, you have come to the right place.
Keep reading to learn more about cryptocurrencies and how Superprof can help you find a crypto tutor in Seberang Perai.
Learn more about the risks of cryptocurrencies, tips to become a better investor and where to study crypto in Petaling Jaya.
What Are the Types of Cryptocurrency?
At its core, cryptocurrency is typically decentralized digital money designed to be used over the internet. Bitcoin, which launched in 2009, was the first cryptocurrency and it remains by far the biggest, most influential, and best-known. In the decade since, Bitcoin and other cryptocurrencies like Ethereum have grown as digital alternatives to money issued by governments.
A cryptocurrency, broadly defined, is a form of digital tokens or “coins” that exist on a distributed and decentralized ledger called a blockchain. Since Bitcoin was launched over a decade ago many cryptocurrencies have appeared in the market with promises for buyers all around the world.
Today, there are thousands of different types of cryptocurrency, and while each is designed to provide some new feature or function, most are founded on similar principles to those that established Bitcoin:
• Cryptocurrencies are not issued, regulated, or backed by a central authority like a bank.
• They are created using a distributed ledger (blockchain) and peer-to-peer review.
• Bitcoin and other coins are encrypted (secured) with specialized computer code called cryptography.
• As assets, cryptocurrencies are generally stored in digital wallets, commonly a blockchain wallet, which allows users to manage and trade their coins.
If you want to learn more about the history of crypto and how you can learn crypto in Georgetown, go to our article here.
In order for us to discuss the different types of cryptocurrencies, it is important to start with a basic differentiation. When discussing cryptos, you may hear the terms "coin" and "token" frequently used. While they may sound like interchangeable terms, there is a difference, and it's important to keep them straight.
A digital coin is created on its own blockchain and acts in much the same way as traditional money. It can be used to store value and as a means of exchange between two parties doing business with each other.
Tokens, on the other hand, have far more use than just digital money. Tokens are created on top of an existing blockchain and can be used as part of a software application (like to grant access to an app, to verify identity, or to track products moving through a supply chain), or they can even represent digital art (like with NFTs, or "non-fungible tokens," that certify something as unique).
That said, there are four main categories of cryptocurrencies that have been defined based on their utility:
- Currency: The world’s first cryptocurrency, Bitcoin, was made for this utility. The aim was to make cross-border payment transactions cheaper and faster. Any cryptocurrency that has the same intention will be categorized under the currency file.
- Asset: Stablecoins can be categorised as assets as the value of these cryptocurrencies is derived from the value of an external asset. For example, USDT derives its value from the US dollar. Gold GLC is tied to the value of gold.
- Object: This type of cryptocurrencies was created to finance special projects aimed at solving the problems of the world. For example, Siacoin (SIA) aims to solve the problem of expensive cloud storage. Another example is Decentraland, which is an Ethereum-based application where users can buy virtual land (NFT-based) using its cryptocurrency (MANA).
- Meme or Joke Coin: These were created strictly for fun, with no specific goal or purpose, yet they are worth millions now. Both Dogecoin and Shiba Inu started out their journey as meme coins in their early days, but now they are part of the crypto race.
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What Are the Most Popular Cryptocurrencies?
Now that we have these four categories in mind, we can better understand what a cryptocurrency entails. Below you will find the most popular cryptocurrencies nowadays:
- Bitcoin: Bitcoin is still the coin people generally reference when they talk about digital currency. Its mysterious creator allegedly Satoshi Nakamoto debuted the currency in 2009 and it’s been on a roller-coaster ride since then. Bitcoin was designed to be independent of any government or central bank. Instead it relies on blockchain technology, a decentralized public ledger that contains a digital record of every Bitcoin transaction.
- Litecoin (LTC): Litecoin was launched in 2011 as an alternative to Bitcoin. Like other cryptocurrencies, Litecoin is an open-source, global payment network that is completely decentralized, meaning there are no central authorities.
- Ethereum (ETH): It is a decentralized software platform that enables smart contracts and decentralized applications (dApps) to be built and run without any downtime, fraud, control, or interference from a third party. The goal behind Ethereum is to create a decentralized suite of financial products that anyone in the world can freely access, regardless of nationality, ethnicity, or faith.
- Binance Coin: Binance Coin is available on the Binance cryptocurrency exchange platform (along with other digital coins that are available for trading). Binance Coin can be used as a type of currency, but it also facilitates tokens that can be used to pay fees on the Binance exchange and to power Binance's DEX (decentralized exchange) for building apps.
- Tether: Tether’s price is anchored at $1 per coin. That’s because it is what’s called a stablecoin. Stablecoins are tied to the value of a specific asset, in Tether’s case, the US Dollar. Tether often acts as a medium when traders move from one cryptocurrency to another. Rather than move back to dollars, they use Tether. However, some people are concerned that Tether isn’t safely backed by dollars held in reserve but instead uses a short-term form of unsecured debt.
- Bitcoin Cash (BCH): Bitcoin Cash is a type of digital currency that was created to improve certain features of Bitcoin. Bitcoin Cash increased the size of blocks, allowing more transactions to be processed faster.
- Cardano (ADA): It is an “Ouroboros proof-of-stake” cryptocurrency that was created with a research-based approach by engineers, mathematicians, and cryptography experts. The project was co-founded by Charles Hoskinson, one of the five initial founding members of Ethereum. Cardano aims to be the world’s financial operating system by establishing DeFi products similar to Ethereum's as well as providing solutions for chain interoperability, voter fraud and legal contract tracing, among other things.
- Solana: Solana is a blockchain platform that generates the cryptocurrency known as Sol. It has made strides in decentralized finance (a.k.a. DeFi), specifically in its smart contract technology, which is integrated by programs that run on the platform according to preset conditions (like paper contracts, but without the middlemen). Solana was also behind the “Degenerate Ape Academy,” a non-fungible token (NFT) that was launched in August 2021.
- XRP (Ripple): XRP is a digital currency based on the digital payments platform RippleNet, built by the company Ripple. It was designed for financial institutions to scale digital payments across the globe and reduce transaction costs associated with typical cross-border funds transfers. Short-term lines of credit can also be extended using XRP.
- USD Coin (USDC): Like Tether, USD Coin is a stablecoin pegged to the dollar, meaning that its value should not fluctuate. The currency’s founders say that it’s backed by fully reserved assets or those with “equivalent fair value”, which are held in accounts with regulated U.S. institutions.
- Zcash (ZEC): Zcash is a digital currency that was built on the original Bitcoin code base. Conceived by scientists at MIT, Johns Hopkins and other respected academic and scientific institutions, it was built on a decentralized blockchain. A core feature and differentiation of Zcash is an emphasis on privacy. While not a function available to investors on Equity Trust’s platform, users can send and receive Zcash without disclosing the sender, receiver, or the amount transacted.
If you want to learn more about why people invest in crypto and how to find the right crypto courses in Ipoh, head to our article.
Private Crypto Tutors in Seberang Perai with Superprof
If you are interested in diving into the world of crypto but are not sure how to do it, some guidance might be the right way to go. With the help of Superprof you can find the guidance you are looking for: a private crypto tutor.
We have crypto tutors all over Malaysia who are available for both in-person and online tutoring and can help you understand everything you need to know about the world of crypto, how to invest and the best tips to make the most out of your crypto experience. For an average rate of RM86 you can find great online tutors to help you with your crypto goals.
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