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By now, hopefully, many of you reading this will know a little bit about Bitcoin and Cryptocurrency. Many know what Bitcoin and Altcoins are and they’re starting to learn how it works. But what many don’t know is that there are different types of Cryptocurrency. Each of them does a specific job or is in a specific niche. Let’s take a look at a few of the different Cryptocurrencies you may encounter.
Types Of Cryptocurrency:
The best way to describe this type of Cryptocurrency is that it’s created for a specific function in Cryptocurrency. They are relatively unique. Generally, Cryptocurrency of this type is associated with the older more well-established coins. Bitcoin, Litecoin, Dash and Z Cash are all examples of individual Cryptocurrencies each with their own Functions.
As Cryptocurrency has grown and evolved many similar coins to those mentioned have been created. These will all have their own unique selling points aimed at trying to have similar impacts on the markets.
Utility tokens are pretty simple. They were designed to perform specific functions within a Blockchain. Utility tokens are often built on top of an existing blockchain like Ethereum. The Ethereum based tokens are generally known as ERC-20 tokens. Examples of utility coins are EOS and VEChain.
Security tokens are basically tokens that have a real-world value or asset behind them. They are a kind of link between the world of Digital currency and real-world assets or services. They are very similar to shares. However, they aren’t a symbol of ownership or anything you’d normally associate with buying shares. They’re a digital store of value for a real-world asset.
Security tokens are starting to grow more and popular. This is partly due to the fact that unlike in the traditional markets transactions are quick. Banks and other financial institutions have several middlemen and funds can take several days to clear. However, security token payments are settled in hours if not minutes. Examples of security tokens would be Blockchain Capital (Bcap), Propertycoin and Siafunds.
Privacy is a big deal. Especially where your money is concerned. We’ve seen a lot of interest in privacy coins. As the name suggests privacy coins are designed to give the users more privacy when it comes to their digital assets. They allow users to make their transactions more anonymously than normal transactions.
Normal transactions are also anonymous. However, with the bitcoin ledger being public it’s actually relatively easy to follow the money. Also, once an address can be linked to a specific person it’s easy to see their activity. Privacy coins give the user a completely anonymous way to send digital currency.
This has drawn a lot of criticism from governments and banks across the world. They believe they’re a safe haven for money launderers. Personally, I feel like that’s a bit like the pot calling the kettle black. Also, a study compiled by Elliptic suggests that only 1% of transactions are for criminal purposes. You can download the report here. Monero, PIVX, Z Cash, Dash and Nav are examples of coins with privacy features.
Because of the fast-moving way in which Cryptocurrencies evolve some coins are harder to place. They may fit into multiple categories of Cryptocurrency. Also, they might not fit exactly into other categories because the concept is new or in the early stages of development.
This is where hybrid Cryptocurrencies come in. Hybrid Cryptocurrencies are ones such as Gas for example that is created by using the Neo platform. Users can then exchange the Gas for other currencies.
for more information about some of the basics of Bitcoin and Cryptocurrency check out more from us here.