April 3, 2019
33 Cryptocurrencies Summed Up in Four Words!
Cryptocurrency are digital currency which is based on cryptography and that can be used as an alternative to FIAT currencies. While fiat currencies derive their value from a centralized authority such as central banks, cryptocurrencies are fully decentralized and do not fall under the purview or jurisdiction of any governments. Each has a different exchange rate. The entire cryptocurrency system is based on the blockchain technology that was first conceived in 2008 by someone under the pseudonym Satoshi Nakamoto.
Broadly there are three main types of cryptocurrencies. These are:
Bitcoin is a fully decentralized digital currency that was founded in 2009 by someone or some organisation using the pseudonymn Satoshi Nakamoto. Even after facing good competition from its numerous counterparts it remains most popular and most valuable cryptocurrency with a market capitalization of more than $100 billion.
This digital token is powered by one of the most brilliant technology called blockchain that has taken the fintech market by storm. Unlike FIAT currencies, Bitcoins has no physical or government backing is used to transfer value from one user to another without the involvement of a third party intermediary.
Users only need a Bitcoin wallet that allows you to access your bitcoins, and a computer or mobile software to transfer value to another user or purchase items at the online shop-fronts that accept it as payment.
A single Bitcoin can be subdivided out up to eight decimal places so the smallest Bitcoin unit known as Satoshi is about 0.00000001 Bitcoins. Unlike other traditional payment platforms a bitcoin blockchain, the distributed and encrypted ledger, maintains the records of all the Bitcoin transactions in real time. The platform is not handled by a single person or organization but by multiple users who comprise the very democratic peer-to-peer network.
Some of the bitcoin users from around the world compete to validate the transaction by solving complex cryptographic puzzles using powerful computers called mining rigs.
The first to achieve it time stamps the valid transactions and add it to the blockchain ledger in chronological order. The transactions on a Bitcoin blockchain platform are simultaneously recorded and verified by every node on the network before they are validated. This peer-to-peer approach prevents the manipulation or duplication of the transaction records on the ledger.
Bitcoin possesses all the attributes of fiat currencies such as divisibility, scarcity, fungibility, portability and it is also impossible to counterfeit. Its prices are determined through open market bidding.
The second categories of cryptocurrencies are called altcoins which are nothing but Bitcoin’s contemporaries. The runaway success of Bitcoin made way for more than 1800 new cryptocurrencies that claim to be better versions of Bitcoin. Any Bitcoin alternative is an altcoin but they don’t enjoy the wide acceptability that Bitcoin has.
Many altcoins are inspired by Bitcoin and are based on the similar blockchain technology with minor modifications. Some display significant deviations from the peer-to-peer proof-of-work based algorithm that underpins the Bitcoin blockchain. Then there are some cryptocurrencies that don’t conform to the classical definition of cryptocurrencies and have been designed to serve a different purpose.
Some altcoins use a proof-of-stake methodology or smart contracts instead of the proof-of-work Bitcoin algorithm to verify and validate token events and achieving the desired objective.
Some of the popular altcoins that are radically different from Bitcoin includes Ethereum and NEO which allow users to build blockchain-based applications on their platforms using smart contracts.
Tokens or dApps
Lastly, there are the tokens or the decentralized applications or dApps that are growing in popularity because innovators are finding more powerful use-cases with these platforms. They deploy smart contracts that allow you to decentralize everything.
A dApp is a server-less peer-to-peer application that does not run on any single system but can run on a blockchain network or on the traditional peer-to-peer platforms that have been in existence over the past few decades e.g. BitTorrent. Since they are platform-independent, they are capable of opening up limitless opportunities for application in various blockchain endeavours. The dApps do not have their own blockchain networks like the other cryptocurrencies but are designed to use Smart Contracts in executing commands and retrieving information from various blockchain systems.
At the very basic level, a dApp is simply a decentralized application which comprises of a backend, a user interface and Smart Contracts at its core which it employs to connect to and perform various functions on the blockchain that hosts them.
The dApp developers reward their users by issuing native tokens on their platforms that can easily be traded for real money. By doing so the tokens attain spotlight and the platforms gain more popularity within the crypto community thereby bestowing value and relevance to the platform users. The popular examples of DAPPS include Civic (CVC), WePower (WPR) and BitDegree (BDG).
Checkout the following infographic on 33 Cryptocurrencies described in four words or less, this infographic was developed by our friends at Mrbtc.org.
For 33 cryptocurrencies summoned up in four words inforgraphic source - click HERE