Cryptocurrency are digital assets that use cryptography, an encryption technique, for security. Cryptocurrencies are primarily used to buy and sell goods and services. People use cryptocurrencies for pseudonymity (near-anonymity), peer-to-peer purchasing (elimination of financial intermediaries), and some other “smart,” programmable capabilities that Bitcoin currently does not possess.
Currently, there are two major categories of cryptocurrencies: those utilized for the purchase of goods and services and those that allow for the creation of “smart contracts,” which are agreements that enforce themselves via code rather than courts. There are over 1,000 cryptocurrencies in existence right now (called “altcoins”); over 600 have market capitalizations of over $100,000.
Popular Cryptocurrencies:
Bitcoin: Released in 2009 by someone under the alias Satoshi Nakamoto, Bitcoin is the most well known of all cryptocurrencies. Despite the complicated technology behind it, payment via Bitcoin is simple. Although Bitcoin is widely recognized as pioneering, it is not without limitations. Not only is Bitcoin slower than some of its alternatives, but its functionality is also more limited.
Ether & Ethereum: Often used interchangeably, Ethereum is a platform that allows for relatively easy creation of smart contracts while Ether is a “token” used to enter into transactions on the Ethereum blockchain. Put simply, smart contracts are computer programs that can automatically execute the terms of a contract. They function similarly to the “IF (then)” Excel function: When a pre-programmed condition is triggered, the smart contract executes the corresponding contractual clause.
Litecoin: Launched in 2011, Litecoin functions similarly to Bitcoin in that is also open sourced, decentralized, and backed by cryptography. However, it was intended to serve in a complementary role to Bitcoin, “the silver to Bitcoin’s gold.” Litecoin has a faster block generate rate and faster transaction confirmation.
Dash: Released in 2014 as “Darkcoin,” Dash has since re-branded and offers more anonymity for its users due to its decentralized mastercode network. It utilizes something called a “Masternode” network which has a more robust foundation than Bitcoin.
Zcash: Released in October 2016, Zcash is a relative newcomer in the space. However, there are claims that it is the first truly anonymous cryptocurrency in existence due to its employment of zero knowledge SNARKS, which involves no transaction records whatsoever. The technology ensures that, despite all the information being encrypted, it is still correct and that double spending is impossible.
Monero: Monero possesses unique privacy properties. For example, Monero enables complete privacy by leveraging a technique called “ring signatures.” It’s become popular in the dark web black market, where users purchase everything from drugs to firearms.
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