What is Cryptocurrency? Instead of serving as a tangible piece of currency, as their names suggest, crypto currencies are digital assets that have been assigned an arbitrary value. The crypto currency was intended to be used as a digital currency, as a replacement for fiat currencies (legal tender whose value is backed by the same government that issued it, not unlike the U.S. dollar).

As a digital currency, however, crypto currency isn’t a coin or even a bill you can hold in your hand. Instead, it uses encryption techniques to regulate the generation of currency and verify the transfer of funds over a highly secured blockchain network.

The most intriguing component of today’s cryptocurrencies, however, is widely believed to be the blockchain network many of their transactions are carried out on. Blockchains were specifically designed to host a decentralized marketplace; one where the transfer of funds may remain unanimous and protected by the highest of securities. In doing so, blockchains require every computer connected to their network to successfully confirm the impending transaction before it is granted permission to proceed.

Now, You can Buy Real Estate with Bitcoin in Dubai today!

In its simplest form, many blockchains act as a “smart contract” that doesn’t grant each part access to what it wants until predetermined criteria are met, not unlike an escrow company. In the end, blockchain makes it safer for each party to complete a transaction.

The whole idea behind using cryptocurrencies is to take advantage of blockchains. Not only are blockchains safer to conduct transactions on, but they will also decentralize the market and enable the use of a single, global currency.

What is Blockchain & how it works?

A blockchain is essentially a distributed database of records or public ledger of all transactions or digital events that have been executed and shared among participating parties. Each transaction in the public ledger is verified by the consensus of a majority of the participants in the system.

The Most Common Types of Cryptocurrency

The following cryptocurrencies represent the most widely popular industry projects (so far):

1. Bitcoin

Possibly the “Kleenex” or “Coca Cola” of all crypto, in that its name is the most recognizable and the most closely associated with the cryptocurrency system.

There are currently more than 17.6 million Bitcoin tokens in circulation, against a present capped limit of 21 million.

2. Bitcoin Cash

Introduced in 2017, Bitcoin Cash is one of the most popular types of cryptocurrency on the market. Its main difference with the original Bitcoin is its block size: 8MB. Compare that to the original Bitcoin’s block size of just 1MB. What that means for users—faster processing speeds.

3. Litecoin

Litecoin is increasingly used in the same breath as Bitcoin, and it functions practically the same way. It was created in 2011 by Charlie Lee, a former employee of Google. He designed it to improve on Bitcoin technology, with shorter transaction times, lower fees, more concentrated miners.

4. Ethereum

Unlike Bitcoin, Ethereum focuses not as much on digital currency as it does on decentralized applications (phone apps). You could think of Ethereum as an app store.

The platform is looking to return control of apps to its original creators and take away that control from middlemen (like Apple, for instance). The only person who can make changes to the app would be the original creator. The token used here is called Ether, which is used as currency by app developers and users.

5. Ripple

Ripple is a type of cryptocurrency, but it is not Blockchain-based. It’s not meant so much for individual users as it is for larger companies and corporations, moving larger amounts of money (its coinage is known as XRP) across the globe.

It’s more well-known for its digital payment protocol more than for its XRP crypto. That’s because the system allows for the transfer of monies in any form, be it dollars or even Bitcoin (or others). It claims to be able to handle 1,500 transactions per second (tps). Compare this with Bitcoin, which can handle 3-6 tps (not including scaling layers). Ethereum can handle 15 tps.

6. Stellar

Stellar focuses on money transfers, and its network is designed to make them faster and more efficient, even across national borders. It was designed by Ripple co-founder Jed McCaleb in 2014 and is operated by a non-profit organization called Stellar.org.

Its goal is to assist developing economies that may not have access to traditional banks and investment opportunities. It doesn’t charge users or institutions for using its Stellar network, and covers operating costs by accepting tax-deductible public donations.

7. NEO

Formerly called Antshares and developed in China, NEO is very aggressively looking to become a major global crypto player. Its focus is smart contracts (digital contracts) that allow users to create and execute agreements without the use of an intermediary.

It’s going after its main competition, Ethereum, but NEO lead developer Erik Zhang mentioned on a Reddit AMA that NEO has three distinct advantages—better architecture, more developer-friendly smart contracts, and digital identity and digital assets for easier integration into the real world.

A NEO white paper explained that developers can develop smart contracts using common programming languages (such as Java or C#). Ethereum, on the other hand, uses its own programming languages that developers must first learn before creating smart contracts on its platform.

8. Cardano

Cardano aka ADA is used to send and receive digital funds. It claims to be a more balanced and sustainable ecosystem for cryptocurrencies and the only coin with a “scientific philosophy and research-driven approach.”

That means that it undergoes especially rigorous reviews by scientists and programmers. It was founded by Charles Hoskinson, who is also the co-founder of Ethereum.

9. IOTA

Launched in 2016, IOTA stands for Internet of Things Application. Unlike most other Blockchain technologies, it doesn’t actually work with a block and chain; it works with smart devices on the Internet of Things (IoT).

All you need to do to use it is to verify two other previous transactions on the IOTA ledger, which is called the Directed Acyclic Graph (DAG), but IOTA creators call it The Tangle.

According to Coin Central, this means the devices need to be able to purchase more electricity, bandwidth, storage, or data when they need them, and sell those resources when they don’t need them.

Of course, different types of cryptocurrency don’t operate in a vacuum—they need a little human help to keep them on course. When systems need an upgrade or update, or occasional steering, there are two ways to do this—hard forking and soft forking.