Home » What Are the Types of Cryptocurrency and How Do They Work?

What Are the Types of Cryptocurrency and How Do They Work?

by Ester Adams

Did you know that from 2018-2021, there was over a 60% increase in crypto trading in the United States? Cryptocurrencies have become the bulk of most portfolios since they are easy to buy and offer a decent ROI. But, the crypto market has vastly changed over the years, and now investors can buy all sorts of coins or tokens.

What are the types of cryptocurrency you should invest in? In today’s brief crypto-related post, we’ll look at some of the most popular types of cryptocurrencies and explain how they function.

XRP 

One of the pioneers of modern blockchain technology, XRP has led an ambitious campaign to dominate the crypto market. Ripple Labs designed XRP in 2012 but was limited to the Ripple money transfer software. It wasn’t until a few years later that Ripple Labs positioned XRP onto a crypto exchange platform.

There are notable differences between XRP and other popular currencies like Bitcoin and Ether. For example, XRP is a token, meaning it’s a programmable asset that companies can use to create smart contracts, unlike Bitcoin. But, of course, understanding blockchain based on XRP can be challenging, so make sure you do thorough research on the topic.

Binance Coin

Undoubtedly, you have heard of Binance since it’s the world’s largest exchange platform where you can invest in Tether, XRP, and other popular cryptocurrencies. Binance Coin started on the Ethereum blockchain but moved onto its own platform shortly afterward. But, despite having the word coin in its name, Binance coin is a utility token like Ether or XRP.

Investors use Binance Coin within the Binance exchange app to buy other currencies, which is why it’s a utility token. Moreover, people cannot mine for Binance Coin as they can for Bitcoin, so the amount available is limited.

Tether

Tether or USDT was the first stable coin (coin tied or tethered to a fiat currency) and is critical to have in a trading portfolio. The main takeaway of Tether is that its price remains relatively stable since it’s tethered to the U.S Dollar. This crypto coin is perfect for newcomers since it doesn’t suffer the same volatility other currencies go through in the market.

The only downside of investing in Tether is that there’s no guarantee that you’ll receive a 1:1 value with the U.S Dollar since each exchange platform charges a different amount for purchasing or selling it.

What Are the Types of Cryptocurrency?–Now You Know!

Hopefully, with this thorough guide, we’ve answered the question: what are the types of cryptocurrency? Of course, it takes time to master the art of crypto trading, so make sure you dedicate time to learning the basics of the market.

Keep this guide bookmarked so you can refer to it whenever you have doubts.

Did you find this article helpful in learning about cryptocurrencies? If so, we offer plenty of other crypto-related posts on our blog, so be sure to check them out before you leave!

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