What is cryptocurrency: types and features

Cryptocurrency is a means of payment created with the help of cryptography and mathematical calculations based on blockchain technology. It is a decentralized system in which there is no controlling authority. Virtual coins have no tangible analog. They cannot be cashed out. Payment and purchase of electronic coins is made only through the Internet. Cryptocurrency is not connected with the banking system and its movement is not tracked by the states.

Features of cryptocurrency

Cryptocurrency transactions are stored in the form of records in public registries - blockchain. They are performed by the method of cryptographic encryption. Cryptocurrency in the form of electronic coins is created by miners through mathematical calculations on computers around the world. The funds of payment are stored in electronic wallets.

What is characteristic of electronic money in blockchain:

• Cryptocurrency cannot depreciate due to inflation because a limited number of coins can be created.
• High anonymity. Only the amount of the transfer can be traced. It is impossible to know who sent the funds to whom.
• Stable operation of the system. Data loss due to failure is impossible, because records are stored on thousands of computers in different parts of the world, not in one place.
• It is impossible to cancel a transfer. You need to enter data very carefully.
• For the entire period of the existence of cryptocurrency, no one has managed to hack the blockchain.

The rate of cryptocurrencies can change during the day, week, month. It depends on many factors, even world events and tweets of influential leaders and figures. Let's take a look at the most popular types of cryptocurrencies.

Bitcoin

This is the first cryptocurrency, which was created in 2009. It is not known exactly who developed this technology: one person or a group. The creator of bitcoin is believed to be Satoshi Nakamoto, but who it was in reality is not known. Bitcoin is the most popular cryptocurrency. People invest in it and it is traded on exchanges.

Altcoin

This is a general name for different types of cryptocurrencies that are not bitcoin. They are created for different purposes:

• Modify altcoins so as to increase the speed of transactions.
• Optimize the process of mining coins through mining.
• Create automated contracts.
• Form the basis for the operation of various crypto applications.

Tokens

Assets that are developed on the basis of various blockchains are called tokens. They can be created by companies for easy investment. Tokens include Ethereum, BNB Chaine, etc. Token can be a special currency in a computer game, a means of payment of commission on a cryptocurrency exchange.

Stablecoin

This is a cryptocurrency that differs from the classic cryptocurrency in that it is linked to tangible assets: fiat money, gold, securities. Stablecoins can be backed by commodities, cryptocurrency. They can be collateral-free, and then their stability depends on smart contracts and certain actions of users.

Due to the connection with assets, the value of steblecoins is more stable. However, it depends on the fluctuation in the value of the collateralized assets. Stablecoins are suitable for storing savings in digital form.

The cryptocurrency system is actively developing. More and more new modifications of digital means of payment appear. The trend is that mutual settlements in the blockchain have a great future due to security, high speed of operations and anonymity. Cryptocurrency payments can be made from any country - all you need is the Internet and an electronic wallet.