What Are the Different Types of Cryptocurrencies?

How many cryptocurrencies are there? How many matter?

The number and types of cryptocurrencies increase every day, with the latest estimate of over 2000 different blockchains.

Not to mention an untold number of token currencies in each blockchain that supports smart contracts. Uniswap keeps community lists of tokens to try to keep track of legitimate projects in DeFi, with 536 tokens listed in the 1inch aggregator list.

But how many are important and what brings that value?

You can find out today if you just keep reading.

Bitcoin: Digital Gold

Bitcoin is the undisputed leader of cryptocurrency by value. Near the middle of December the market cap of Bitcoin was around $350 billion with estimates for 2021 reaching as high as $1 trillion invested.

If that happens, it means that it would have 1/10 of the market cap of gold, a physical value-storage asset (and commodity with real-world uses and applications).

From there, things will only snowball further. In fact, from a tick under $7000 on January 1, 2020 to Christmas day, Bitcoin rose by nearly $20,000 per bitcoin. 2021 could see similar gains of 300% or more.

Bitcoin’s greatest strengths are:

• It was first
• Security is a priority
• Clear monetary policy in place by protocol
• Non-sovereign, trustless, and totally decentralized

These reasons push it ahead of the pack. It was essentially a finished product when it was launched. Satoshi Nakamoto labored over it as a parent before the birth of the currency and nurtured it from attack until it was able to stand on its own legs in 2010.

However, it does lack transaction capacity, unfavorable transaction costs, high energy usage, and a few other undesirables.

Don’t let that scare you off though. Bitcoin is a solid investment, with a dominance of about 71% in cryptocurrency — more than two-thirds!

Ethereum: The World’s Computer

If Bitcoin is the grand-daddy of cryptocurrency, Ethereum is the workhorse retail-level currency that the average user will probably be using daily. Bitcoin is a store of value but Ethereum’s role is a bit different.

Despite popular belief, Ethereum is not exactly a cryptocurrency as much as it is a virtual machine. The fuel for that machine is “gas” measured in GWEI. The smallest unit of Ethereum’s built-in currency is Wei, with Gwei representing a billion Wei, and one “Ether” equaling a quintillion Wei.

Users of the virtual machine “pay” for their processing power with Ethereum. Smart contracts are those applications and can enable the secure transfer of ownership of real assets.

Really, any application can run on Ethereum. But at the current valuation of ETH, certain operations would be prohibitively expensive to run.

The uses of Ethereum as a means for decentralized financial tools, transference of deeds and other proofs of ownership, and more gives Ethereum it’s intrinsic value. Its ability to slice to such thin margins ensures it can be used on a retail level and survive.

The protocol is currently in a state of transition to Ethereum 2.0 with the release of the Beacon chain. This moves Ethereum from proof-of-work to proof-of-stake, which is hoped to increase security and decrease transaction price. Both will enable an increase of transaction speeds with peace of mind.

TRON: P2P Content Distributor

TRON, like Ethereum, is not purely a cryptocurrency. Rather it’s a decentralized platform of global digital content management. It hopes to be an entertainment system that allows cost-effective and easy sharing of your digital content.

It’s relatively new, coming in September of 2017 from a Singaporean non-profit called the TRON Foundation.

An organization owns and controls the entertainment services you want, and you pay them for it, though the content is (mostly) created by others. This means that the end-user pays more and the creator gets less, with the middle man making out the winner.

TRON hopes to up-end this exchange eliminating the middle-man, like YouTube and Netflix, from the equation. Exodus, TRON’s platform, hopes to allow peer-to-peer exchange of digital distribution and storage of the content.

The Sun Network is hoping make TRON more competitive than Ethereum, EOS, and anyone else.

Ripple: PayPal for Banks

In a nutshell, what PayPal does for individuals and businesses, Ripple does for banks. Before you buy Ripple XRP, it’s important to know that the cryptocurrency is really in a state of flux right now.

The SEC in the United States has sent a lawsuit against the US-Based company in mid-December 2020, which saw its profits fall by 50% nearly overnight. It’s since regained momentum and made incredible gains, due to Ripple leadership’s strong stand.

Brad Garlinghouse, the CEO of Ripple, said that they will be “on the right side” of history, which investors have seemed to love. Banks are on board with a solid product that helps them transfer funds faster and more securely than ever before.

That said, Ripple XRP is not a decentralized cryptocurrency. It’s a cryptocurrency owned by a company and which has majority holdings of the cryptocurrency in reserve (about 61%).

Time will tell what will happen to Ripple, but it’s still in the top four.

The Top Types of Cryptocurrencies

Now that you know more about the top types of cryptocurrencies, what will you do? The choice of investing or not is up to you, but it’s the opinion of many that soon we won’t be investing as much as using digital currencies.

Whether you’re looking to HODL and earn passively or you’re skeptical, it’s good to know about the top contenders for the future’s switch to non-sovereign digital currencies.

At Business to Mark, we’re into making life easier for you in business, tech, and even SEO. Want to know more?

Keep browsing to find out!