This article will help you better understand bitcoin and cryptocurrencies – assets that you will invest in when participating in the crypto market and see the difference between cryptocurrencies, from which you I know what my investment direction is.
Here I want to make it clear to you, investing in bitcoin also means you are investing in a cryptocurrency, that’s why this article is about all cryptocurrencies in general so that when If you invest in any other cryptocurrency, the knowledge here will still be useful to you.
What is cryptocurrency
?In a nutshell, Cryptocurrency is a form of electronic money issued by projects on blockchain, used as a means of transaction on blockchains. such as rewarding miners, buying project investment capital, etc. Cryptocurrencies use cryptographic algorithms to ensure the security of transaction information in digital form and control the creation of new units through technology blockchain.
Viewing: What is Cryptocurrencies
Distinguish between cryptocurrencies, virtual currencies and cryptocurrencies (crypto)
Cryptocurrencies (digital currency)
Money that you use in digital form and use it through the Internet, can represent fiat money under the guarantee of the government, such as money in InteBanking, or e-wallets like Momo, Moca, etc. Or no government guarantee like Bitcoin, ETH, …..
Cryptocurrency (Virtual Currency)
Cryptocurrency is actually a form of electronic money, but instead of being issued or guaranteed by any government or monetary authority in any country, crypto is issued by Blockchain projects and has the ability to encrypt information. In this article, I will use the word electronic money to make it easier for you to understand the content of the article.
Classification of Cryptocurrencies
Together with me, we will learn about each type of cryptocurrency currently circulating on the market to have the best overview as well as understand what type of property you intend to invest or hold to understand the potentials of such assets. its risks.
What is Coin?
Coin is a currency that is issued and developed on a separate blockchain and operates independently. Coin was born with the purpose of solving the problems of payment, finance, security, application development … of the blockchain itself.
Each blockchain has only 1 unique coin.
For example, Bitcoin Network’s BTC has coins as BTC, Ether of Ethereum in addition to Cardano, Stellar, NEO, Litecoin, IOTA, etc.
Currently, there are 2 popular coins: Bitcoin (Coin Cap) and Altcoin:
Is the first cryptocurrency to be issued, and is built on the Bitcoin Network. Symbol BTC, Considered the top coin in cryptocurrencies and has the highest Public Acceptance with:
Best Liquidity.Latest Average Trading Volumes.Top Cryptocurrencies by Market Cap.
The word Altcoin is a compound word of Alternative and Coin to form “altcoin”, which refers to all coins/tokens other than Bitcoin, which are purpose built as an alternative to Bitcoin. Functionally, most Altcoins are based on Bitcoin and the basic functions are relatively similar.
What is a token
?Some tokens, when the project grows strong enough, will aim to develop a separate Blockchain platform for that token and then this Token is considered as a Coin.
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In the token there is a special token, which is extremely popularly used in the crypto field, which is stablecoin, let’s learn more with me:
What is a stablecoin
?Stablecoin is a cryptocurrency designed with the aim of minimizing the impact of price fluctuations (volatility).
To do that, the value of a Stablecoin will usually be anchored to another stable asset such as real money (fiat money), commodities (gold, silver…) or maybe another cryptocurrency. .
Currently, Stablecoins are classified into 2 main types: Collateral (Backed) and Non-Backed (Non-Backed).
A type of stablecoin that is collateralized by another asset with a value equivalent to the amount of Stablecoin that has been issued to the market.
The three most popular collateralized stablecoins are
Fiat-backed, eg: USDT, TUSD,.Commodity-backed, eg: Digix gold tokens (dgx),…Other crypto-backed mortgages (Crypto-backed) , for example: OUSD, DAI, RSR…
This is a stablecoin without collateral of any asset, completely thanks to algorithms and smart contracts to manage the supply and demand of tokens similar to how central banks are doing with fiat money, for example. : Basis Cash, Empty Set Dolla, …
How are Coins and Tokens different
In terms of features
Coin is considered as a means of exchange and store of value for the purposes of payment, investment and development of a specific blockchain project, so each blockchain has only one type of platform coin.Token possess all the features The functionality of a coin is often issued by projects built on the blockchain platform, and has many additional utilities depending on each project.
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Coin requires a separate wallet platform and when sending/receiving transaction fees will be deducted directly from the wallet of that coin. Token does not have its own wallet, it uses the wallet of the platform coin and the transaction fee. translation will be deducted from the platform coin (eg Ethereum).
You can refer to the video below for a more detailed analysis of the differences:
I hope that after this article, you have had the most general view of cryptocurrencies as well as distinguishing between coins and tokens, each side has different investment advantages, it is extremely difficult to grasp the concepts from the beginning. important.