Guide to different types of cryptocurrencies
When cryptocurrency was still very new, you could easily count the total cryptocurrencies that were available in the market. This is not the case anymore as we can currently see over a thousand different types cryptocurrencies on the market.
With so many different types of cryptocurrencies available on the market, it is essential for an investor to understand the cryptocurrency type before you can start investing in these assets. One of the most common mistakes that people do is invest in any asset whose value is increasing at a rapid rate. However, without knowing much about that asset, you are risking your investment greatly. So, without any further ado let us try and understand the different types of cryptocurrencies.
Different types of cryptocurrencies:
Cryptocurrencies can be broadly classified into three different categories. They are: Bitcoin, Altcoins, Tokens
1- Bitcoin: Bitcoin was the very first cryptocurrency to have ever existed. The benefits of the decentralized blockchain technology were first seen on this crypto network. Bitcoin was first created after the economic fallout of 2008 which resulted in a huge recession and led to the downfall of the US dollar as well. Even though things have stabilized now, the events that led to this fallout is still on everyone’s minds.
In order to avoid another financial crisis like that, we needed a currency that is free from all the centralized power. Thus, Bitcoin was introduced. Due to its ideologies of giving back complete control to its users, Bitcoin attracted humongous support from investors around the world.
This led to the rapid rise in its value. Thus attracting more investors. Soon, the benefits of decentralized blockchain technology were widespread. While Bitcoin made use of the Blockchain technology for only recording financial transactions, other cryptocurrencies were being developed in order to expand the usability of the blockchain technology.
Since Bitcoin was created in 2009 by Satoshi Nakamoto it has had its ups and downs throughout time. But it’s still standing here today showing the enormous potential and value it brings. You might think it’s too late to invest in Bitcoin? That questions has been asked by so many people since the beginning of Bitcoin. It was asked when Bitcoin was valued at $1 dollar. Next at $10 dollars, later at $200 dollars, then $1000, etc.
2- Altcoins: Are another type of cryptocurrency. All other coins that were created after Bitcoin are collectively known as altcoins. While some of the Altcoins such as Litecoin, etc were developed to provide a faster network that Bitcoin, cryptocurrencies such as Ethereum and Neo were developed in order to expand the usage of the blockchain technology beyond the financial industry.
Bitcoin is far from the only cryptocurrency out there. Today there are thousands of cryptocurrencies. Often they are labelled as altcoins as in alternative coins. And Bitcoin is the original. Today some see Ethereum, Litecoin and others to belong to the same category as Bitcoin, and no longer an ‘altcoin’. But this is highly subjective.
The use cases that were developed by these altcoins were so great that they could potentially replace every single centralized method that exists. Additionally, due to the usage of blockchain technology, these services are also free from corruption as well. Thus, making them a very valuable asset in the world.
3- Tokens: Another type of cryptocurrency that exists are called tokens. Tokens are cryptocurrencies that are hosted on another crypto network. Ethereum was the pioneer of the crypto token feature. Instead of having to create their own blockchains, tokens make use of the blockchain network of other cryptocurrencies.
Some of the popular tokens that exist are Ethereum based ones like Binance Coin, OMG, NPXS, etc
How many cryptocurrencies are there?
There are today according to Coinmarketcap 1172 different cryptocurrencies. Yep you heard that right. And perhaps only 5% of those have gone from promising (or less promising) crypto startups to real products. With actual users. So it’s important for you to wade through the masses to find the gems.
Where can you buy these different types of cryptocurrencies?
All cryptocurrencies are not available on all the cryptocurrency exchanges out there. It’s important to be aware that you might beed to sign up for several exchanges if you want to get hold of different types of cryptocurrencies. The bigger cryptocurrencies like Bitcoin, Ethereum, Litecoin, Dash, etc are all available mostly on the same exchanges. But if you’re looking to buy a smaller altcoin, then you need to branch out. But don’t worry we have reviewed and created guides into in our eyes the best and most secure exchanges out there. Give them a try.
Our favourite and most secure cryptocurrency exchanges of 2019:
- OKEx – OKEx is the second biggest exchange for cryptocurrencies when comparing trade volume (24h). OKEx offers fiat-to-crypto and crypto-to-crypto trading on more than 100 digital currencies. Like Binance it’s great for buying different types of cryptocurrencies.
- Binance – Binance is right now the leading exchange if calculated by volume (via Coinmarketcap). Binance offers perhaps the biggest selection of coins and one of our favourite exchanges, so it’s great if you want to buy different types of cryptocurrencies
- Bit-Z – Bit-Z is one of the worlds biggest exchanges when it comes to trading volume and amount of supported coins, after Binance. Bit-Z founded in 2016 in Hong Kong. Bit-Z has established branches in 10 countries and regions including Singapore, Japan and South Korea.
- Kucoin – Kucoin launched in 2017 and fairly quickly made a name for itself in the crypto world due to its early adoption of certain altcoins and their own coin called Kucoin Shares (KCS) which is a passive income coin, where you as a hodler of KCS gets a percentage of the trading fees from the Kucoin exchange. They have a lot of different types of cryptocurrencies
- eToro – eToro is very much part of the new wave of global Fintech companies that has helped to change the scene of finance, banking and much more. It is the world’s leading social trading network, with millions of registered users and an array of innovative trading and investment tools. And they have taken the tools, the users and methods to crypto as well.
Conclusion about the different types of cryptocurrencies:
Now that you have understood the different types of cryptocurrencies and also know where to buy them from, you can go right in and buy your first Bitcoin. If you are not yet 100 percent sure about how buying Bitcoin works then we have created the perfect guide for you.
How to invest in Bitcoin the beginner guide: What Bitcoin is, who created Bitcoin, recommended ways to buy Bitcoin, the most secure wallets to store your Bitcoin at
Other popular guides to help beginners are our The best Bitcoin and cryptocurrency wallets guide and our How to be safe with crypto guide that helps you avoid common mistakes, scams and protect your cryptocurrencies.
Even though you have basic knowledge about cryptocurrencies now, you will still need to research on the individual assets before you start investing in them. This is the key to your success in the crypto world.
Last important tips:
- DYOR: Do your own research or DYOR is a common expression used in the cryptocurrency community. And we think it’s one of the better ones. Because it means that new users should before they jump straight in take their time to understand what cryptocurrencies are.
- You need to be in control of your own crypto: You can’t completely trust that an exchange will always protect your cryptocurrencies. Remember it’s you that are in control of your own crypto, not the exchange, not a bank, or a government. Therefore you need to make sure that you also are storing your crypto somewhere safe. A hardware wallet is the way to to go, find a good wallet for you in our wallet comparisons.
- Have fun: Learning about different types of cryptocurrencies can be really exciting. Try and learn something new every week about Bitcoin and different cryptocurrencies. Hang out on Reddit, on cryptocurrencies subreddits, the biggest subreddit known as Crypto Currency, watch Youtube clips about crypto, read Quora questions about it, Medium posts, etc. Be hungry to know more than everybody else.