In this section of tradingonlineguide.com we will go through all the different types of cryptocurrency in the market. The goal is to give you a perfect overview of the situation so you can start trading with the different types of cryptocurrency and best crypto brokers available.
For sure everyone knows about Bitcoin, Ethereum and Litecoin, but they are not the only ones. There are many more opportunities existing in the cryptocurrencies world. So let’s see them!
What is Bitcoin?
Bitcoin is probably the most well-known cryptocurrency. It was introduced in 2009 by Satoshi Nakamoto. During the years they grew and got more power which has meant that they have been introduced by many companies as a payment method.
Everybody realized they are a revolutionary currency.
In fact, Bitcoin is a decentralized currency. It means that there isn’t any government or authority controlling them. People can exchange them without any restriction.
Bitcoin is available in the market in a limited number and there are in total 21 million of them.
Another important feature of Bitcoin is that they are exchanged in an encrypted system called blockchain.
This system means that users don’t need to share their personal details to trade crypto.
Bitcoin can’t be defined as the perfect currency though. It’s still too early. Its value boomed up to $20.000 last year to bounce down again after few months.
Another point is that some countries don’t view it in a positive way. An example is China, which banned all the Bitcoin exchange platforms in the country. This news affected the Bitcoin value which dropped down by 40%.
All of these points have led to even more people to trade Bitcoin instead of buying them.
Why? Because if you trade Bitcoin and the value drops down there is the possibility to speculate on it and have some profits.
Other Types of Cryptocurrency
How many types of cryptocurrency exist?
There is a vast range of tradable cryptocurrencies. Here are the main ones:
- Ethereum: was the first cryptocurrency introduced for trading in 2015 at the price of only $2. Today its price is at more than $300 which means some people made a very good investment in it.
- Litecoin: this is the last of the top 3 cryptocurrencies that everybody knows. It’s a young currency because it was just ‘born’ in 2011. It became famous in the market because it’s an alternative to Bitcoin and it provides an open source protocol to do online payments.
- Ripple: this cryptocurrency was invented in 2004, but just introduced in the market in 2011 by the company Open Coin with the goal to trade currencies in a more encrypted market. In the last period, it has grown incredibly and a lot of traders are keeping an eye on it.
- Dash: this cryptocurrency was invented to create a faster and more secure online transaction system. It’s one of the newest types of cryptocurrency because it was only invented in 2014.
- Iota: this is the youngest between the types of cryptocurrency invented. Its value in the market just recently in July 2017 was more than 742 million Dollars which brings Iota into the top 10 most valuable cryptos in the world. Today its price is about $0,60 and this is why a lot of traders are investing in it. A lot of people see it as the new Bitcoin, ready to boom like the main cryptocurrency has done last year.
Most of the brokers today offer the opportunity to trade all the mentioned types of cryptocurrency. To see which ones are the best ones see our page about best cryptocurrency platform.
History of cryptocurrency
If everybody knows what they are and their value in the market, not a lot of people knows the history of cryptocurrencies.
When were they ‘born’ and why?
To start our explanation we need to go back to the 1980’s when Mr. David Chaum invented the first version of an encrypted algorithm. With that algorithm, people could exchange different information with each other without any third parties being able to see and understand their information.
Starting from there, Mr. Chaum moved to the Netherlands and founded a company called ‘Digicash‘. The company had the goal to create the first cryptocurrency which could be exchanged through an encrypted system.
The big difference between Digicash and the new cryptocurrencies is that in the 1980’s there wasn´t a decentralized system. In fact, Digicash was the only provider and there was a monopoly based system controlled by the company itself.
The Dutch authorities didn’t view this system very well and imposed Digicash to sell its cryptocurrency only to banks and financial institutes, not to any single private investor.
This ruling helped to signal the end of Digicash 10 years later.
However, Mr. Chaum in the 1990’s refused to sign a contract with Microsoft which wanted to introduce the cryptocurrency to allow Microsoft users to purchase products by paying with that system.
In the same period, when the first cryptocurrency started to fall, Paypal was invented and it got the piece of the market left by Digicash.
In the early 2000’s we must mention the company E-Gold, which wanted to sell its own crypto. This company was based in Florida, and as you can understand from its name, had developed a cryptocurrency just to trade gold with.
In exchange for gold that company was paying its seller with the crypto e-gold. They could eventually exchange that currency with other gold traders in the system or to either purchase new gold from the company.
In a few years, the company was booming and it had millions of people trading gold with that system. But suddenly something happened and the fall began.
Many hackers broke into the system and started to steal the access data for a lot of users. The system just didn’t work and many users lost their crypto money and investments.
In 2005 the company almost disappeared because of the doubts about its security. A lot of users sold their cryptocurrency and just got out the system as quickly as they could.
In 2009 the company finally closed.
And again, when someone fails, a new one takes its place in the market. Now we are talking about Bitcoin.
In 2009 a Japanese man named Mr. Satoshi invented Bitcoin, his goal was exactly the same as the others: invent a secure digital currency, which can be used by people to buy and sell goods online.
Mr. Satoshi created this cryptocurrency based on a decentralized system, mainly because all the previous ones failed for the opposite reason: they were based on a centralized system. A lot of people wrongly thought this invention wasn’t going to have a future because today we can say that Bitcoin has been the first cryptocurrency to launch the ‘Crypto Era’ of the 21st century.
Now it’s time to see how they grew in the market in the recent period. Visit the how to trade Cryptocurrencies page and learn how to trade crypto like a professional here: https://tradingonlineguide.com/cryptocurrency-trading/
The future of Cryptocurrency
Cryptocurrencies are every day more a reality in our society. Nowadays it’s possible to buy goods online, but also in the real world, and even pay for services.
This was something unthinkable only the last year.
The world is moving very rapidly and the digital and crypto Era will get even more and more important.
Today it’s possible to pay online in bitcoin for food and drinks even. this means that investing in cryptocurrencies and trying to make some profits can be a serious investment opportunity.
The important thing to do is to understand which one is the right horse to bet on.
Not all the new ICOs and new cryptocurrencies are going to succeed. Just a small percentage of them.
This is probably the most difficult thing. Diversification could be the key to success.
Investing a small amount of money to different ICOs when they are just born and see which one could rock the market is for many people the way to invest.