What is it?
Cryptocurrency is, as it suggests, a currency that is purely digital. The currency that we are most familiar with is the dollar and the special thing about it is that the government enforces its use. Cryptocurrencies are not issued by any government or authority; meaning that they are a separate currency that has no relation to the government. Now, to explain what cryptocurrency is exactly is a big hassle filled with all sorts of technological jargon that I’m sure we don’t want to hear. The simplest answer is that your “wallet” has a series of algorithms and programs that track your activity in the form of encryption keys, thus allowing the currency to be linked to you and your identity. Now that that is out of the way, you are most likely wondering what kind of cryptocurrencies are there.
Before we discuss the various kinds of cryptocurrencies, we have to understand the difference between altcoins and tokens. Altcoins are cryptocurrencies modeled after the original cryptocurrency Bitcoin and tokens are one of the forms taken by cryptocurrencies for use.
Ethereum
Ethereum is an altcoin that was made based on Bitcoin and has no relation to the government. It was initially created to provide access to anyone in the world regardless of background. A cryptocurrency like this is especially useful in certain countries in the world where proper financial infrastructure is not available because it allows people to still have bank loans, deposits, etc. all on crypto. Ethereum is actually the second largest cryptocurrency in the world with each ETH being $1,652.
Tether
Tether is a cryptocurrency called stablecoin, meaning that it has a stable value and is reliable. What I mean by that is that even major cryptocurrencies like Bitcoin and Ethereum experience fluctuations in value which could lead to big financial trouble. Tether is a bitcoin that is modeled after the U.S. dollar with each token being $1. This allows for easier transactions and a more reliable currency that attracts lots of wary users.
XRP
XRP is a specific cryptocurrency that can only be used in the XRP ledger which is made by the company Ripple. XRP can only be used for transactions verified by the ledger consensus program. A single XRP has a value of $0.74 as of July 2023.
Dogecoin
Ah yes, Dogecoin the original meme currency that somehow has amassed billions of dollars worldwide. It was created by software engineers Billy Markus and Jackson Palmer as a joke, but after opening it to the world they discovered its potential and it became one of the most popular cryptocurrencies in the world. It has a value of $0.07 and has amassed $9.9 billion since its creation in 2021.
Investments
The advantages of cryptocurrencies are that they remove the necessity of a third party, can be used anywhere, and remove points of financial failure. But the disadvantages are that they can be used for criminal purposes, have fluctuating values, and are expensive. I, myself, barely know how money works but when it comes down to investment; it is your choice. Based on your financial goals you should make the best decision possible.
Thank you.
Courtesy to Investopedia and SUNY Oswego for the information
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