When you hear the term “cryptocurrency” you will probably ask the question:
“How is it possible that there are thousands of different currencies? How many of them will survive?”
So that you understand in a simple way what is a cryptocurrency and the different types that we can find, keep on reading!
There is not an official classification, but we can group them into three large blocks:
- Cryptocurrency “Currency”: The best known is Bitcoin, but there are many others. They are the clearest replica of the conventional currency. They serve as a store of value and an element of change. Bitcoin and other cryptocurrencies such as Litecoin have a defined value in a market for the purchase and sale of securities. The more Bitcoin buyers the more the value rises and the higher the number of Bitcoin sales operations, the lower the value.
- Utility Cryptocurrencies: Utility currencies are more complex to understand. They serve as a base and infrastructure to create profits on it. To give an example that is perhaps easy to understand, if we transfer it to the world we know, we could resemble it to an operating system (such as Microsoft or IOS). Is not this operating system behind a company or foundation that supports it and evolves it? The same thing happens in this case. Cryptocurrencies of this type are, among many others, Ethereum, Filecoin, etc.
- Cryptocurrency app or platform: This type of cryptocurrency is the most common and is the most unknown. If we imagine that the previous cryptocurrencies are the operating systems this type of moden would be the computer programs that run on those systems. These cryptocurrencies are usually launched associated with a specific project. Imagine a startup that launches an online travel booking project. This project may decide that purchases in your online store can be made through many moyendas but if they are made with their own currency they have additional advantages. Well, in this case, this project would have its own cryptocurrency. As we said there are many projects that use their own currency. An example would be Po.et, a project that allows to send to a database the contents that are published and thus publicly certify that the contents are original and proper. It would be like sending each article of this post to a public registrar to ensure that, in the case of a copy, someone can certify that these contents were published in this blog first. You will see at the end of each post an icon that says Verified by Po.et. Well, in order to manage and register contents in this new project, the Po.et cryptocurrency itself can be used in the future.
There are many aspects on which we could deepen but you already know that my intention is to make contents short and easy to understand.