These days, no one can be surprised by the existence of digital currency and its growing popularity. The digital currency has taken our world by storm about a decade ago, though it existed for much longer than that. However, it seems that only these days the world comes to accept this new payment type. People become more confident about using, buying, or paying with cryptocurrency even though not everybody still understands how digital money works.
For some people, learning about how cryptocurrency works is as difficult as reading things like chemistry essays. You may understand the overall purpose of the things you are reading about and yet still struggle to grasp the main concept. Well, if you are one of those people, don’t be desperate. You are not alone. Let’s learn about the most popular types of digital currencies together. Here’s a guide on what they are and how they are different.
What is a digital currency?
Digital currency is not that much different from the money we come to know. The main difference here is that digital currency doesn’t have any physical form and exists solely in the digital world. As the currency has constantly changed throughout the centuries, it was only a matter of time when we would shift to online currencies over real-world money. Basically, this money is nothing more than a code. However, their concept allows creating, processing, and transacting digital money in a decentralized system online. The demand on them mainly creates the value of these currencies. Thus, it is similar to stocks. You can go now and research how stocks work to understand this concept better.
The main benefit and biggest pride of digital currencies are that they are decentralized and don’t allow any third-party involvement, be it banks or governments. Hence, a person can make payments in digital money from one part of the world to another, directly to the person or company. No fees or taxation required. On the other hand, the absence of a third party means that these transactions cannot be regulated or secured by official institutions.
Even if you don’t pay any attention to cryptocurrency, you still know about Bitcoin. You may not know exactly what it is or how it works, but you know that it is there. It’s fair to say that Bitcoin has started the whole obsession with digital money. Basically, this was the first cryptocurrency that made global news for blowing up in its price. One day, people who bought Bitcoin years ago have suddenly woken up incredibly richer – all due to their investment into this cryptocurrency. Frankly, Bitcoin is such a common discussion topic that you can learn about it by contacting any writer from Superbgrade or any other writing service.
Today, the boom around Bitcoin has a noticeable decrease. Yet, it is still one of the most popular and widely used cryptocurrencies in the world. It has become one of the first currencies to be accepted in the global institution and payments system around the globe. Hence, this currency is one of the most reliable currencies available right now. However, when it comes to reliability, digital money does not have the best record.
Ethereum has recently become the most popular Bitcoin alternative and the second-largest digital currency in the world. Its system follows the same principles as Bitcoin, such as no involvement of the third party, no centralized control, and high fraud security. Ethereum strives to achieve a highly decentralized financial system, which can be available from every corner of the world. For that same reason, Ethereum has become a rather popular cryptocurrency to mine. This currency is rather young (it was launched only six years ago) though it shows serious ambitions to take over the digital currency market.
For a while, Litecoin was the second to Bitcoin in pretty much everything. Litecoin was created not long after the great Bitocin success by a former Google engineer. These days, this currency exists as the solid backup to Bitcoin. It is one of the oldest and most reliable currencies on the market and is already accepted by many global companies and institutions. Currently, it’s in the top ten of the largest digital currencies in the world.
Dogecoin is a good example of a sudden but massive cryptocurrency boom in the early 2010s. Dogecoin was initially created as a joke. At the time when so many started introducing their own currencies, it was not uncommon to code such a token to show how ridiculous the situation has come. Surprisingly, though, the Internet loves the currency and started buying it, which ultimately instantly increased its market value. However, the interesting thing is that Dogecoin still continues to rise in value, making it a potentially good investment.