Cryptocurrencies are digital currencies that use cryptography for security and to control the creation and transfer of money. They were invented in 2008 by a person or group using the name Satoshi Nakamoto, whose true identity is still unknown. The first cryptocurrency was Bitcoin, which was released on 3 January 2009 as open-source software. It uses peer-to-peer technology to operate with no central authority or banks; all transactions take place between users directly, without an intermediary. These characteristics make cryptocurrencies ideal for use as alternative forms of payment online or in mobile apps, where they can be more secure than traditional payment methods such as credit cards.
- Centralized Cryptocurrencies
A single entity controls these cryptocurrencies, usually referred to as a ‘miner.’ In order to mine a cryptocurrency, you need access to powerful computing equipment. As a result, large corporations usually do mining rather than individuals.
- Decentralized Cryptocurrencies
These cryptocurrencies are run by a decentralized system, meaning that there is no single controlling body. Instead, each user must validate transactions before they are added to the blockchain. This validation process is known as proof of work. Proof of work requires a lot of processing power, so most cryptocurrencies use GPUs (graphics processing units) to help speed up transaction verification.
- Hybrid Cryptocurrencies
Hybrid cryptocurrencies combine features of both centralized and decentralized cryptocurrencies. For example, some hybrids allow their users to issue fiat currency but also require them to perform proof of work in order to generate new units of currency. Others do not require their users to perform proof of work at all.
- Alts Coins
Alts coins are alternative cryptocurrencies. There are many different alts coins out there, including Litecoin, Dogecoin, Peercoin, Ripple, Nxt, Darkcoin, MaidSafeCoin, Primecoin, Blackcoin, Vertcoin, Quark, Auroracoin, Bytecoin, Namecoin, Bitshares, Counterparty, GoCoin, Ethereum Classic, Golem, Stratis, Monero, Factom, Dashcoin, Siacoin, PIVX, Digibyte, BitShares, Stellite, Zcash, DGB, Black Label Coin, Viacoin, Lisk, NXT, Monacoin, Potcoin, Ripple, Iconomi, QTUM, Stellar Lumens, Reddcoin, Worldcoin, Bitsquare, SmartCash, Vericoin, Peercoin, Dogecoin, etc. The coins listed above have been chosen because they offer something unique compared to other coins. You may find your own coin if you want to create one.
- ICOs
Initial Coin Offerings or Initial Token Offerings are where an entrepreneur/company issues a certain amount of tokens, which represent ownership rights over a company. These can then be traded between investors and token holders.
The understandings of the various cryptocurrencies is very important!
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