The main different types of cryptocurrency (or altcoins) relate to how coins are produced and spent (Learn more about altcoins). Some coins, like Bitcoin, Ethereum and Monero, are created in a process called “mining” which involves using powerful computers to solve complicated cryptographic puzzles. When a puzzle is solved, the system rewards the winning “miner” with coins. The miner can then sell the coins in the market. (Learn more bout mining)
Other coins, like NEM (XEM), have other types of algorithms that don’t require powerful hardware. And then there are currencies such as ripple and IOTA that can’t be mined – they’re produced by an organization that stands behind the currency.
When it comes to spending, there are different types of cryptocurrency such as Bitcoin which is the cryptocurrency that has the widest acceptance among merchants and service providers. Ethereum, for example, is meant to be used to pay for the services of the blockchain-based Ethereum platform, to create and use applications on it. Others coins, like Litecoin and Dash, are working on giving their holders new spending possibilities. But daily use – buying coffee, clothes and so on – is not the primary goal of some coins.
Other important aspect of crypto coins is the privacy of the transaction. Bitcoin is not anonymous, but, rather, pseudo-anonymous. Monero is undoubtedly the best cryptocurrency out there if privacy is your main concern. Also, the important feature is the speed that different types of cryptocurrency offers. At the moment, transactions in Bitcoin are slower than, Ethereum or dash.
Generally speaking there are few most important different types of cryptocurrency:
Litecoin, launched in the year 2011, was among the initial cryptocurrencies following bitcoin and was often referred to as ‘silver to Bitcoin’s gold.’ It was created by Charlie Lee, an MIT graduate and former Google engineer. Litecoin is based on an open source global payment network that is not controlled by any central authority and uses “scrypt” as a proof of work, which can be decoded with the help of CPUs of consumer grade. Although Litecoin has a faster block generation rate and hence offers a faster transaction confirmation than Bitcoin.
Launched in 2015, Ethereum is a decentralized software platform that enables Smart Contracts and Distributed Applications (ĐApps) to be built and run without any downtime, fraud, control or interference from a third party. During 2014, Ethereum had launched a pre-sale for ether which had received an overwhelming response. The applications on Ethereum are run on its platform-specific cryptographic token, ether. A significant share of developers looking to develop and run applications inside Ethereum. According to the creators of the Ethereum, it can be used to codify, decentralize, secure and trade just about anything.
Zcash, a decentralized and open-source cryptocurrency launched in the latter part of 2016, looks promising. Zcash offers privacy and selective transparency of transactions. Zcash provides extra security or privacy where all transactions are recorded and published on a blockchain. Such details as the sender, recipient, and amount remain anonymous. Zcash offers its users the function of shielded transactions, which encrypts data using advanced cryptographic technique or zero-knowledge proof construction called a zk-SNARK developed by its team.
Dash (aka as Darkcoin) is a more secretive version of Bitcoin. Dash offers more anonymity as it works on a decentralized mastercode network that enables almost untraceable transactions. Launched in January 2014, Dash experienced an increasing popularity in a short span of time. This cryptocurrency was created and developed by Evan Duffield. Dash can be mined using a CPU or GPU. In March 2015, ‘Darkcoin’ was rebranded to Dash, which stands for Digital Cash and operates under the ticker – DASH.
Ripple is a real-time global settlement network that offers instant, certain and low-cost international payments. Ripple enables banks to settle cross-border payments in real time, with end-to-end transparency and lower costs. Ripple was launched in 2012. Ripple’s deviates from bitcoin and most altcoins, because it’s consensus ledger (its method of transaction conformation) doesn’t need mining power. Since Ripple’s structure doesn’t require mining, it reduces the usage of computing power, and minimizes network latency.
Monero, open source cryptocurrency, has been launched in April 2014, with a strong focus on decentralization and scalability, and enables complete privacy by using a special technique called “ring signatures”. Ring signature technology hides where the money comes from. Spent inputs in a transaction are hidden among several others that also appear to be spent. It means that no one knows which source of money is actually being spent. Therefore, Monero is a secure, private and untraceable currency.