Cryptocurrencies are digital currencies that operate using blockchain technology, a decentralized and secure system that allows transactions to be recorded and verified. There is a great diversity of cryptocurrencies, which are distinguished by their characteristics, their uses and their values. In this article, we will present the main categories of cryptocurrencies, as well as some examples.
## Bitcoin
Bitcoin is the first and most famous cryptocurrency. It was created in 2009 by a mysterious character nicknamed Satoshi Nakamoto, whose identity remains unknown. Bitcoin is based on a computer protocol that limits its supply to 21 million units, giving it scarcity and resistance to inflation. Bitcoin is considered a store of value, an alternative means of payment and a universal currency. Its price is very volatile and depends on supply and demand on the markets.
## Altcoins
Altcoins are alternative cryptocurrencies to Bitcoin. There are thousands of them, which offer technical innovations, specific functionalities or different objectives. Among the best-known altcoins, we can cite:
- Ethereum, which is a platform that allows the creation of decentralized applications (dApps) and smart contracts, which are autonomous programs that execute predefined actions. Ethereum uses its own cryptocurrency, Ether, to remunerate network participants.
- Ripple, which is a payment protocol that aims to facilitate international transactions between financial institutions. Ripple uses its own cryptocurrency, XRP, to transfer value around the world.
- Litecoin, which is an improved version of Bitcoin, which offers greater speed, greater capacity and lower transaction fees. Litecoin uses a different mining algorithm than Bitcoin, which allows more people to participate in securing the network.
## Stablecoins
Stablecoins are cryptocurrencies that aim to maintain parity with a reference asset, typically a fiat currency like the dollar or euro, or a tangible asset like gold or oil. Their goal is to bring stability and confidence to the cryptocurrency market, which is often subject to strong fluctuations. Stablecoins can be classified into three main types:
- Centralized stablecoins, which are issued and managed by a central entity, which holds an equivalent amount of the reference asset in reserve. For example, Tether, the best-known and most widely used stablecoin, is issued by the company Tether Limited, which claims to hold one dollar for each Tether in circulation.
- Decentralized stablecoins, which are collateralized by other cryptocurrencies, which are deposited in smart contracts. For example, Dai, a dollar-pegged stablecoin, is collateralized by Ether, which is locked in a protocol called MakerDAO, which automatically adjusts the exchange rate and collateralization level.
- Algorithmic stablecoins, which are regulated by an algorithm, which modifies the supply and demand of the cryptocurrency based on the price of the reference asset. For example, Basis, a dollar-pegged stablecoin, uses a shrink-and-expand mechanism, which increases or decreases the number of tokens in circulation depending on whether the price is above or below a dollar.
## Memecoins
Memecoins are cryptocurrencies that are inspired or based on memes, that is, images, videos or humorous phrases that spread on the Internet. Memecoins are often parodic, ironic or satirical in nature, and have no intrinsic value or real utility. Their popularity is based on fashion, word of mouth and the influence of social networks. Memecoins are often very speculative and risky, as their price can fluctuate unpredictably and irregularly. Among the best-known memecoins, we can cite:
- Dogecoin, which is a cryptocurrency that uses the image of a Shiba Inu dog as its logo and mascot. Dogecoin was created in 2013 as a joke, but it gained notoriety thanks to the support of figures like Elon Musk, the CEO of Tesla and SpaceX, who regularly tweeted about it.
- Shiba Inu, which is a cryptocurrency that presents itself as a competitor to Dogecoin, and which also uses the image of a Shiba Inu dog. The Shiba Inu was launched in 2020, and it saw a sharp rise in 2021, after being listed on several exchanges and receiving attention from the media and investors.
- Banano, which is a cryptocurrency that uses the image of a banana as a logo and symbol. Banano is a fork of Nano, a cryptocurrency that stands out for its speed, free use and low energy consumption. Banano aims to be a fun, playful and accessible cryptocurrency, which regularly organizes games, competitions and free distributions.
