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<\/p>\nDigital currency is electronic money with properties similar to traditional (fiat) currencies, and it can be regulated or unregulated. It is a general term for all electronic money (money in the digital space). Digital currency includes virtual currencies and cryptocurrencies. Digital money is also known as cybercash.<\/p>\n
Virtual currency is a type of digital currency. All virtual currencies are digital (existing only on the internet), but not all digital currencies are virtual.<\/p>\n
Cryptocurrency is a type of virtual currency created using cryptographic methods and mathematical computations, mainly based on blockchain technology. It is both digital and virtual currency as it exists on the internet and is created through cryptographic algorithms.<\/p>\n
Cryptocurrency: Types and Characteristics
\nAll types of cryptocurrencies can be divided into three main categories: Bitcoin, altcoins (including stablecoins), and tokens (including DeFi tokens). Each of these groups has its own characteristics.<\/p>\n
Bitcoin and altcoins themselves are not money in the traditional sense but complex digital products with their own cryptographic code and encrypted records. To become a form of money, even digital money, they undergo a complex transformation and processing mechanism using special technologies.<\/p>\n
Let’s delve deeper into the types of cryptocurrencies and their differences.<\/p>\n
What is Bitcoin
\nBitcoin is the first cryptocurrency and remains the leading digital coin by market capitalization.<\/p>\n
Bitcoin is a global peer-to-peer electronic payment system that enables parties to transact with each other without intermediaries like banks or other financial institutions.<\/p>\n
This cryptocurrency is often considered a digital alternative to fiat currencies and gold.<\/p>\n
What are Altcoins
\nAltcoins are all other cryptocurrencies created after Bitcoin, which accounted for approximately 40% of the crypto market in 2023.<\/p>\n
The launch of Bitcoin and its open-source code in 2008 paved the way for the creation of thousands of other cryptocurrencies, which were referred to as alternative coins (altcoins).<\/p>\n
Some of them are similar to Bitcoin in nature. For example, Litecoin, according to its creator Charlie Lee, was designed as a Bitcoin analog and operates as a peer-to-peer currency and global payment network.<\/p>\n
Other cryptocurrencies have different goals from Bitcoin:<\/p>\n
Ethereum, the world’s first programmable blockchain, allows developers to create and deploy decentralized applications (DApps) and smart contracts.
\nIOTA was developed to become a new level of data and transaction settlement for the Internet of Things (IoT) and machine-to-machine (M2M) economy. IOTA uses its patented distributed ledger technology, The Tangle.
\nLike Bitcoin, all altcoins can function independently in their own networks using distributed ledger technology (DLT). The most well-known and commonly used DLT is blockchain technology. However, variations in the underlying code of each protocol make each altcoin unique.<\/p>\n
What are Stablecoins
\nStablecoins are altcoins whose value is pegged to something else, such as strong fiat currencies (e.g., the US dollar, euro, etc.) or valuable commodities like gold, to reduce price volatility. Some of the top stablecoins in 2023 are Tether and Binance USD.<\/p>\n
<\/p>\n
However, some stablecoins are not backed by anything and their value is regulated by additional issuance or asset burning, such as the coins Carbon and Havven.<\/p>\n
<\/p>\n
What are Tokens
\nThe main purpose of all cryptocurrencies is to facilitate and expedite transaction processes. They are all built on blockchain technology, where all transaction information is stored in encrypted form.<\/p>\n
A token is not a typical cryptocurrency, as it does not have its own blockchain. It is a record in the blockchain registry of transactions, a different distributed information system that certifies the owner’s rights to civil objects.<\/p>\n
In simple terms, tokens are accounting units with the function of substituting financial assets (securities, indices, commodities, gold, etc.) in the digital world. They are like digital receipts from the token creator, promising to provide something to the owner.<\/p>\n
Unlike Bitcoin and altcoins, tokens cannot operate independently. Instead, they are placed on top of existing cryptocurrency networks (usually Ethereum and blockchain) and are managed through smart contracts. Special software is usually required to access tokens<\/p>\n","protected":false},"excerpt":{"rendered":"
Digital currency is electronic money with properties similar to traditional (fiat) currencies, and it can be regulated or unregulated. It is a general term for all electronic money (money in the digital space). Digital currency includes virtual currencies and cryptocurrencies. Digital money is also known as cybercash. Virtual currency is a type of digital currency. […]<\/p>\n","protected":false},"author":1,"featured_media":808,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[58],"tags":[],"class_list":["post-485","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-guides-education-en"],"acf":[],"_links":{"self":[{"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/posts\/485","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/comments?post=485"}],"version-history":[{"count":2,"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/posts\/485\/revisions"}],"predecessor-version":[{"id":507,"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/posts\/485\/revisions\/507"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/media\/808"}],"wp:attachment":[{"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/media?parent=485"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/categories?post=485"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/armcoincrypto.am\/en\/wp-json\/wp\/v2\/tags?post=485"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}