A lot of people think that cryptocurrency just means bitcoin and that’s a small number of enthusiasts involved. They are wrong on both counts. The digital currency market is growing rapidly, as are the platforms and technology around it.
Bitcoin was the first decentralized cryptocurrency created in 2009. It remains the most popular and accounts for 46% of the total crypto market value. Currencies that subsequently followed Bitcoin’s pattern are collectively referred to as altcoins.
As of April 2021, over 100 million people held cryptocurrency, and there are over 10,000 different types of digital currency. However, their design, popularity, and purpose vary widely.
How do cryptocurrencies differ from each other?
There are four main types of cryptocurrency: Proof of Work (PoW), Proof of Stake (PoS), Tokens, and Stablecoins. Understanding it in great detail would take a lot of study, but as a brief introduction, a good start is the original and still the most popular type – PoW.
Bitcoin is the most famous digital currency and is a PoW. It uses blockchain technology which allows users to make transparent peer-to-peer transactions visible to all, but only the owner can decrypt a Bitcoin with a unique key.
One of the main issues with Bitcoin and PoW is the processing power required. It does not adapt well and the energy consumption is not sustainable. To make things more efficient, Litecoin was released in 2011 as an alternative, as were others like Bitcoin Cash. These work the same way but were designed to have faster transaction times.
Probably the most well-known altcoin is Ethereum, launched in 2015 and being around 19% of the size of Bitcoin. Ethereum’s goal is more of an open-source platform that uses blockchain for decentralized applications. The currency used by developers and users of the app is a token called Ether.
However, the energy requirements demanded by the PoW blockchain system (equivalent to a small country like Sweden) are proving problematic.
The PoS system is more scalable. Proof of Stake gets its name from the fact that participating nodes use their own cryptocurrency holdings as a deposit for transactions. This speeds up processing speeds and should avoid some of the PoW bottlenecks. Currently, only the smallest cryptocurrencies use PoS, but as Ethereum is currently moving from PoW to PoS, that will change soon.
These two types of currencies are defined by the technology used. Tokens are different in that they are not used as general purpose currency. They exist as part of an existing blockchain, like an Ether token for Ethereum. They represent a value but only in the system for which they were created. This makes them vulnerable to problems in their ecosystem. There are currently thousands of tokens.
Finally, there are the Stablecoins. These exist to combat one of the main drawbacks of cryptocurrencies – volatility. Stable coins are linked to fiat currency or gold for stability. They are a hybrid between standard cryptocurrencies and tokens.
Where can you learn more about cryptocurrencies and how to get involved?
To a foreigner, cryptocurrency can be confusing and seem overly complex. However, organizations and platforms are growing that attempt to help people enter the crypto world. Some of them even include online academies, a marketplace with major currencies, and a secure wallet to store coins.
A great example of this all-in-one approach is based in Spanish Bit2Me. To help those who want to get involved but don’t know where to start, the platform has created an academy. Platform Expansion VP Koh Onozawa strongly believes in learning about cryptocurrencies before taking the plunge.
Onozawa explains, “We understand that taking your first steps into the cryptocurrency world can be intimidating, but with deeper understanding and knowledge, those fears quickly dissipate. So we created our own academy. We now offer over 50 hours of online courses, face-to-face workshops, and a database of knowledge, articles and materials. “
The idea is that instead of betting and worrying about price fluctuations, a savvy investor will understand the market and know what is fueling volatility. The approach is proving popular. Bit2Me Academy is free and had over 1.7 million students in 2020 alone.
When a person wants to invest, they can stay on the platform to make their purchases. “Our platform allows users to trade over 50 cryptocurrencies,” says Onozawa, “including Bitcoin, Ethereum, Cardona, Ripple and even Dogecoin. It is difficult to give an exact figure as new currencies are added all the time. “
Another advantage of using a platform like Bit2Me is that wallets and security are all part of the platform. “We take security very seriously. There have been a few famous cryptocurrency thefts, so we are ensuring security by implementing Second Factor Authentication (2FA) and instant transaction notifications. We also keep 98% of digital currency in cold storage and are insured for more than the total amount we hold, ”adds Onozawa.
The platforms greatly facilitate entry into the world of cryptocurrencies
Even those who have been trading digital currencies from the start can use these platforms to stay on top of new altcoin developments and connect with other members of the community.
For everyone else, they are becoming more and more of a necessity. The sites help people understand and stay abreast of the growing world of cryptocurrencies and provide a marketplace to trade a large number of currencies in a very secure environment. As the industry grows larger and more complex, digital currency platforms will only increase in popularity.