Types of cryptocurrencies - a list, advantages and disadvantages, ways to make money

Just 9 years ago, bitcoin appeared as an innovative financial instrument for payments, savings, mutual settlements and earnings. At first, few people took it seriously as a substitute for fiat money. Existing electronic payment systems, bank payments for non-cash payments operate with virtual monetary analogues of paper money. The increase in the number of bitcoins and the volume of transactions with it proved to everyone that cryptocurrency is an electronic form of the currency of the future, a real replacement for fiat money, especially when settling between different countries.

What is a cryptocurrency

Usual money for us is issued into circulation by the central banks of different countries. Their value is influenced by decisions of governments, the economy of countries, international trade. Cryptographic currency is a fundamentally new instrument of mutual settlements. To generate coins, or mining, it is necessary to produce a certain mathematical calculation algorithm. Each crypto unit is a sequence of blocks, and each of the blocks is a complex mathematical formula. To create a new coin, it is necessary to generate a new chain of transaction blocks.

History of appearance

The emergence of bitcoin was a continuation of the development of the concept of blockchain. This term, translated from English, means a chain of blocks. A group of programmers, led by Satoshi Nakamoto, introduced the concept of a cryptocurrency based on the principle of generating chains of blocks, each of which is calculated according to a certain mathematical formula. To create a crypt, which is called mining, the computing capabilities of computers are used, in which video cards have the most powerful mathematical functionality.

What is the difference between digital currency and conventional money

Unlike fiat money, the reproduction of cryptographic currencies does not depend on countries, governments and international relations. The rate of cryptocurrencies in relation to other currencies is affected only by the complexity of their mining and the demand for it for mutual settlements. Any programmer can issue a cryptocurrency. Operations with bitcoin, created in 2009, began after 2011, when public electronic wallets appeared for storing it and ways to transfer it from one owner to another.

Types of cryptocurrencies

More than 700 of them have been created and are on the crypto-currency market with a different rate and number of coins. The main one is the bitcoin cryptocurrency. The maximum possible amount in circulation is 21 million bitcoins. On May 27, 2017, its rate exceeded $3,000. As of July 21, 2019 (hereinafter) it is equal to 2732 US dollars. Its capitalization exceeded 44 billion dollars. All cryptocurrencies on crypto exchanges are quoted relative to bitcoin. The most popular cryptocurrencies are:

Litecoin was launched in 2011;
derivative of Bitcoin by Charles Lee;
ranks second in the list of btc forks after Namecoin;
has a limit of 84 million coins.

the electronic payment system appeared in August 2012;
based on the Bitcoin code;
developers are Scott Nadal and Sunny King;
Peercoin is based on an additional crypto-code called PoS - proof-of-stake.

first issue of coins April 2011;
based on the Bitcoin code;
creates its own DNS server;
Namecoin mining is very difficult.

appeared on the market on May 3, 2013;
author unknown;
identical data hashing algorithm with Litecoin;
limit 336 million.

was created in 2013 on the basis of Bitcoin;
the maximum number of coins produced can be 100 million units;
the annual tax of 5% in the system is automatically removed from the amount earned.

established in 2012;
its creator Jed McCaleb, the work is continued by RippleLabs;
the system is open source;

NEM stands for New Economy Movement or New Economy Movement;
became known in 2015;
original open source;
using the POI (Proof Of Importance) algorithm, the user is determined who will generate the next block.

the launch took place on July 30, 2015;
authors Vitaly Buterin and Gavin Wood;
functions are not limited to electronic currency, thanks to the technology of smart contracts, they are used when registering transactions, when exchanging resources;

on the market since autumn 2016;
the team of cryptographers from the most famous universities in the world is engaged in development;
based on a new zero-knowledge proof protocol (zero-knowledge proof or zk-SNARK);
absolute anonymity of this payment system.

renamed from Darkcoin in 2015;
distinguished by the security and anonymity of transactions;
the daily turnover of DASH is 7% of the total turnover of cryptocurrencies;
mining DASH does not require so many resources;

Electronic currency bitcoin

When creating bitcoin, several ingenious principles of its mining were invented. Seeing how quickly the price and popularity of the firstborn grew, many unique services associated with it appeared. The independence of bitcoin and the rise in its value have prompted the leadership of several large countries, such as China, to use it as one of the reserve currencies. Now it is more difficult to mine bitcoins, the cost of electricity for their reproduction begins to exceed its market value.

What are forks

One of the advantages of bitcoin was the openness and public availability of its code. After it became clear about the financial prospects of cryptographic currencies, varieties of digital currency began to appear, copies of bitcoin or forks. Their number is already more than 700. A feature of cryptocurrency forks is an improved cryptographic code compared to bitcoin. They require less mining costs, so they are popular for small mining farms.

Distinctive features

The main feature of most cryptocurrencies is their generation on the basis of the blockchain according to certain procedures. Blockchain implies the continuity of each subsequent coin of information of the entire previous chain of blocks. Cryptocurrencies differ in the program code, the initial and maximum emission amount, the complexity of mining electronic gold. Many special exchanges have appeared on the Internet, in which the value of cryptocurrencies is determined by the demand for digital coins.

Decentralized accounting of digital counting units

All these actions are performed in a decentralized way - anyone can join this process. A real crypt has only a creator, and there is no central authority for accounting and control over mining. All information about the sequence number and the entire previous chain is in each block. Offers of crypto-like HYIP projects appear on the fork market, which are described in terms of cryptocurrencies and blockchain technology, but are financial pyramids. In them, higher-level partners receive remuneration from sales.

Use of cryptography

Many people come across cryptography when encrypting the entrance to wallets. When generating bitcoin, two types of cryptography are used. As a result of mining, a new coin is created in digital form. The creation message profile (hash) is created with the first type of cryptography. The second type is used to encrypt the electronic digital signature for each part of the entire bitcoin chain. These signatures are stored on the wallets of bitcoin owners. Signatures are not repeated, while it is easy to verify the authenticity of the amount of crypto that is on the wallet.

Independence from government or financial institutions

The appearance of crypto money and the growth of their popularity were so rapid that government agencies were not ready to understand and assess the scale of what had happened. They are completely independent from the governments of countries and banking institutions. This decentralization is one of their main advantages, which encourages many countries to start using cryptocurrencies for international payments and as reserve currencies. In the global financial markets, operations in bitcoin are increasingly being carried out.

Irreversibility of transactions

Among the few disadvantages of cryptomoney systems is the irreversibility of transactions. This follows from their complete independence from regulatory bodies. In the very operation of transferring bitcoins or other coins, fraud is impossible. This also imposes more serious requirements on the choice of partners for these operations, checking their reliability, and the absence of fraudulent activities when advertising goods and services on the Internet.

The presence of an upper limit on the total emission

A tool for preliminary protection of issued crypts from inflation is to limit the limit of their total emission. Miners should pay attention to this characteristic when choosing a fork. If the number of issued coins approaches its limit, this means an increase in the cost of mining, but also an increase in the market value. Some cryptos do not have a release limit. This is an additional opportunity for them to issue due to the existing number of them for each miner.

Where to get cryptocurrency

It is possible to purchase, start using and earn on the crypt in several ways:

there is an opportunity to buy, and then, with an increase in the market value, sell coins in exchangers;
crypto-exchanges are designed to exchange fiat money for selected forks and trade them by buying when they fall, and then selling when their market value increases;
The most financially and energy-consuming way is mining. It will require a decent investment of money, a constant upgrade of farms, but the income from this will be high.

How Cryptocurrency Works

To begin with, the client downloads an electronic wallet to a computer or smartphone, in which he stores cryptocurrencies. The purchase is made when contacting the exchange office, or to the crypto-exchange. Having exchanged your fiat currency for a crypt, you indicate your wallet, to which it is credited. If you need to pay for goods or services in the wallet, there is a “transfer” function, similar to money transfers. Specify in it the wallet ID of the recipient of crypto money, the amount, confirm the transfer. There are no restrictions for wallet owners.

Cryptocurrency mining - what is it

The process by which cryptocurrency is mined is different from mining gold or coal. Mining begins with the assembly of the farm. To implement this task, the motherboard of an ordinary PC computer, a server or more powerful power supply, a hard drive, a monitor, and several powerful video cards with additional cooling are taken. The speed, number, processing power of video cards will determine the mining power of the farm. You install a specialized mining program, run it, select a pool and fork, and start mining itself.

How to mine electronic money

At the first stage of mining, a fork is selected, or a type of cryptocurrency, for example, cryptocurrency sync. The selection criteria are:

profitability - the profitability of reproduction compared to costs;
liquidity in the market - the ability to quickly and profitably sell on an exchange or exchanger;
the complexity of the encryption algorithm places demands on the farm hardware.

The next step is choosing a pool, registering your workers in it - mining computers. An important characteristic of a pool is its commission, or the share of the block price that you get. Next, the choice of a miner is made - a program for mining coins:

cudaminer - for mining on Nvidia video cards (GPU);
cgminer - for mining on ATI video cards (GPU);
pooler cpu miner (minerd) - for mining on processors (CPU).

To start mining, it is necessary to carry out a number of simple operations, the type and sequence of which depends on the chosen miner. The last step will require the withdrawal of the crypt. To do this, a wallet is downloaded from the fork site, and the cryptocurrency earnings are withdrawn to it for further resale on an exchange or exchanger. The income of people who mine forks depends on the use of the computing power of video cards, the power of computers, and the correct choice of initial conditions.

Cryptocurrency exchange rates

Name	Creation date, year	Capitalization, USD USA	Course to USD USA




Ethereum Classic ETC




		All cryptocurrencies have high volatility. How to make money on cryptocurrency There are several ways to make money on cryptocurrencies: cryptocurrency mining, in which income depends on the capacity of farm equipment; using them as an object of profitable investment; trading on crypto-exchanges - special services for buying and selling. Investments The growth in the cost of the ancestor of all crypts showed their prospects as an object of accumulation and investment. The average growth of major cryptocurrencies for the first half of 2019 was 800%. Most high-yield investment programs cannot boast of such a return. For miners, it is recommended to leave 50% of income in the crypt. With an increase in the market value, the profitability of mining increases several times. This rule improves the efficiency of the whole process. Cryptocurrency trading To make money on forks, the traditional way of trading is used. To do this, you need to register on the cryptocurrency exchange. For example, it is proposed to consider the yobit.net exchange. When registering for a client, wallets are created in rubles, dollars and all cryptocurrencies, transactions for which are carried out on the exchange. The client replenishes the account in monetary units. Then he creates an order for - indicates the desired purchase rate, the amount of the transaction. When there is a member of the exchange - the seller of bitcoins at the rate you specified, the transaction takes place. Further bitcoins are changed to any fork. Video