Although Bitcoin is the most well-known digital currency - the two words often taken to be synonymous - there are a variety of other types, with distinct characteristics.
Discover the main cryptocurrencies available on the market:
Bitcoin
Bitcoin (BTC) is the best known of digital currencies. This is the first fully decentralized global payment system. It was designed in 2008, in the midst of the global financial crisis that started in the American mortgage market, with the objective of replacing paper money, in addition to eliminating the need for the presence of banks to mediate financial operations.
According to the Bitcoin.org website, the first Bitcoin specification and proof of concept were published in an article signed by Satoshi Nakamoto, the pseudonym of a programmer (or group of programmers) that has not yet been identified. He invented the operating logic of blockchain, a system that made Bitcoin possible.
In the article, Nakamoto pure that there will be a maximum of 21 million bitcoins in circulation. It is estimated that the last coin will be mined in the year 2140.
Bitcoin Cash
Bitcoin Cash (BCH) is a new version of the original Bitcoin, created more recently - in August 2017. It was developed in an attempt to perfect the first currency, which has rates considered high and requires a long processing time for each.
The main difference is that Bitcoin Cash has a block size limit of 8 MB, much larger than the 1 MB of the original Bitcoin. Thus, confirmation of transactions can happen faster and also with lower rates. This guarantees it an even larger scale than its predecessor.
Who had Bitcoins needed in their wallets the same amount of Bitcoin Cash when it was created. The operating rules are parallel to the original asset, also with a limit of 21 million coins.
Ethereum
There are some similarities, but also differences, between Bitcoin and Ethereum (ETH). The original digital currency was actually called Ether. In 2016, however, a hacker found a flaw in the system and, from it, managed to steal the equivalent of $ 50 million in Ether. Faced with doubts about the future of the currency, the community that maintained it opted to create a new network.
The original Ether - the target of the theft - was renamed the Ethereum Classic and the currency that started circulating in the new network was named Ethereum. With the support of the community, it is worth more than its first version.
Originally, Ether was not created to be a digital currency like Bitcoin. The idea was to become an asset to reward developers for using the Ethereum platform in their projects. It is a decentralized platform used to execute “smart contracts”, which are operations carried out automatically when certain conditions are met.
The blockchain is also the basis for validating transactions with Ethereum, to ensure security and still prevent fraud. As with Bitcoin, the creation of new currencies is also based on the mining process. Today, Ethereum is among the most traded cryptocurrencies in the world.
Tether
Unlike Bitcoin and other digital currencies, Tether (USDT), launched in 2014 by a company of the same name, is a stablecoin because it is backed by a physical currency. The purpose of this cryptocurrency is to maintain parity with the US dollar. That is, for each Tether issued there must be an equivalent dollar in cash.
Since the cryptocurrency was created, however, experts have questioned parity, as the company did not offer transparency on how it followed it. In 2019, it was announced that not every Tether is actually backed by a dollar. According to the company, 100% of them are guaranteed, but not only by traditional currency, but also by cash equivalents and other assets or receivables from loans made by Tether to third parties.
The characteristic of Tether is that it is a stable currency that represents physical currencies in the digital world. Due to the lower volatility, it has become a good option for making transfers between systems and with different cryptocurrencies. Thus, investors protect themselves from the price changes of other assets and avoid the risk of having significant losses during these operations.
Tether is predominantly traded on Bitfinex, a large cryptocurrency exchange, which has common shareholders and executives with Tether (the currency's parent company). Although it has some advantages over other digital assets, it has been involved in major controversies.
For example, there has already been an accusation by the New York Attorney General's Office that Bitfinex would have used Tether reserves to cover a $ 850 million hole in its accounts as of 2018. Another suspicion is that the currency has been used by a speculator in operations to manipulate the price of Bitcoin in the market, with knowledge or even involvement of Bitfinex. These are events yet to be clarified.
Ripple
Ripple (XRP) is a distributed payment protocol created in 2011, and the currency of this system is XRP. A feature of the Ripple platform is to support other tokens representing traditional currencies and even other goods in its network. The idea is that the system allows secure and instant payments.
Created by developer Ryan Fugger, entrepreneur Chris Larsen and programmer Jed McCaleb, Ripple was created in 2012. It is not just a currency, but a system in which any currency - includingto depend on the traditional financial system to carry out transactions. Another different feature of the system is that there is no mining process, as in the case of Bitcoin and Ethereum.
Litecoin
Litecoin (LTC) was created in 2011 by a former Google employee named Charlie Lee and has many features similar to Bitcoin. The main difference is in the mining process, which seeks to reduce the time needed to confirm transactions made with the currency. The intention is to make it easier for anyone to participate in the process of creating new Litecoins.
Due to the faster processing of transactions, Litecoin is considered a better alternative for carrying out day-to-day operations. Bitcoin, in turn, would work better as a store of value. Litecoin was designed to produce more units, with a limit of 84 million coins, against 21 million for Bitcoin. the most well-known cryptocurrency, Bitcoin - can. be negotiated. To some extent, Ripple's operation is somewhat similar to that of banks, in that it accepts various assets and facilitates transactions.
Precisely for this reason, Ripple goes against the discourse on digital currencies in general, whose ideal is not.
