Currently, nearly 80% of central banks worldwide are exploring the potential of various types of digital currency circulating in their market. This number includes 27 advanced nations. About 40% are still in pilot and experimental stages.
But what is digital currency? Is it the same as cryptocurrency? First, digital currency is available in electronic form.
All cryptocurrencies, including Bitcoin and Ethereum, are digital currencies. However, not all digital currencies merit cryptocurrency.
Also, it’s prudent to note that digital currency is different from electronic currency stored in banks. How? You can turn your electronic bank numbers into banknotes and minted coins. On the other hand, digital currencies only exchange hands in electronic form.
Let’s look into the five popular types of digital currency.
1. Bitcoin (BTC)
Bitcoin is the pioneer for cryptocurrencies. But, when was cryptocurrency invented? Of course, many investors acknowledged crypto when Bitcoin came to light in 2009.
Bitcoin has the highest capital market value of all traded crypto. Thus, it guarantees more liquidity assurance.
The adoption of Bitcoin in retail and financial institutions is growing. Today, you can trade crypto in various secure platforms such as SoFi. Additionally, you can use your SoFi balance to purchase other digital coins such as Dogecoin in real-time.
Generally, bitcoin is the best digital currency for storing value.
2. Litecoin (LTC)
Many investors view Litecoin as the better version of Bitcoin. Litecoin came into existence in 2012, two years after Bitcoin.
The founder, Charlie Lee, is a former Google employee. Lee intended to improve Bitcoin’s blockchain technology.
Today, Litecoin is a popular digital currency for investors who want high transaction speeds and lower costs. This is because Litecoin has relatively concentrated miners to authorize the peer-to-peer transactions.
3. Ethereum (ETH)
Ethereum is gaining popularity since its introduction in 2015. Although it’s trailing Bitcoin in the capital market, ETH is one of the most promising digital currencies. On top of that, Ethereum is the pioneer of smart contracts in crypto.
ETH is a go-to option for digital currencies holding the most market enthusiasm. Various multinational players Microsoft and JP Morgan, are developing Ethereum software.
Other companies include Intel and Chase. ETH is available on SoFi, Coinbase, and Gemini.
4. Cardano (ADA)
If you’re looking for a digital currency offering the best hedge against Ethereum, Cardano sounds like one. Charles Hokinson, one of Ethereum’s pioneers, is the project founder for Cardano.
Cardano offers a proof-of-stake algorithm. This consensus algorithm is environmental-friendly and guarantees cheaper transactions. However, there are no smart contracts in Cardano.
5. Crypto Tokens
Crypto tokens are special types of digital currencies popular in crowdfunding. You can use tokens to invest, store value, or for purchases. All tokens are a creation of a standard initial coin offering procedure before distribution.
Types of Digital Currency
Various types of digital currency will likely reshape our perception of money. The rise of crypto tokens such as Bitcoin and Ethereum brings the future of digital currency nearer. Take advantage of the dip, buy some coins and explore unlimited financial possibilities.
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