Aenco X-files: Do you understand different types of Cryptocurrencies?
Having thousands and thousands of cryptocurrencies out there, do you understand their types? Why are these cryptocurrencies created, and how should you use these cryptocurrencies?
In this episode of X-files, we cover three main types of cryptocurrencies based on our general classification. Specifically, different cryptocurrencies we view to potentially serve core functions such as (i) payment/store of value; (ii) powering decentralized finance/smart contract systems; and (iii) supporting the distribution of data and oracles. Here are only a few examples of these types of cryptocurrencies. As you may know, the crypto sphere is developing and evolving rapidly and we strive to keep you updated as timely as possible.
⚡️Function 1: Payment/Store of Value
Similar to other fiat currencies, cryptocurrencies may have their function for payment and transaction. One of the main features of cryptocurrency transaction is its transparency, that people can check the details of the cryptocurrency transactions on public blockchains. As many of you would know, cryptocurrencies can also help store value and reduce the risk of inflation caused by the printing of fiat money by centralized parties. Bitcoin (BTC), Bitcoin Cash (BCH), and Litecoin (LTC) are some well-known examples of these types of cryptocurrencies.
⚡️Function 2: Powering Decentralized Finance/Smart Contract System
Some cryptocurrencies act importantly as the digital currency which fuels their specific blockchain-based financial smart contract systems. Ether (ETH), is a good example of cryptocurrency, running primarily on the Ethereum blockchain smart contract network. Cardano (ADA), also runs specifically on the Cardano platform. ADA has claimed to be the first cryptocurrency to run on scientifically tested peer review. These important players are competing to become the base layer standard for the rapidly growing decentralized finance (“DeFi”) sector.
⚡️Function 3: Supporting Distribution of Data and Oracles
Some tokens/cryptocurrencies act mainly to support the distribution of data and oracles. A good example is the LINK token, supporting the Chainlink system. It helps “connect blockchains to the outside world”, which it is creating a security bridge between the two, and solving the problem of potential oracles’ failure. As stated in Chainlink’s whitepaper, it helps the distribution of data sources, oracles and the usage of trusted hardware.
In this case, Chainlink nodes would only be paid by LINK tokens. Being a ERC-677 token, LINK tokens are built specifically to support the Chainlink network, for it to provide reliable inputs and outputs on blockchains.
Of course, some cryptocurrencies would have a mix of several usages, and some are mainly designed for a specific type. Whatever it is, it is important for investors/users to understand the types of cryptocurrencies before their investment or actual use cases.
So leave a question for you to ponder: what type of cryptocurrency does AENS smart token fall into? Let us know your comment down below! Don’t forget to visit AENX to trade some of these important cryptocurrencies available on the platform, including BTC, ETH, and LINK.
Start trading on AENX: https://aenxchange.com/
✔ 𝘐𝘯𝘴𝘵𝘢𝘨𝘳𝘢𝘮: 𝘪𝘯𝘴𝘵𝘢𝘨𝘳𝘢𝘮.𝘤𝘰𝘮/𝘢𝘦𝘯𝘤𝘰𝘪𝘯/
✔𝘝𝘪𝘣𝘦𝘳: 𝘈𝘦𝘯𝘤𝘰 𝘝𝘪𝘦𝘵𝘯𝘢𝘮