A Beginner’s Guide to Different Types of Digital Currency

Did you know that about 1 in 5 adults in the United States have invested in cryptocurrency?

Most people avoid the topic because they don’t understand how secure and simple it can be.

If you are interested in discovering the types of crypto, you also need to know how to get them.

Keep reading if you what to learn more about what crypto is and the different types of digital currency you can try!

What Is Digital Currency?

Before you can understand the value of the different types of digital currency, you need to learn the basics.

Digital currency is a method of payment that only exists in digital form. There aren’t any bills or physical coins, unless someone withdrawals them from their account at an ATM. This money-like asset is stored and managed from computer systems or online.

The purpose of digital currency is to streamline banking at a global level. Since digital currency isn’t controlled by central banks, it leads to a faster process with more flexibility.

Exchange rates won’t be a factor and people can use one method of payment no matter what continent they are on. The digital currency uses blockchain technology to help track and manage these transactions.

Basics of Blockchain 

It helps to think of blockchain as a financial ledger, where all of the transactions get recorded.

Blockchain technology records all digital currency transactions to verify someone’s value. A peer-to-peer network increases security and reduces the risk of getting money stolen.

Each transaction that’s recorded in this digital ledger results in the user receiving a hash. Hashes or identities go to the end of the ledger to show the updated balance. There are also timestamps on the transactions to help track data.

With full access to the blockchain, people can exchange unlimited amounts of crypto.

Coins vs Tokens

The terms coin and token are used with digital currencies, even though there isn’t any physical money involved.

Coins are built upon a blockchain and can be used as if they were traditional money. Many people compare the coins to a debit or credit card when you make online purchases. Your digital wallet stores a certain value in coins and you can then determine which type of crypto you want to exchange it to.

When it comes to coins, they get distributed through the process of mining. They are challenging to create and require significant resources and skills.

Tokens are used as software to process data and represent an asset. Tokens help people track moving products in the supply chain and verify the identity of users. NFTs and Ethereum are forms of tokens that people typically invest in.

Tokens are easy to create and distribute since they have a variety of uses and styles.

How to Get Digital Currency

Once you decide that you want to invest in digital currency, you need to locate a broker or exchange business.

You can locate a broker online if you don’t have one in town. They will help you create an account and exchange your cash for digital currency.

If you want to find profitable and safe crypto, take a look at the list below for details and great options. You’ll need to download a digital wallet and trading app to start making exchanges.

When you find a reputable trading site, you can purchase crypto and start building your ledger. Your transactions and assets will get stored in your virtual wallet until you are ready to exchange or spend them.

Reputable Trading Apps to Try 

Aside from getting a risky form of crypto, you don’t want to put your assets in the hands of a scammer.

You should research the trading apps and virtual wallets you are considering.

Robinhood, Webull, and SoFi are some of the most trustworthy places to try when you are starting. You can also download Block’s application, which is attributed to Square and Cash App. If you want to support an American trading company, Coinbase is another great option.

On these applications, you can manage your crypto and stock investments. If you need full-service stock broker resources, these won’t be enough.

Avoid the Biggest Scam

The biggest scam people encounter when they get digital currency is they fall for “free crypto” ads.

If you see an app advertising online that they will pay you a large sum of crypto if you open an account, proceed with caution. Only share your personal info and banking details with a trusted company and do your research each time.

When you aren’t sure if you can trust a trading platform, search for online reviews. Online reviews can help provide insight if other people have lost money from fraud or if it’s led to success.

Instead of focusing on getting free crypto, focus on investing a reasonable amount in your digital wallet. As you gain confidence with your crypto, you can look for opportunities to gain assets.

Different Types of Crypto

Although there are more than 19,000 types of crypto in circulation, not all of them are reliable.

Learning about the most consistent and profitable crypto can prevent you from wasting your money. Any software developer in the world can create digital currencies since they are sourced from the blockchain.

Different types of crypto have become available as people try to avoid surging prices. With all of the different types in mind, it can be difficult to narrow it down to a few.

Read further to discover which options are most intriguing!

Bitcoin

One of the most popular types of digital currency around the globe is Bitcoin.

As of last year, more than 5.5 million Bitcoin were distributed across the globe. This company began in 2009 and has made the most progress compared to other types of crypto.

Bitcoin has an excellent market value and as more people use it, the more reliable it becomes. Bitcoin has scaling capabilities along with additional privacy and functionality features.

This is the most well-known crypto since it was the first choice for people to try. All transactions get recorded with blockchain tech and which helps verify if someone has enough money. Bitcoin offers fast and reliable exchanges that won’t expose you to fraud or scams.

Ethereum

Ether tokens are distributed through online transactions over the Ethereum network.

This network and type of crypto can help you turn smart contracts and decentralized apps into assets. Ethereum applications and contracts are desirable since they have fewer restrictions.

The applications can get used outside of Apple and Google’s abilities, helping you reach more people.

Ethereum is the second most popular form of cryptocurrency. Experts in the finance industry believe that Ether will increase its value by up to 400% this year. Much like Bitcoin, this form of crypto can also get converted to cash.

Tether

If you want to get digital currency, but are scared to make the leap, Tether is recommended.

Tether is a stablecoin that combines the benefits of digital currencies and fiat currency. The United States dollar is comparable to Tether currency since it’s issued by the government. Other forms of crypto don’t have government interference, which is why they’re more popular.

A decentralized form of banking comes with many benefits. However, some businesses don’t have the capabilities to accept the form of payment yet.

Binance Coin

Another type of cryptocurrency that is also a token, is the Binance Coin.

Binance was originally developed as a token, it has evolved since its early beginnings, however.

The Binance Coin was developed for the Binance crypto exchange platform. This platform also allows other types of digital coins to get exchanged and traded. You can use Binance as a form of currency to pay fees and exchange currency when building apps.

You can use this type of crypto to purchase goods and services across the globe.

USD Coin 

The USD Coin closely resembles Tether since it’s connected to the government and the US dollar.

This is another type of currency that’s hosted on Ethereum technology. The purpose of the USD Coin is to create a digital form of traditional currency. This would be ideal for people that don’t have a bank account or who frequently travel.

USD Coins are versatile and many merchants are accepting them as online payments. Keep in mind that the value of the USD Coin won’t fluctuate like traditional cash since it’s incorporated into your digital wallet.

Binance USD

If you’re interested in both Binance Coin and USD Coin, you can exchange your cash for Binance USD.

Binance USD is a stablecoin that is backed by the dollar, yet still has crypto capabilities. Although this is a newer form of cryptocurrency, it has already surpassed Ether. When you buy this form of crypto, you should expect exchange rates to be nearly identical to the fiat dollar.

This is a better option for people to invest in once they’ve established confidence in exchanging crypto. Beginners tend to struggle with Binance USD since investments aren’t always secured or protected.

Dogecoin

Most people know about Dogecoin because they’ve seen the most influential people market it online.

Dogecoin got its unique name from the meme with Shiba Inu the dog. This viral sensation has become a powerhouse in the crypto world, and many people are investing.

The thing that makes Dogecoin so unique, however, is not its name. Unlike other forms of crypto, there is a limited number of coins available. It’s perfect for sending money to people or making payments for services and products.

Avalanche

The technology, finance, and environmental industries often don’t work together. But with Avalanche, they do.

If you’re looking to invest in an alternative to Ether, Avalanche is a great choice since it also has the fastest smart contracts. This form of crypto is eco-friendly and comes at a low cost, resulting in their growing interest.

Avalanche has a zero-waste policy, digital wallets make it possible. Transactions are quickly approved through their blockchain technology.

Curious About NFTs?

Many digital currency beginners make the mistake of thinking that NFTs are a type of crypto.

Although NFTs also use blockchain technology, you don’t want to confuse them with currency. Non-fungible tokens aren’t a type of currency, but rather a unique digital asset.

These assets come in many forms, such as videos, music, and art.

There are other types of NFTs in circulation since they tend to follow online trends. Other uncommon examples of NFTs are real estate assets and in-game items. Avatars, digital collectibles, and domain names can also become valuable assets.

Since NFTs use blockchain technology, you don’t have to worry about security issues. These are great ways to invest your money but don’t forget that they aren’t equivalent to physical cash or crypto.

Which Types of Digital Currency Will You Consider?

Digital currencies and the world of crypto are intimidating to most people.

Learning about the types of digital currency and how they can improve your life will make it easier to invest. With the help of blockchain technology, users can trust that their transactions are secure and they don’t have to worry about fraud.

Although there are higher levels of security with digital currency, you should always do your research. Whether you need to find an app for trading or a digital wallet, only go with the best.

Bitcoin, Ether, and Dogecoin are some of the most popular forms of crypto on the market. After you establish a budget, you can exchange your money and start building your ledger.

If you want to learn more about digital currency and how to manage your finances, check out our blog for more info!

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