Cryptocurrency trading - II

In the second part of this series, we discuss the various types of cryptocurrencies. As we mentioned in the first article, cryptocurrencies are valuable since they are used for trading and performing transactions. Some of the cryptocurrencies are not valuable on their own based on this definition as they are only used to make exchanges possible. These are called Fiat cryptocurrency. Fiat cryptocurrencies are only used to perform exchanges and were originally used as realizing the core, essential aims of using digital currencies. These are performing cheaper, easier transactions and decentralizing currencies as much as possible. The well-known Fiat cryptocurrencies are bitcoin, bitcoin cash, litecoin, and monero.

Stablecoins are not self-defined as Fiat currencies, but their value is measured against the value of other assets so as the name suggests, it would become more stable. Thus, Stablecoins are less volatile than Fiat cryptocurrencies and have their own well-defined value. Tether is the most familiar name among Stablecoins which is associated with the US dollar.

Utility Tokens are perhaps the most popular in the world of cryptocurrencies and are of particular interest since they are used for empowering businesses and performing various tasks in blockchains. Since they are in demand, they hold monetary value. Ethereum blockchain uses Ether as its cryptocurrency. EOS and XRP are also popular examples of utility tokens used for performing digital transactions.

Through introducing the qualities of each cryptocurrency, the reader might have already guessed what factors can influence the available cryptocurrencies: i) the number of available coins, ii) the value of these available coins, iii) the rate users use the available coins, iv) the number of users joining the blockchains, v) how useful a particular cryptocurrency would be in performing transactions and how much it would empower a business/industry, vi) security breaches, vii) economic failures – especially for the case of stablecoins, viii) regular update of the cryptocurrencies in use.

Cryptocurrencies are distributed in lots which is usually one unit of the selected cryptocurrency. Just like money, depending on the type of cryptocurrency you choose, large or small batches of lots may be used in different cryptocurrency systems.

One important question is whether cryptocurrencies will last in the global economy? The answer is no one knows for sure. For now, they are mainly used as trading exchanges and as the demand exists, they exist. What you can exchange cryptocurrency for, currently, range from real-state to fast food. Among the cryptocurrencies introduced above, perhaps stablecoin will offer the most stable future as it is affiliated with the value of assets, and as time goes by, they will prove how valuable transferring money with low fees/charges can be. The most challenging part of using cryptocurrencies, at the moment, is their complicacy for users with no knowledge of advanced technologies. It takes them a lot of time to adapt to the system and once they do, getting a grasp of how transactions work and how coins are produced offers a repulsive vision as it is growing rather fast. To conclude this article, we mention another important fact that is, you cannot buy cryptocurrency on any usual exchange platform, but need to use specific platforms. Thus, before entering the game, try to understand if the platform you are comfortable with offer cryptocurrencies.

By F. Z. Majidi

F. Z. Majidi is a Doctorate student at the Sapienza University and INAF-Padova Observatory currently, doing astronomy and astrophysics. As an avid reader, she is crazy about science and curious about technology. She also reads all sorts of things from classical novels to Manga and Webtoons in her free time. Her other hobbies are painting, singing, gaming, listening and learning about music (all the genres from classical music to metal and neo-metal), and last but not the least, blogging and freelancing.

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