Types of cryptocurrencies in Forex trading

These days a term “cryptocurrency” is getting more and more conventional for the mass consciousness, becoming an attribute of a significant percentage of those people’s business life, who have a progressive way of thinking. If earlier by financial funds we could imply so-called fiat (or paper) money belonging to a certain country, then nowadays various kinds of cryptocurrency are actively developing.

They are used as an exchange tool, a unit of account and a measure of keeping a one’s savings via cryptographic technologies. Doubtlessly, there are concrete differences between cryptocurrencies, however, most of them are based on P2P principle (peer-to-peer). It becomes totally possible when specialized software analyzes accounting potential of some participant.

Cryptography provides correct generation of cryptographic blocks, which therefore helps to make transactions safe and normalize the whole infrastructure’s work in general. Certainly, Bitcoin is the most popular type of such currency, and the rest is called “Altcoins” in order to avoid any misunderstanding and misapprehension. In other words, Altcoins is a combination of an adjective “alternative” and a a noun “coins”. 

Wide usage of Bitcoins when Forex trading is explained by their set of functions, which really come in handy: such money can be used in deals commitment, i.e. when a trader deposit and withdraw funds; aside from that, they have a good reputation as a trading tool together with other crypto- and classic currencies. Making up appropriate currency pairs for a certain trader, they may become those optimal default conditions, finally leading to getting a substantial profit.

Comparative analysis of cryptocurrencies.

Bitcoin as a pioneer among cryptocurrencies

Bitcoin, as many other innovations in the field of high technologies, was developed and launched in Japan in 2008. At least, the name of Satoshi Nakamoto is associated with the creator of the first cryptocurrency in the world. Nevertheless, the real identity of the author is still hidden from us, but there are many versions that it’s just a nickname and there are plenty of pretenders to call themselves “Satoshi Nakamoto”. Well, whoever it might be, that person is genius, because he created a currency reached an incredible level of popularity.

Having made up an algorithm called “blockchain”, that mysterious specialist in cryptography and computer science launched a public network, which has some particular characteristics, for example, distribution, decentralization and openness. Blockchain was introduced to the world a ear later, in 2009, and since then by its development parameters, capitalization and users involved, the only one cryptocurrency became the ultimate leader.

Like any other currency, Bitcoin has its own ISO-code. Initially it looked like XBT, but today this abbreviation is becoming less popular, so an average trader may be acquainted to BTC instead. Quite often abbreviations of currency pairs look like  BTC/EUR, BTC/USD or, let’s say,  BTC/ETH. It means there is a possibility of such different pairs’ existence, where we may assume that a “traditional” currency would be combined with a crypto one. Also, as we can see in our last example, there’s more cryptocurrencies than just a Bitcoin, thus, let’s take a closer look.

Ethereum

Despite such stable success of blockchain and Bitcoin as the first invented cryptocurrency, it couldn’t always be like that. In 2015 a young and perspective Canadian programmer with the Russian roots Vitalik Buterin created another cryptocurrency and gave it a laconic name “Ether”. Actually, “Ether” is mostly more a coin itself, and “Ethereum” is more for the entire ecosystem. 

There’s an interesting fact that Buterin has been fond of writing codes for video games since he was 10 years old. Being a programmer’s son himself, he felt how his father gratified his scientific undertakings, that’s why in 2011 he began to pay much attention to how Bitcoin works, in order to apply his knowledge on practice and improve it by making up something even better and more successful than Bitcoin.

In some aspect Ethereum is similar to Bitcoin, however, there’s a significant peculiarity – its substance, which can be easily affected by such a negative economic phenomenon as inflation. On the contrary, Bitcoin is deflated by its structure. Another difference is operating on the Ethereum platform, basing its activity on smart-contracts.

Followers who stick to this technology, suppose that such mechanism can actually be the main rival  to the monopolist of the market and make it weaker in time to the extent that even ETH (or ETC) title would be seen more often than BTC. By the given moment this relatively young currency has gone through a serious upgrade to the version 2.0 and now it’s title is Serenity. Whether Ethereum’s fans’ expectations  in terms of liquidity may come true or not, we may find out only in the future.

Litecoin, Ripple and Monero

Speaking of the crypto market leaders, we should definitely mention those kinds of currencies, which are less well-known than these two ones. Here we are going to introduce newbie traders to such titles, which are less likely familiar to them, but making deals with these currencies are absolutely legal, and, furthermore, it would be also profitable when taking into consideration all nuances and analyzing all default conditions.

Is Litecoin similar to its famous prototype?

Litecoin is a fork of Bitcoin, created by Charlie Lee about 10 years ago, in 2011. Despite the similar names, the algorithms for these currencies are different. For Litecoin, this is “scrypt” technology, which also carries out limited emission. The currency has a recognizable official abbreviation LTC. It is updated more often than Bitcoin. Therefore, some controversial innovations like Segregated Witness don’t face much opposition and criticism among users.

What are the features of the Ripple currency?

This cryptocurrency with the XRP code is isolated and has no direct analogues. Launched in 2012 by Ripple Labs, this payment protocol operates on a distributed blockchain. So-called “mining” of a currency, cannot be done in the case of Ripple, even if open source is the basis of the protocol. All the currency in Ripple Labs is managed directly by the company itself and is fully owned by it, although, of course, it is available for regular trading and it is pretty convenient due to high-speed transactions.

Who needs the privacy of Monero?

Traders who prioritize their privacy, will be interested in the Monero currency. Even the author of this currency remained hidden from the public, it is only known that the year of Monero launch is considered 2014, and its original name was BitMonero. The CryptoNote protocol formed the basis for the operation of the currency, but over the years, it has become possible to conduct transactions outside of this protocol. Traders, for whom the maximum secrecy of payments is a key factor in choosing a cryptocurrency, are the main audience for this financial product with the XMR trading symbol.