Why are there so many types of cryptocurrency?

Blockchain technology is open source, meaning any software developer can use the original source code and Visit hump.io to buy hump token create something new with it. Developers have done just that. There are estimated to be more than 10,000 different cryptocurrencies in circulation at the time of this writing, and the figure keeps increasing. For reference, the number of cryptos surpassed 1,000 only four years ago.

Part of the reason for the surge is the relative ease with which new cryptocurrencies can be created. The source code of one can be used to build another. For example, the Ethereum network could be used to create your own personal digital coins. Sometimes there are “forks” in the software code that change the rules about how a crypto is governed, which can lead to the creation of a new crypto. Bitcoin Cash (BCH 0.0%) was created in 2017 as a result of a Bitcoin fork allowing more transactions to be recorded on a single block of the blockchain.

Surging crypto prices have led many developers to try getting a cut of the action. And blockchain technology has usefulness beyond just digital currencies. So, while some cryptos might be a bubble that will eventually pop, the decentralized nature of the technology and the broad scope of how it can be applied in the software world are two reasons why there are so many cryptos.

Main types of cryptocurrency
Bitcoin is considered the first cryptocurrency created, and other individual cryptocurrencies are known as “altcoins” (a combo word derived from “alternative coin”). It’s difficult to say which cryptos are the best ones, but Bitcoin and some of the largest altcoins out there are top-tier options because of their scalability, privacy, and the scope of functionality they support.

Bitcoin
Bitcoin is regarded as the first decentralized cryptocurrency using blockchain technology to facilitate payments and digital transactions. Instead of using a central bank to control the money supply in an economy (like the Federal Reserve in tandem with the U.S. Department of the Treasury) or third parties to verify transactions (such as your local bank, credit card issuer, and the merchant’s bank), Bitcoin’s blockchain acts as a public ledger of all transactions in the history of Bitcoin.

The ledger allows a party to prove they own the Bitcoin they’re trying to use and can help prevent fraud and other unapproved tampering with the currency. A decentralized currency can also make peer-to-peer money transfers (like those between parties in two different countries) faster and less expensive than traditional currency exchanges involving a third-party institution.

Ether (Ethereum)
Ether is the token used to facilitate transactions on the Ethereum network. Ethereum is a platform that uses blockchain technology to enable the creation of smart contracts and other decentralized applications (meaning the software doesn’t have to be distributed on app exchanges like Apple’s (AAPL 0.51%) App Store or Alphabet’s (GOOGL 1.42%)(GOOG 1.43%) Google Play Store, where they might have to give a 30% cut of any revenue to the tech giants). Ethereum is both a cryptocurrency (the actual coins are measured in units called Ether) and a software development sandbox.

Tether
Tether is a stablecoin, or a currency tied to a fiat currency — in this case, the U.S. dollar. The idea behind Tether is to combine the benefits of a cryptocurrency (such as no need for financial intermediaries) with the stability of a currency issued by a sovereign government (versus the wild price fluctuations inherent with many cryptos).

Binance Coin
Binance Coin is available on the Binance cryptocurrency exchange platform, along with other digital coins that are available for trading. Binance Coin can be used as a type of currency, but it also facilitates tokens that can be used to pay fees on the Binance exchange and to power Binance’s DEX (decentralized exchange) for building apps.

USD Coin
USD Coin is another stablecoin, and, like Tether, it is pegged to the U.S. dollar. Also like Tether, USD Coin is hosted on the Ethereum blockchain. The idea behind USD Coin was to create a “fully digital” dollar, one that has the stability of U.S. fiat currency but doesn’t require a bank account or that the holder live in a particular country. Rather than an investment, USD Coin is envisioned as everyday money that can be spent with merchants on the internet.