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What is the difference and differences of the crypt : Bitcoin - altcoins - stablecoins

What is the difference and differences of the crypt : Bitcoin - altcoins - stablecoins

Well, who hasn't heard about Bitcoin (BTC - bitcoin) yet?

Yes, everyone knows that bitcoin is crypta. He is the only one and is easy to remember. But for many who are still relatively far from the crypto industry, there is a lot that has not been explored, at least at the level of understanding how some coins differ from others.

Sometimes you only have to hear about some altcoins and stablecoins. And today, by the way, there are already more than 7000 of them.

We will try to reveal in an easy-to-understand form the main difference in cryptocurrencies, namely, what is the difference between bitcoin and altcoins and what is the role of stablecoins in this kitchen.

Why there are so Many crypts - differences

In 2009, the first coin based on cryptographic technology was born.  This is the ancestor, the king of cryptography – Bictoin (BTC)).

Further, in the course of the development of the crypto industry, other types of cryptocurrencies began to appear.

Many of them borrowed the BTC blockchain and as a result of its fork (branching of the original network), the source code of the main cryptocurrency was modified and the branches already worked independently.

As a result of such modifications, a significant part of derivatives was formed, and they are called altcoins.

The most popular altcoins created on the BTC fork are Bitcoin Cash, Bitcoin Gold, Litecoin, Dash (DASH), etc.

this is important

On the basis of these altos, in turn, other altcoins can be created. So the well-known Elon Musk Dogecoin coin was developed on the basis of a fork of the LTC coin, called Luckycoin, which in turn was created on the basis of the BTC fork.

Therefore, he is the one and only BTC, and all that is behind the fence, even on its branches, are all altcoins.

But this is only a small part of altcoins created on the basis of BTC.

In addition to the ancestor of the network (BTC blockchain), Ethereum blockchains (ETH – ethereum), Binance Smart Chain, Solana, Cardano, Polkadot, etc. were also created.

Projects have already been created within each of these networks. Each project has its own coin. I.e., the cryptocurrency of each project is already called a token, which in turn also belongs to altcoins.

These tokens, in turn, are used in the ecosystem of their project and are a means of paying for services or products provided by the team. The commission for all transactions within the blockchain (network), regardless of the coins in which it is carried out, is paid by coins of the network to which it belongs.

For example, the EOS token is a project of the Ethereum network (ETH). All fees for its transaction must be paid by the ETH coin.

So, we already understand that there is a crypt. It is divided into BTC and altcoins. And altcoins, in turn, for tokens and coins.

But in addition to these types of crypts, there is another special kind of it - the stablecoin. And this is where many "fall into a stupor".

By its nature, it is an ordinary token.

The most popular types include – USDT,USDC, BUSD, DAI, TrueUSD.

The principle of its creation is the same as that of the tokens of the main blockchain networks.

So, for example, the USDT token functions in all available networks (Ethereum (ERC-20), Tron (TRC-20), Binance Smart Chain (BEP-20)).

A distinctive feature of stablecoins is that these tokens are secured by certain real assets of its owner.

That is, if the rise in the price of altcoins is mainly due to people's belief in its growth potential due to the development of its project or the departure from the fiat inflation, then stablecoins are not affected by this. At their core, stablecoins are equivalent in their price to the asset to which they are tied. Therefore, to some extent they can be attributed to risk-free assets that currently have something behind them (dollars, gold, bonds, etc.).

So, for example, the most popular type of stablecoin USDT or Tether is equivalent in its price to 1 US dollar. Its cost directly depends on the US dollar exchange rate. And the company Tether Limited, registered in Hong Kong in 2014, is behind this stable.

Backed by USDT fiat funds in the form of Treasury bills, deposits, corporate short- and long-term US bonds. The amount of issued USDT is strictly related to the volume of the company's assets with which they are secured. And this, by the way, is checked by certain audit companies without fail. Everything is quite strict.

this is important

However, it is necessary to understand that the guarantor of this crypt is still directly its owner. And all the risks associated with its provision are on his shoulders.

So, the recent case of the bankruptcy of VSB Bank, where a significant share of the assets of the Circle technology company was stored, deprived it of part of the assets allocated to secure its USDC coin. Therefore, the risk of risk-free assets, as it sounds strange, also exists.

There are also stablecoins that are secured not only by physical assets, but also by the same crypto, which refers them to decentralized algorithmic stablecoins that carry even greater risks.

In general, the system of interaction and the appearance of cryptomonets can be presented in this form.

what is the difference of the crypt

Prerequisites for creating their own controlled digital currencies in various states

Thus, the whole crypt is BTC (bitcoin is the gold standard of cryptography) and altcoins, which essentially include the same stablecoins.

A stablecoin is the same token issued on a certain blockchain, only backed by a certain asset. In fact, it is an altcoin, simply allocated to a certain group because of its peculiarity.

The transfer of coins from one wallet to another should be carried out in the redistribution of the network in which they operate, for example, in ERC-20 or TRC-20.

The process of creating a certain altcoin is not a big problem, especially on the existing blockchain, but to give it value … Here it is necessary to work with the team to give it a certain productivity. Well, for example, how the functionality of smart contracts is implemented in the ETH blockchain.

this is important

The blockchain technology itself already provides for a system of fast, secure and cheap transactions to anywhere in the world, which is typical for almost all types of crypts. And this is its main advantage relative to the current fiat money transfer system (today's money). The rest the value of it, in the development of projects on it is for the benefit of society and the state.

Information for reasoning.

  • Why have the monetary authorities of certain countries been actively promoting the topic of creating their own digital currencies all over the world lately ?
  • What are they planning to create them on ?
  • And why don 't they want to use existing crypto coins for these purposes ?

What is the difference and differences of the crypt: Bitcoin - altcoins - stablecoins - Something like that !

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