Nowadays, most people are familiar with the term cryptocurrency. This virtual alternative to the traditional fiat has gained worldwide media attention due to the rise, fall, and subsequent stabilization of Bitcoin. Nevertheless, BTC isn’t the only player in the game. In fact, there are quite a few distinct cryptos out there worth looking into.
Due to this, using a reliable cryptocurrency analysis tool such as the Bubble-O-Meter can be indispensable. Here is what you need to know about the various types of cryptocurrencies on the market, as well as how to use a comparative breakdown to guide your trades towards success and profit.
Different types of cryptocurrencies
By definition, a cryptocurrency represents a strongly encrypted digital asset that is used in decentralized financial transactions that are private and secure, executed via blockchain. Due to this, it gained a lot of popularity in recent years, as more and more people were attracted by the anonymity and full financial control it offered.
Created in 2009 by an unknown individual who went by the alias of Satoshi Nakamoto, Bitcoin is widely regarded as the first cryptocurrency to ever hit the market. Interest for it appeared immediately, but it wasn’t until a few years ago that the true craze began. In the fall of 2017, BTC had reached peak values.
Come winter, its bubble finally burst in what is now known as “the cryptocurrency bloodbath”. Due to restrictive financial regulations imposed by several key countries in the trade, values plummeted at alarming rates, causing investors from all over the globe to withdraw in panic. However, as it was expected, things settled down eventually.
With all the buzz surrounding Bitcoin, it is easy to forget that there are plenty of other alternative cryptocurrencies in the world. In fact, there are more than 4,000 of them at moment. And while many are irrelevant to the bigger picture, a few managed to come to the foreground and gain importance in the trade.
According to Investopedia, there are six other pertinent cryptocurrencies that are worth investing in at this moment besides Bitcoin. These are Litecoin (LTC), Ethereum (ETH), Ripple (XRP), Dash (DASH), Zcash (ZEC), and Monero (XMR). Their prices are considerably lower than that of BTC, but they are also more lowkey, which gives you an edge over the competition.
Nevertheless, knowing what the different types of cryptocurrencies on the market are isn’t enough. It’s also important to understand what they are each used for, as this plays a huge role in the way in which they get moved around. There are three major types of cryptocurrencies, namely transactional, platform, and utility.
Bitcoin and Litecoin are the primary transactional currencies. They are generally exchanged for services and products, similarly to traditional physical currencies. Their main purpose is to eliminate the need for money issued by global governments, and perhaps even to remove fiat currency entirely one day.
A good example of a platform currency is Ethereum, whose aim is to create new markets and eliminate the need for mediation. What is more, it is the basis of the creation of a host of entirely new cryptocurrencies, as well as the foundation of smart contracts. Finally, a utility crypto such as Ripple is used to ease financial processed pursued by institutions such as banks.
Using the Bubble-O-Meter
As explained above, there are many types of cryptocurrencies presently at play on the foreign exchange market. What is more, they each serve very distinct purposes, which influences trading and investments even more. For this reason, the subtle differences between them can become hard to grasp for newcomers.
Fortunately, many brokers provide their clients with a handy tool that simplifies the peculiarities of each cryptocurrency and makes competitive comparisons widely accessible. This feature is known as the Bubble-O-Meter, and its main purpose is to provide users with a fast cryptocurrency analysis that will guide their investments.
The prices of various cryptocurrencies, such as Litecoin (LTC), Ethereum (ETH), Ripple (XRP), Dash (DASH), Zcash (ZEC), and Monero (XMR) are compared against the market standard, which is Bitcoin (BTC). To do so, the Bubble-O-Meter makes use of Volume-Adjusted Price, or VAP for short, and Supply-Adjusted Price, also referred to as SAP.
Although the information provided isn’t updated in real time, it is an excellent way to get a feel of the market and see the trading ratio against capitalization. This can serve as a solid starting point for any future trade, as it is fully adjustable so as not to be Bitcoin-biased. All in all, it is a trustworthy tool that can be used by newbies and pros alike.
The bottom line
The various types of cryptocurrencies on the market don’t just have different names and prices, but also serve distinct purposes. Due to this, using the Bubble-O-Meter to analyze their capitalization is essential for a successful trade. And thanks to the simplicity and accessibility of it all, everyone can benefit from such a tool.