NEW! Our Hero’s Journey tool can help you with your next step towards financial freedom - click here to try now.
Advertiser Disclosure

5 types of cryptocurrency you should know about

5 types of cryptocurrency you should know about
Image source: Getty Images


You might have only heard of Bitcoin, but there are actually many different types of cryptocurrency. There are a number of digital assets making up the rest of the cryptocurrency market.

Compare stocks and shares ISAs

If you’re planning to open a stocks and shares ISA, choosing the right platform is important. To help you narrow down the choices, we’ve created a list of some of the top stocks and shares ISAs.

Let’s take a look at five different cryptocurrencies that are worth having on your radar.

Types of cryptocurrency

Before diving in, it’s worth just explaining a few things. Cryptocurrency can be a pretty complex topic if you’re not a computer programmer.

A key thing to remember is that most cryptocurrencies are designed to be used as digital tokens on specific networks.

Although there are competing types of cryptocurrency, their price is just one small aspect. The companies, organisations, and foundations behind these technologies are mostly trying to create useful digital networks and marketplaces, not just coins for trading on the Internet.

Here are five important cryptocurrencies that you should know about.

1. Ethereum (ETH)

Ether (ETH) is the cryptocurrency used in the Ethereum network. It is the second-largest cryptocurrency on the market and Bitcoin’s biggest rival. The name of the platform and the programming language is Ethereum.

Ethereum is the creation of programmer Vitalik Buterin, among others, and it went live in 2015. It uses blockchain and is open-source but it’s more sophisticated than Bitcoin in its design.

The idea is for Ethereum to be used for smart contracts and distributed applications (DApps). This may sound complicated but basically, it just means creating ways for different parties to interact and do business in an efficient and secure way.

Many cryptocurrencies available actually run on the Ethereum network. Ether’s price is up over 90% since the beginning of the year, and it’s currently sitting around $1,400. This is a price similar to highs it reached back in 2018.

2. Cardano (ADA)

Launched in 2015 by a co-founder of Ethereum, Charles Hoskinson, Cardano and its token ADA are also for use with smart contracts and DApps. You can think of it as a competitor to Ethereum. Indeed, ADA is a similar type of cryptocurrency to ETH.

It’s interesting because it’s the only blockchain that’s peer-reviewed and developed by academic experts in the field. The Cardano team are dead-set on changing the world, not just making money from the ADA token.

Are you making these 3 common investing mistakes?

These all-too-common investing errors could lead to missing out on the long-term wealth-building power that shares can hold….

To help you learn more about these pitfalls, how to avoid them, and how you could move forward on a path to wealth-building, we’ve created a free report, “The 3 Worst Mistakes New Investors Make”.

Just enter your best email below for instant access to your free copy.

By checking this box and submitting your email address, you agree to MyWalletHero sending you emails with money tips, along with details of products and services that we think might interest you. You can unsubscribe from future emails at any time. You also consent to us processing your personal data in line with our privacy policy, and our cookie statement. For more information, including how we collect, store, and handle personal data, please read our Privacy Statement and Terms & Conditions.

Their goal is to create a faster and more efficient network than Ethereum. Cardano’s ADA cryptocurrency has a very high supply and a current price of $0.37 per coin, a long way off its top value of $1.18.

3. Litecoin (LTC)

Designed to be an improvement on Bitcoin, Litecoin aims to become a global payment network. Launched in 2011 by Charlie Lee, this is a payment-oriented type of cryptocurrency. If Bitcoin is digital gold, the hope for Litecoin is to become digital silver.

Litecoin’s programming structure makes it faster and easier to acquire than Bitcoin. The idea is to use this altcoin for smaller transactions and it has a coin limit almost four times higher than Bitcoin.

Litecoin’s price has seen positive movement of over 28% this year, up to around $150 per coin, but it’s still way off its highest ever valuation of just over $350.

4. Stellar Lumens (XLM)

This is an open network focusing on the movement and storage of money. Stellar uses a cryptocurrency token called Lumens (XLM). This is another financial type of cryptocurrency. However, rather than being aimed at individuals, Stellar’s aim is to use their XLM cryptocurrency to make it easier and cheaper for institutions to be able to trade things like assets across borders.

The aim of the network is to work alongside fiat currency (regular money) and not replace it. Their ambitious goal is to make global markets more fluid, open and less congested than they are today.

The price of the XLM token has shot up by over 130% this year to $0.31. Like many others, it’s still way off its highest price, which was $0.87.

5. IOTA (IOTA)

Launched in 2016, the IOTA Foundation’s main goal is to power the Internet of Things (IoT) using their IOTA cryptocurrency. This just means machine-to-machine transactions. Instead of blockchain, IOTA uses a technology known as Tangle. Most blockchains have issues with speed and scalability, so this is a different approach.

If there are too many transactions, blockchains can get clogged up. IOTA’s Tangle design allows it to become faster with more users. And because there are no miners, there are no transaction fees. This makes it potentially really useful for networks with lots of small transactions.

The IOTA Foundation has already partnered up with massive car manufacturers like Jaguar Land Rover and even cities like Taipei in Taiwan.

IOTA’s price has seen a really positive upswing of over 60% this year to $0.48. But this is still way off its highest price of $5.25, so there is perhaps plenty of room for the price to expand again.

Reviewed and rated 4 stars out of 5 by MyWalletHero

Need investment advice? Get a free initial review lasting up to 1 hour, plus £50 off any follow-up advice.

MyWalletHero has sourced you a £50 discount off the cost of advice when you find an independent or whole-of-market financial adviser through Unbiased.co.uk*. All advisers are FCA-regulated, qualified and give fully unbiased advice. To find yourself an adviser fast and for free – use the Unbiased matching tool.

*This is an offer from one of our affiliate partners. For more information on why and how we work with partners, click here.

Was this article helpful?
YesNo

Some offers on MyWalletHero are from our partners — it’s how we make money and keep this site going. But does that impact our ratings? Nope. Our commitment is to you. If a product isn’t any good, our rating will reflect that, or we won’t list it at all. Also, while we aim to feature the best products available, we do not review every product on the market. Learn more here. The statements above are The Motley Fool’s alone and have not been provided or endorsed by bank advertisers. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK has recommended Barclays, Hargreaves Lansdown, HSBC Holdings, Lloyds Banking Group, Mastercard, and Tesco.