4 Types of Cryptocurrencies and How to Buy Them

4 Types of Cryptocurrencies and How to Buy Them

Cryptocurrencies are all the rage right now, and for a good reason. They offer a new way to conduct transactions without the need for third-party interference. But with so many types of cryptocurrencies available on the market, it can be challenging to know where to start when you’re ready to buy. In this guest post, we’ll take a look at some of the most popular cryptos and how you can buy them.

What are Cryptocurrencies?

According to the experts at SoFi, “cryptocurrencies are digital or virtual tokens that use cryptography to secure their transactions and control the creation of new units.” Cryptocurrencies are decentralized, meaning they aren’t subject to government or financial institution control. This makes them an attractive option for people who want a more secure way to conduct transactions.

What’s the Difference Between Crypto Coins and Tokens?

Cryptocurrencies can be divided into two categories: coins and tokens. Coins are the original type of cryptocurrency, and they function as a digital equivalent of traditional currency. On the other hand, Tokens represent a unit of value used to fuel transactions on a particular platform or network. For example, Ethereum’s ether token is used to pay for transactions on the Ethereum network.

What are the Different Types of Cryptocurrency?

Since the inception of Bitcoin in 2009, over a thousand different cryptocurrencies have been created. Here are some of the most popular:

1. Bitcoin (BTC)

As mentioned above, Bitcoin was the first cryptocurrency ever created. It remains the most well-known and valuable crypto, with a market cap of over $744 billion as of March 2022. Bitcoin can be bought and sold on exchanges and can also be used to purchase goods and services.

2. Ethereum (ETH)

Ethereum is a decentralized platform that runs smart contracts or applications that run exactly as programmed without any possibility of fraud or third-party interference. Its native currency is ether, which is used to pay for transactions on the network.

3. Ripple

Ripple is a real-time gross settlement system (RTGS), currency exchange, and remittance network. Ripple is different from other cryptocurrencies because it doesn’t use a blockchain. Instead, it uses a distributed ledger system that allows instant transactions with low fees.

4. Tether (USDT)

Tether is a stablecoin, meaning it’s a cryptocurrency pegged to the US dollar. It aims to provide the stability of fiat currency with the flexibility of crypto. USDT can be used to trade goods and services or traded on exchanges.

How to Buy Cryptocurrencies

Now that you know a little more about the different types of crypto, you’re probably wondering how you can buy them. Here are a few methods:

Cryptocurrency Exchanges

The most common way to buy cryptocurrencies is through a cryptocurrency exchange. Exchanges are online platforms that allow you to buy, sell, or trade cryptos for other assets, such as fiat currency or other digital tokens.

Peer-to-Peer Trading

Another way to buy crypto is through peer-to-peer (PTP) trading platforms. PTP platforms allow you to buy and sell cryptos directly from other users. This can be a more affordable option than using an exchange, but it can also be riskier because you’re dealing with individual sellers and buyers.

Fiat-to-Crypto Gateways

Some exchanges and PTP platforms also offer fiat-to-crypto gateways. These allow you to buy cryptos using traditional fiat currencies, such as USD, EUR, or GBP.

Cryptocurrency ATMs

Another option for buying crypto is through a cryptocurrency ATM. Cryptocurrency ATMs work similarly to regular ATMs, allowing you to purchase crypto with fiat currency.

Overall, there are many ways to buy cryptocurrencies. You should do your research and choose the right method for you. Luckily, SoFi is an all-in-one investment tool that allows you to trade stocks and ETFs, acquire cryptocurrency, and begin automatic investing. So why don’t you give it a try today?

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