What is the purpose of cryptocurrency? Although this question may sound rhetorical to some, there is more to explain than common knowledge. You will be surprised to understand that most cryptocurrency traders have no idea that these coins are created to serve different purposes. Having said that, let's stick to the question, "what is the purpose of cryptocurrency?" Well, this is what this piece is there to explain. Let's take the decentralized finance coins, for example. They are those financial transactions conducted without using the conventional bank method. Let's demystify this is like doing everything you do with the traditional bank outside the bank itself. When we say, "those things you do", we mean getting loans, investing, insurance, and even credit cards.
But unlike in the traditional bank system, where all the information about the participating parties is recorded, you will be doing all this in complete anonymity. One of the major advantages of this type of coin (and almost all the coins) is that it makes you completely invisible to the government. And it will also be able to offer more stable finance among the users of this coin. That being said, let's move back to the purpose of the many coins that we see today. Below, we have listed five known cryptocurrencies and their different purposes. Read on.
The BTC (as it is also called) is the biggest and the most popular coin in the market today. It is highly valued despite its history of extreme volatility. Bitcoin was created to be used for making digital payments on online platforms. Although it still serves this purpose to date, experts believe that it is too volatile for that. This cannot be said to be true because the market should be able to decide at the end of the day.
Ethereum is the most popular coin after Bitcoin and has performed wonderfully well after its creation in 2013. Ethereum is an open-source coin where users can deploy while developing another cryptocurrency. Aside from being one of the largest cryptocurrencies in terms of market cap, Ethereum also helps create decentralized applications (otherwise known as dApp) and smart contracts. Because of its tough security apparatus, it runs without any form of fraud control, downtime, or involves any form of interference from a third party.
Also called the USDT, it is a stable coin and is among the first of its kind to make it on the market. This coin is pegged to the dollar, hence, has the dollar's value. It is currently the biggest stable coin with the largest market cap. Since the price is the same as the dollar, traders often use it to evade inflation in their various countries or escape the market.
The question of what the purpose of cryptocurrency is purposely coined to bring out the technical attributes of every coin while explaining its purpose. And with this, we are very confident to say that Cardano is designed with a technology known as the Ouroboros. Ouroboros is a peer-reviewed blockchain model. It is a more scalable way of maintaining decentralization in the cryptocurrency industry. They are used to simplify the process of data collection when it is done from multiple sources.
The question of the purpose of cryptocurrency can really be complex because it is challenging to mention the purpose of one coin without the other. Nevertheless, there are other coins that still serve a completely different purpose from what we have mentioned above. But mind you, as they can differ, most of them are very similar but have one thing in common: anonymity and design with a cryptographic security feature. And no matter the purpose of a coin, they are designed in such a way that it cannot be counterfeited or spent twice. As strange as it may sound and contrary to popular belief that all cryptocurrencies come in a decentralized network, some of them are traceable.