Bitcoin is the most valuable and popular cryptocurrency at present. An anonymous individual named Satoshi Nakamoto invented it and introduced it to the world through a white paper back in 2008. Right now, thousands of cryptocurrencies exist in the market, and the popularity of this digital asset is rising by the day.
So, if you are new to the world of Bitcoins and familiarizing yourself with platforms like Bitcoin Prime, it would be helpful to know about things beyond the basic tenets of trading. With that in mind, here’s discussing the types of cryptocurrencies and their legality.
What are the types of cryptocurrencies?
Every cryptocurrency comes with a different specification and function. For instance, the ether of Ethereum markets itself as the fuel for the smart contract platform underlying it. Banks use the XRP of Ripple for facilitating transfers between various areas.
The public got access to Bitcoin back in 2009, and it is still the most covered and widely-traded cryptocurrency. Going by the status in November 2021, more than eighteen million Bitcoins were in circulation and the total market cap was around $1.2 trillion. Now, just 21 million Bitcoin will ever come into existence.
Keeping the success of Bitcoin in sight, several other cryptocurrencies (called ‘altcoins’) have now been launched. Many of the new currencies were made from scratch, while others are forks or clones of Bitcoin. Such currencies include EOS, Cardano, Ethereum, Litecoin, and Solana.
Going by the estimates in November 2021, the total value of the cryptocurrencies in existence reached more than $2.1 trillion. And Bitcoin represented at least forty percent of the total value.
Are all types of cryptocurrencies legal?
Fiat currencies get the authority as a transaction medium from the monetary authorities or government. For instance, every dollar bill comes with the backing of the Federal Reserve.
As no private or public entities back the cryptocurrencies, it is quite hard to make a strong case for the legal status of the coins in various financial jurisdictions in the world. It certainly doesn’t help that the cryptocurrencies tend to function largely outside the present financial infrastructure.
As such, the legal status of the cryptocurrencies has several implications for the use in trading and daily transactions. Now, the truth is that the situation is different for different countries. In December 2021, El Salvador became the only country ever to let Bitcoin become the legal tender for financial transactions. On the other hand, China banned all crypto-based transactions until further notice.
The fact is that, regardless of the type of cryptocurrency you use, the regulation varies based on jurisdiction. If cryptocurrency is legal in a country, all types and forms of it are legal as well.
The endnote
Cryptocurrencies were brought to the world with the aim to improve financial infrastructure. However, with any form of revolution, tradeoffs are almost a given. At the recent stage of cryptocurrency development, there are several differences between the basic idea of decentralized systems of cryptocurrencies and the practical implementation of it.