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This vs. That - December 1

Altcoins vs Stablecoins

  • Stablecoin is a form of cryptocurrency with its value linked to an outside source, such as the American dollar or gold, giving the coin a stable value. This stability is what sets stablecoins apart in the otherwise volatile crypto market.

  • Altcoins are the middle ground and are the usual go-to for new investors. Their price of entry is usually attainable and affordable for the average person.

  • The main difference between stablecoins and altcoins is that stablecoins always remain at the same value, altcoins can spike or dip in value.

  • Stablecoins provide a stable investment that will always maintain the same value. Altcoins, on the other hand, offer different types of functionality

ERC 20 vs ERC 721

  • Main distinction between ERC20 and ERC721 tokens is that ERC20 is a fungible token, but ERC 721 is a non -fungible token.

  • ERC20 tokens are interchangeable and represent a single entity, whereas ERC721 tokens represent a collection of assets.

  • ERC20 tokens can be divided in any number of ways. On the other hand, ERC721 tokens are not-divisible.

  • An ERC721 token represents a class of assets, whereas an ERC20 token represents a particular type of asset.

DeFi vs CeFi

  • An important difference between DeFi and CeFi is that when a user interacts with DeFi, they simply have to trust that the smart contract is written in a secure way. DeFi is peer-to-peer lending and does not require the same amount of trust as interacting with a CeFi company.

  • When a user decides to use a DeFi platform directly, there is a higher level of technological knowledge that is required. DeFi is trustless and decentralized, which creates more confidence in the banking services because of the ability to audit the underlying smart contract code.

  • CeFi platforms essentially outsource the technological obstacles from the depositor to the institution, yet require the depositor to trust a central party and their lending practices.

Staking vs Mining

  • Mining uses the proof-of-work (PoW) consensus mechanism. In this system, miners are users with powerful computational hardware, which they use to solve complex computational puzzles. It validates the transactions and provides security to the transactional data stored in the blockchain

  • Staking uses the Proof-of-Stake consensus mechanism. It was introduced as an alternative to PoW when people started realizing the environmental cost of mining. It also removed the need for expensive GPUs that were necessary for mining.

  • Mining requires powerful GPUs (Graphics Processing Units) that perform complex calculations to solve these puzzles.

  • The staking method requires cryptocurrency holders to 'stake' their coins. Users have to lock their coins on the blockchain network for a fixed period where they cannot withdraw them, making them illiquid

Cold Wallet vs Hot Wallets

  • The main difference between hot wallets and cold wallets is that hot wallets are connected to the internet through your computer or phone, while cold wallets are hardware devices that can keep your data offline.

  • Cold wallets aren’t connected to the internet, so they’re less vulnerable to online hacks or theft than a hot wallet

  • Hot wallets can be accessed on more than one device, so in the event that your computer or phone is stolen, you can recover your funds through a seed phrase or other backup method.

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