The third generation cryptocurrencies are those that succeeded the second generation and are characterized by greater speed in operations and by having exclusive services for their users.
Therefore, we are facing a new generation of cryptocurrencies that improve the previous ones. The first was Bitcoin, the second had its maximum exponent in Ethereum, with its decentralized contracts. For its part, the third has, among the best known, IOTA or Cardano.
The form of classification is because they provide a novelty compared to the previous generation. Thus, the second generation, used the type of contracts mentioned above and the third, added services that give them extra value.
Problem of third generation cryptocurrencies
Third generation cryptocurrencies seek to solve a series of existing problems in the previous ones. Let’s see some of them.
- The most important, speed. In fact, these cryptocurrencies have focused on it as the main objective. They must be fast when carrying out transactions, since it is one of the most valued things.
- Sustainability and the environment. Protecting our planet has become a goal, and for this reason, this type of virtual currency advocates not using high-level computational mining. In this way, it promotes energy saving.
- The scalability allows operations between many and at a very low cost.
- Finally, they can be operated on different blockchain platforms, something that, in turn, provides encryption alternatives.
utility token and security token
The utility and security token are two concepts related to cryptocurrencies. In the first case, we are dealing with a type of virtual currency that entails a series of added services or allows you to belong to exclusive clubs, the third generation.
The second refers to what we could call the fourth generation cryptocurrencies. In this way and as its name indicates, they are focused on security. Thus, they include property or titling rights, among others.
Example of third generation cryptocurrencies
Let’s see, finally, some of these cryptocurrencies.
- Algorand (ALGO): A cryptocurrency that, above all, focuses on scalability.
- Cardano (ADA): It is a cryptocurrency operated on the blockchain of the same name and whose essential innovation is peer reviews based on scientific evidence.
- Polkadot (DOT): A scalable, efficient virtual currency with an interest in sustainability and the environment.
- Solana (SOL): Its main comparative advantage is the low cost of its commissions.