The remarks below do not represent investment advice or any other type of advice on financial services, financial instruments, financial products, or digital assets. They’re meant to give you a basic idea of what’s going on. The remarks that follow are not an offer to enter into a contract for the purchase or selling of financial instruments or financial products. Alternatively, an invitation to make such an offer and acquire or sell any digital asset. The value of cryptocurrencies fluctuates dramatically. At any point, a decrease in value or a full loss is conceivable. The loss of data and passwords might potentially result in a total loss.
You’ve probably heard of cryptocurrencies, which are digital currency protected by encryption. But how many different varieties of cryptocurrencies exist? There are many more cryptocurrencies, not only Bitcoin and Dogecoin, that are creating waves. In this post, we’ll examine the top ten (based on market size) and provide some background on additional crypto assets you should be aware of.
What types of cryptocurrencies are there?
While many cryptocurrencies use a blockchain-based architecture, there are several notable variances. Coins and tokens are the two major types of cryptocurrency.
Coins and alternative cryptocurrencies (altcoins)
Any cryptocurrency that runs on its own blockchain is referred to as a coin. Because Bitcoin is backed by its own infrastructure, it is referred to as a “currency.” Ether, like Bitcoin, is managed by the Ethereum blockchain.
Any currency other than Bitcoin is referred to as an “altcoin.” Many altcoins function in the same way as Bitcoin does. Others, though, like Dogecoin, are rather unique. In comparison to Bitcoin’s ceiling of 21 million coins, Doge, for example, has a limitless quantity of coins.
Tokens are a type of currency that may be used
Tokens, like currencies, are tradable digital assets. Tokens, on the other hand, are non-native assets, which means they are built on the architecture of another blockchain. Tether, which is housed on the Ethereum blockchain, and others such as TerraUSD, Chainlink, Uniswap, and Polygon are examples of these.
There are dozens of cryptocurrencies—but not all of them are the same. We explain how the ten most prevalent varieties of cryptocurrency function.
1. Bitcoin (BTC)
Bitcoin was the world’s first cryptocurrency, with its beginnings traced back to a white paper released in 2008, and it is still the most well-known sort of crypto. It runs on its own blockchain, with transactions confirmed by a decentralized network of miners. Bitcoin had the greatest market capitalization in Jan 2022, with $896 billion USD.
2. The ether (ETH)
Ether is the coin that operates on the Ethereum blockchain. Ether, like Bitcoin, works on its own blockchain. But unlike Bitcoin, Ether is uncapped, which means that an endless amount of coins may theoretically be minted. Smart contracts, which operate on the Ethereum blockchain and are automatically performed when specific criteria are satisfied, are also supported by Ethereum.
3. Binance Coins (BNB)
Binance Coin is the native cryptocurrency of Binance, which will be the world’s largest cryptocurrency exchange in 2021. Users that prefer to pay with BNB will have their transaction costs cut. As a result, Binance Coin has grown in popularity, becoming one of the market’s major cryptocurrencies. Binance eliminates or “burns” a predetermined percentage of currencies in circulation to guarantee their value remains steady.
4. Tethering (USDT)
Tether is a sort of stablecoin that is connected to an external asset to provide less erratic pricing. In this situation, each coin is backed by an equivalent quantity of US dollars, preventing it from experiencing the same market volatility as other cryptocurrencies. However, there is significant controversy regarding whether it is genuinely backed by the dollar.
5. Javier Solana (SOL)
SOL is the native token of the Solana platform, which, like Ethereum and Bitcoin, operates on a blockchain architecture. Solana’s network can process 50,000 transactions per second, making this platform particularly appealing to investors who want to trade swiftly.
6. XRP currency (XRP)
XRP, which works on the Ripple protocol, has been labeled a “cryptocurrency for banks” since it is particularly intended for the demands of the banking industry. XRP was created to enable international payments by acting as a bridge between two separate currencies to provide cheaper and faster worldwide transactions.
7. Cardano (ADA)
The native currency of the Cardano blockchain is ADA. Cardano, which has been branded a “third-generation” cryptocurrency, separates its blockchain into two layers to improve transaction speeds. Native tokens are used to create a better experience for ADA holders.
8. US Dollar Coin (USDC)
USD Coin, like Tether, is a non-mineable stablecoin linked to the US dollar. USD Coin, on the other hand, offers more transparent funding and better auditing methods than Tether. The goal is to eliminate some of the risks associated with cryptocurrency by allowing users to withdraw their coins and get the appropriate amount of cash in return.
9. Terra (LUNA)
The Terra blockchain’s native currency, LUNA, supports the different stablecoins that have been established on this network. Terra algorithmic stablecoins are powered by LUNA and employ a core pool of tokens managed by smart contracts to keep the price stable.
10. Avalanche (AVAX)
AVAX is used on the Avalanche platform, among other things, to pay transaction fees. Avalanche lets developers establish new bespoke blockchains called “subnets” on the platform. Because the Avalanche blockchain is compatible with Solidity, the Ethereum blockchain programming language, Ethereum developers can easily establish Avalanche subnets.
What to Think About Before Purchasing Cryptocurrency
There are many various sorts of cryptocurrencies available, so it’s worth thinking about which coins or tokens could be suitable for you. Whether you’re a seasoned crypto investor or just getting started in this fascinating field, studying is a wonderful approach to limiting risk and making an informed choice about your money.