Cryptocurrencies are digital or virtual currencies that operate using cryptography technologies. They enable secure online payments to be made without the intervention of third-party intermediaries. The term “crypto” refers to the encryption methods and cryptographic procedures used to safeguard these entries, which include elliptical curve encryption, public-private key pairs, and hashing algorithms.
Bitcoin and other cryptocurrencies can be mined or purchased on cryptocurrency exchanges. Not all online stores allow cryptocurrency payments. Even well-known cryptocurrencies, such as Bitcoin, are rarely used for retail sales. However, the increasing value of cryptocurrencies has made them appealing as trading instruments. To a lesser extent, they are also used for cross-border transactions.
There are thousands of different cryptocurrencies, ranging from Bitcoin and Ethereum to Dogecoin and Tether, which might be overwhelming if you’re new to the world of cryptocurrency. To get you started, here are the top ten cryptocurrencies by market capitalization, which is the total value of all coins currently in circulation.
- The cryptocurrency bitcoin (BTC)
Market capitalization exceeds $730 billion.
Bitcoin (BTC) was the first cryptocurrency, developed in 2009 by someone going by the alias Satoshi Nakamoto. BTC, like the majority of cryptocurrencies, is built on a blockchain, which is a distributed ledger that records transactions across a network of thousands of computers. - Ethereum (ETH)
Over $327 billion in market capitalization
Ethereum, which is both a cryptocurrency and a blockchain platform, is a favorite among programmers due to the possible uses it offers, such as smart contracts that run automatically when certain conditions are satisfied and non-fungible tokens (NFTs). Ethereum has grown tremendously as well. From April 2016 to February 2022, its price increased by approximately 25,000 percent, rising from around $11 to over $2,700. - Tether (USDT) Tether has a market capitalization of more than $78 billion.
Tether, unlike some other types of cryptocurrency, is a stablecoin, which means it is backed by fiat currencies such as US dollars and the Euro and theoretically maintains a value equal to one of those denominations. - Binance Coin (BNB). The Binance market capitalization exceeds $63 billion. The Binance Coin is a cryptocurrency that may be used to trade and pay fees on Binance, one of the largest cryptocurrency exchanges in the world. Since its launch in 2017, Binance Coin has evolved beyond simply performing transactions on Binance’s exchange platform. It can now be used for business, payment processing, and even trip planning. It can also be exchanged for other cryptocurrencies such as Ethereum or Bitcoin. It was barely $0.10 in 2017; by February 1, 2022, it had risen to roughly $377, a 377,000 percent increase.
- US Dollar Coin (USDC). Over $50 billion in market capitalization used Coin (USDC), like Tether, is a stablecoin, which means it is backed by US dollars and aiming for a 1 USD to 1 USDC ratio. USDC is powered by Ethereum, and you may use USD Coin to make international payments. Over $35 billion in market capitalization
- Cardano, which arrived on the crypto market later, is famous for its early embrace of proof-of-stake validation. By removing the competitive, problem-solving part of transaction verification seen in platforms such as Bitcoin, this solution reduces transaction time, energy usage, and environmental effect. Cardano, like Ethereum, uses ADA, its native coin, to enable smart contracts and decentralized apps. Cardano’s ADA token has grown slowly in comparison to other major crypto coins. In 2017, the price of ADA was $0.02. Its price was $1.05.01 on February 1, 2022. This represents a 5,150% increase.
- Javier Solana (SOL): Over $33.5 billion in market capitalizationSolana, which was created to support decentralized financial (DeFi) applications, decentralized apps (DApps), and smart contracts, is based on a unique hybrid proof-of-stake and proof-of-history method that allows it to process transactions rapidly and safely. The platform is powered by SOL, Solana’s native cryptocurrency. SOL’s pricing when it first appeared in 2020 was $0.77. By February 1, 2022, its value had risen to over $100, representing an increase of nearly 13,000 percent.
- XRP (XRP)
Over $29 billion in market capitalization
XRP, which was founded by some of the same individuals as Ripple, a digital technology and payment processing company, can be used on that network to facilitate swaps of various currency kinds, including fiat currencies and other major cryptocurrencies. The price of XRP at the start of 2017 was $0.006. Its price hit $0.62 on February 1, 2022, representing a more than 10,000% increase. - Terra (LUNA)
Over $21 billion in market capitalization
Terra is a stablecoin blockchain payment network that focuses on maintaining a balance between two types of cryptocurrency. Stablecoins backed by Terra, such as TerraUSD, are linked to the value of actual currencies. Luna, their counterbalance, powers the Terra platform and is utilized to create new Terra stablecoins. Terra stablecoins and Luna act in tandem based on supply and demand: When the price of a stablecoin rises above the value of its connected currency, users are incentivized to burn their Luna in order to create more Terra stablecoin. Similarly, as its value declines in relation to its base currency, users are encouraged to burn their Terra stablecoins in order to manufacture more Luna. As the Terra platforms gain popularity, the value of Luna rises. Luna’s price has climbed about 8,000 percent since January 3, 2021, when it was $0.64, to $51.39 just over a year later. - Polkadot (DOT) has a market capitalization of more than $19 billion. Cryptocurrencies can use any number of blockchains; Polkadot (and its namesake coin) intends to unify them by building a cryptocurrency network that connects the various blockchains so that they can work together. This integration has fostered significant growth since Polkadot’s introduction in 2020, and it has the potential to transform how cryptocurrencies are managed. Between September 2020 and February 1, 2022, its price increased by approximately 565 percent, from $2.93 to $19.49.
These are the top 10 cryptocurrencies as of now as per the recent hike in their prices. However, knowing just the top cryptocurrencies is not enough. An investor must know everything about cryptocurrencies before making an investing decision.
When it comes to cryptocurrencies, one of the most challenging challenges for investors is not getting caught up in the hype. Digital currencies have quickly gained significance in the portfolios of many retail and institutional investors. Simultaneously, analysts have continued to warn investors about the market’s volatility and unpredictability.
If you’ve decided to invest in the cryptocurrency market, as with any other investment, you should do your research first. In the sections below, we’ll go over what you should know before investing.
Think About Your Motives for Investing in Cryptocurrency
The most important question to ask yourself before investing in cryptocurrency is why you’re doing it.
Are you only interested because of the present popularity of the bitcoin craze? Is there a compelling reason to invest in one or more specific digital tokens? Of course, individual investors have different personal financial goals, and for some, researching cryptocurrencies makes more sense than for others.
Get a Feel for the Industry
Before investing in digital currencies, inexperienced investors must first comprehend how the digital currency world works. Take the time to educate yourself on the many currencies available. With hundreds of different coins and tokens to choose from, it’s vital to look beyond the most well-known names like Bitcoin, Ether, and Ripple.
Furthermore, it is necessary to examine blockchain technology in order to grasp how this component of the bitcoin universe works.
Some aspects of blockchain technology may be difficult to grasp if you do not have a background in computer science or coding.
There are a plethora of primers on blockchain technology for non-technologists.
Once you’ve chosen a cryptocurrency (or several cryptocurrencies) to invest in, look into how those tokens use blockchain technology and whether they provide any innovations that set them apart from the competition. If you have a deeper grasp of cryptocurrencies and blockchain technology, you will be better positioned to determine whether a potential investment opportunity is worthwhile.
Join an Online Cryptocurrency Enthusiast Community
Things move swiftly in the digital currency area because it is so hot.
One possible explanation is that there is a large and active community of digital currency investors and enthusiasts that connect with one another around the clock.
Join our group to stay up to date on the latest developments in the bitcoin business. Although Reddit has become a key hub for digital currency lovers, there are countless other online forums with active discussions.
Cryptocurrency White Papers
However, the specifics of digital currency are more important than word of mouth. When contemplating an investment, seek the project’s white paper.
Every cryptocurrency project should have one, and it should be easily accessible (if it isn’t, consider it a warning sign).
Read the white paper carefully; it should tell you everything about what the project’s developers hope to achieve, including a timeline, a general framework of the project, and specifics. When a white paper lacks numbers and accurate project details, it is often viewed negatively. A white paper allows a development team to clearly out the who, what, when, and why of their project. If something in the white paper appears to be missing or deceptive, it may suggest that the project has faults.
Timing Is Everything
As a consequence of your thorough investigation, you’ve most certainly developed a grasp of the cryptocurrency sector and chosen one or more projects in which to invest.
The next step is to choose the best timing to make your investment. The world of digital currencies moves swiftly and is notoriously volatile.
On the one hand, investing in a hot new currency before it explodes in popularity and value may encourage other investors to do the same. Monitoring the market before making a move, on the other hand, will boost your odds of success. The prices of cryptocurrencies tend to follow predictable patterns. Bitcoin is frequently at the fore of digital currencies, which tend to follow its overall trajectory. News of an exchange hack, fraud, or price manipulation may, of course, send shockwaves through the cryptocurrency sector, so keeping an eye on what’s going on in the industry as a whole is vital.
Finally, keep in mind that digital currencies are highly speculative. There are many other investors who have poured money into the virtual token sector only to see it disappear for every overnight bitcoin millionaire. Investing in this sector entails taking a risk. By conducting your research before making an investment, you can increase your chances of success.
