Cryptocurrencies are digital currencies that are safeguarded by cryptography, as you’ve surely heard. But how many different types of cryptocurrencies exist? In addition to Bitcoin and Dogecoin, there are dozens of other cryptocurrencies. In this piece, we will examine the top nine (based on market capitalization) and provide information on other crypto assets that you should be aware of. While several cryptocurrencies share the same blockchain-based technology, there are some significant differences. In general, cryptocurrency is classified into two types: coins and tokens.
Altcoins and coins
Any cryptocurrency with its own blockchain is referred to as a coin. Bitcoin, for example, is considered a “currency” because it runs on its own infrastructure. The Ethereum blockchain, like Bitcoin, governs Ether. The term “altcoin” refers to any coin other than Bitcoin. Many altcoins function similarly to Bitcoin. Others, like as Dogecoin, are quite different. Doge, for example, offers an unlimited amount of currencies, but Bitcoin is limited to 21 million units.
Tokens are digital assets that may be bought and sold, similar to coins. Tokens, on the other hand, are a non-native asset, which implies they rely on another blockchain’s architecture. Tether is one of them, as with TerraUSD, Chainlink, Uniswap, and Polygon, which are all based on the Ethereum blockchain..
- Bitcoin (BTC)
Bitcoin was the first cryptocurrency, dating back to a white paper published in 2008, and it remains the most well-known type of cryptocurrency. It operates on its own blockchain, with a decentralised army of miners validating transactions (and creating new Bitcoins up to a certain limit). In January 2022, Bitcoin had the highest market capitalization, at US$896 billion.
- Ether (ETH) (ETH)
Ether is a cryptocurrency built on the Ethereum blockchain. Ether, like Bitcoin, has its own blockchain, but unlike Bitcoin, Ether is uncapped, which implies that an infinite number of currencies can be created. Ethereum also supports smart contracts, which are programmes that run on the Ethereum blockchain and are executed automatically when certain criteria are met.
- The Binance Coin (BNB)
Binance Coin is the native cryptocurrency of Binance, which plans to be the largest cryptocurrency exchange in the world by 2021. This exchange has lower transaction costs for those who pay with BNB. As a result, Binance Coin has increased in popularity, becoming one of the market’s major cryptocoins. Binance “burns” a predetermined percentage of the currencies in circulation to keep their value stable.
- Tether (USDT) (USDT)
Tether is a stablecoin that is linked to another asset in order to provide a less erratic price. In this case, each currency is backed by an equal amount of US dollars, which prevents it from experiencing the same market volatility as other cryptocurrencies. However, there is some debate regarding whether it is truly backed by the dollar.
- Javier Solana (SOL)
SOL is the native token of the Solana platform, which operates on a blockchain architecture like Ethereum and Bitcoin. Solana’s network can handle 50,000 transactions per second, making this platform ideal to investors who want to trade swiftly.
- XRP (XRP) (XRP)
Because it is expressly developed to fulfil the needs of the financial services industry, XRP has been branded a “cryptocurrency for banks” and works on the Ripple network. XRP was developed to facilitate international payments by acting as a bridge between two distinct currencies, allowing for cheaper and faster global transfers.
- Cardano (ADA)
ADA is the native coin of the Cardano blockchain. Cardano, branded a “third-generation” cryptocurrency, separates its blockchain into two layers to increase transaction speeds and offers native tokens to improve the experience of ADA holders.
- US Dollar Coin (USDC)
USD Coin is a non-mineable stablecoin pegged to the US dollar, similar to Tether. Tether, on the other hand, provides more transparent funding and better auditing mechanisms than USD Coin. By allowing users to withdraw their coins and receive cash in exchange, the idea is to alleviate some of the risk associated with bitcoin.
- Dogecoin (DOGE) (DOGE)
Dogecoin, which was created to spoof Bitcoin, has since grown to become one of the most valuable cryptocurrencies in use. Dogecoin, which was launched in 2013 and was inspired by a dog meme from the same year, rose to prominence in 2021 and now has a market capitalization of 8.4 billion euros as of October 2022. Dogecoin is a Litecoin derivative that, like Bitcoin, is based on blockchain technology. However, unlike Bitcoin, there is no fixed supply of coins. On the one hand, this enables anybody in the world to mine an infinite number of Dogecoins. However, there is a greater probability that the currency’s value may collapse rapidly due to its infinite supply.
There are numerous types of cryptocurrencies accessible, so it’s important to consider which coins or tokens are right for you. Whether you’re a seasoned crypto investor or just getting started in this exciting sector, learning is a fantastic way to limit risk and make informed decisions about your money.