Thousands of different virtual currencies are circulating the growing marketplace and grabbing investors’ attention. You probably hear a lot of talk about this new form of currency, but do you really understand what cryptocurrency is?
Continue reading to learn about the 10 most popular cryptocurrencies and what you need to know before investing.
Cryptocurrency is defined as “a digital currency in which transactions are verified and records maintained by a decentralized system using cryptography, rather than by a centralized authority.”
This form of currency is so fascinating because it is immune to government interference and manipulation. Encryption (crypto) techniques secure the network, so your money is protected. The cryptocurrency systems allow for secure online payments in the form of virtual tokens.
Have you ever heard of Bitcoin? If not, it is safe to assume you live under a rock. Bitcoin was the first block-chained based cryptocurrency that began circulating and creating buzz among investors.
Now there are thousands of alternate cryptocurrencies, each with its own function and value. Many of these virtual currencies’ values tend to fluctuate over time, making them highly unpredictable.
“They all have different utilities; they all have different founders who have different visions for where that cryptocurrency is going,” says Mike Uehlein, founder and financial planner of WealthU advisors.
Now, if you are interested in getting your (virtual) hands on some cryptocurrency, it would help to learn about the ones that are currently the most popular.
10. Cardano (ADA)
As the first blockchain to incorporate a peer-reviewed research strategy into its core principles, it didn’t take long for Cardano to gain the attention of investors.
One of the various advantages this cryptocurrency holds is a limit of 45 billion tokens. By avoiding inflation, the value of the token remains strong.
Cardano developers say the technology is capable of “redistributing power from unaccountable structures to the margins.”
Chainlink is a blockchain-based network that offers the tradable cryptocurrency token known as LINK, which is used to pay for smart contract transactions.
Its website says it uses “real-world data and off-chain computation while maintaining security and reliability.”
8. Lumen (XLM)
Stellar is an open-source network used to store and move money, and its native cryptocurrency is known as the Lumen (XLM).
It’s important to note that all digital currency can be sold through Stellar, not just Lumen. However, it is necessary to own small amounts of Lumen to initialize accounts and make transactions.
Polkadot is not only about moving around tokens but also allows networks to communicate actual data. As a multi-chan application environment, its mission includes allowing different blockchains to exchange information and transactions.
On the Polkadot website, they flaunt data and identity security and the user being in control. Buying Polkadot’s native token, DOT, allows you to have a vote on upgrades to their network.
Uniswap is built on Ethereum’s blockchain. It is a decentralized, open-source crypto exchange that gives more control to users because there are no unnecessary intermediaries.
Buying UNI has many benefits, such as compatibility with ERC-20 wallets like MetaMask and MyEtherWallet. Additionally, UNI token holders can vote on new developments and changes to the platform.
Similar to most cryptocurrencies, Tether can be sent around the world without conversion or fees. This stablecoin currency is pegged to the U.S. dollar and is relied upon to stabilize the value of other cryptocurrencies like Bitcoin.
Tether is a dollar replacement that is often used when investors fear volatility in the market. So, it is best used as a means for storage.
According to Investopedia, “Tether was specifically designed to build the necessary bridge between fiat currencies and cryptocurrencies and offer stability, transparency, and minimal transaction charges to users.”
Like Tether, the USD Coin is a stablecoin tied to the U.S. dollar. Circle, a global financial firm, created this cryptocurrency they call “the world’s leading digital dollar stablecoin.”
Unlike many other cryptocurrencies that have more potential to fluctuate in value, you should not feel like you are taking a risk when buying USDC. Its purpose is to help create value amongst the entire blockchain ecosystem and makes trading more volatile coins simple.
3. Ripple (XRP)
XRP, the cryptocurrency of the Ripple digital payment network, is known for how rapidly it can convert any fiat currency to another.
It can settle transactions in just three to five seconds! XRP can be relied on for cross-border payments– it scales faster and is more sustainable than Bitcoin.
According to Ripple’s website, it’s “faster, less costly and more scalable than any other digital asset.”
ALL TIME TIP: As an individual investor, there are many ways for you to buy XRP. Visit any digital exchange that lists XRP and buy it that way!
Ether is the cryptocurrency that fuels the decentralized Ethereum network, is a top-dog in the crypto world. It’s an open-source blockchain where developers can build apps and other cryptocurrencies.
Essentially, Ether is a digital currency for applications. The value of Ether has risen to around $3,000 per token. Still, that number is nowhere near Bitcoin’s value of nearly $40,000 per coin.
Finally, it’s time to discuss the OG cryptocurrency, Bitcoin. Not only is it the most popular, but it is also the most valued. Despite its unpredictability throughout its existence, it remains elite.
The maximum supply of Bitcoin is 21 million, and that will never change. Bitcoin is comparable to gold because it can not be duplicated and is a scarce resource.
FUN FACT: Bitcoin exchange banks are popping up all over the U.S.