In this list, we will provide a summary of each of the top 10 cryptocurrencies trading in the markets today.
Top 10 Cryptocurrencies – A Fundamental Guide
Bitcoin is a currency that was created in 2009 by an unknown person using the alias Satoshi Nakamoto. Transactions are made with no middle men. Bitcoins can be used to buy merchandise anonymously. In addition, international payments are easy and cheap because bitcoins are not tied to any country or subject to regulation. There are no credit card fees so the currency may be attractive to small businesses. Some people buy bitcoins as an investment, hoping that they’ll go up in value. The price of bitcoin skyrocketed into the thousands in 2017.
Buying Bitcoins, Transfers and Mining
Many marketplaces called “bitcoin exchanges” allow people to buy or sell bitcoins using different currencies. Coinbase is a leading exchange, along with Bitstamp and Bitfinex. People can send bitcoins to each other using mobile apps or their computers. It’s similar to sending cash digitally. People compete to “mine” bitcoins using computers to solve complex math puzzles. This is how bitcoins are created. Currently, a winner is rewarded with 12.5 bitcoins roughly every 10 minutes.
What is a Bitcoin Wallet?
Bitcoins are stored in a digital wallet, which exists on the cloud or on a user’s computer. The wallet is essentially a virtual bank account that allows users to send or receive bitcoins, pay for goods, or save their crypto currency. Bitcoin wallets are not insured by the FDIC.
For those who have never read the full white paper, we have attached a link to the original copy below.
Ethereum is the second most popular cryptocurrency, after Bitcoin. However, it is intended to be much more than simply a medium of exchange or a store of value. Instead, Ethereum calls itself a decentralized computing network built on blockchain technology.
The Ethereum Blockchain
Ethereum works on the basis of a blockchain network. A blockchain is a decentralized, distributed public ledger where all transactions are verified and recorded. It’s distributed, which means that everyone participating in the Ethereum network holds an identical copy of this ledger, letting them see all past transactions. It isn’t operated or managed by any centralized entity—instead, it’s managed by all of the distributed ledger holders.
Blockchain transactions use cryptography. This serves to keep the network secure and verify transactions. People use computers to “mine,” or solve complex mathematical equations that confirm each transaction on the network and add new blocks to the blockchain. Participants are rewarded with cryptocurrency tokens called Ether (ETH).
What Can You Do With Ether?
You can use Ether as a digital currency in financial transactions, as an investment or as a store of value. Ethereum is the blockchain network on which Ether is held and exchanged. What’s particularly unique about Ethereum is that users can build applications that “run” on the blockchain. These applications can store and transfer personal data or handle complex financial transactions.
Ethereum vs. Bitcoin
Ethereum is different from Bitcoin in that the network can perform computations as part of the mining process. This computational capability turns creates a decentralized global computing engine and openly verifiable data store. Bitcoin’s primary use is as a virtual currency and store of value. Ether also works as a virtual currency and store of value, but the decentralized Ethereum network makes it possible to create and run applications, smart contracts and other transactions on the network. Bitcoin doesn’t offer these functions. It’s only used as a currency and store of value.
Just as we did for Bitcoin, we have provided the Ethereum white paper below. (https://ethereum.org/en/whitepaper/)
Cardano is billed as a third-generation blockchain that aims to directly compete with Ethereum and other decentralized application platforms as a more scalable, secure and efficient alternative. It builds on what Bitcoin and Ethereum have done, while aiming to be more sustainable and scalable. That means it’s much more environmentally friendly, faster, and more secure.
Charles Hoskinson, the co-founder of the proof-of-work blockchain Ethereum, understood the implications of these challenges to blockchain networks, and began developing Cardano and its primary cryptocurrency, ada, in 2015, launching the platform and the ada token in 2017. Cardano is the name of the blockchain platform, while ADA is the name of its native cryptocurrency token. Cardano’s ADA token, in turn, takes its name from mathematician Ada Lovelace.
Cardano is a proof-of-stake blockchain platform: the first to be founded on peer-reviewed research and developed through evidence-based methods. The Cardano platform runs on the Ouroboros consensus protocol. Ouroboros is the first PoS protocol that was proved to be secure. In addition, it was also the first to be informed by scholarly academic research. Each development phase, or era, in the Cardano roadmap is anchored by the research-based framework, incorporating peer-reviewed insights with evidence-based.
Cardano is Scalable
Scalability has been a problem for cryptocurrencies. Bitcoin processes approximately five transactions per second, and Ethereum processes roughly 15. This leads to slower transactions and higher fees. Visa processes about 1,700 transactions per second. Cardano currently processes about 257 transactions per second. In addition, Cardano is seeking to add another layer, called Hydra, to its blockchain. With this technology, it could potentially process 1 million transactions per second.
Cardano vs. Ethereum
Cardano offers many of Ethereum’s capabilities, such as robust smart contracts. Meanwhile, Cardano is energy-efficient and supports fast transactions with minimal transaction fees. Additionally, it has a strict cap of 45 billion coins outstanding, as compared to Ethereum, which has no absolute limit to its total eventual supply.
Proof-of-Work vs. Proof-of-Stake
Bitcoin and traditional cryptocurrencies use a proof-of-work protocol. This is where miners use high-powered computing rigs to guess at complicated mathematical puzzles. Those with more computing power win more of the puzzles, and thus receive more of the mining reward.
In contrast, proof-of-stake bypasses the computing-intensive mining process. Instead of having to spend huge amounts of computing power to maintain the blockchain, proof-of-stake protocols use a miner’s tokens as the collateral that makes the system function. Cardano’s Ouroboros was novel in being one of the first successful proof-of-stake protocols that created a realistic alternative to proof-of-work tokens. Proof-of-stake has become so intriguing that even Ethereum may switch to it.
Proof-of-stake is not without its critics, however. One issue is that these systems can concentrate ownership excessively. This runs contrary to the cryptocurrency community’s ethos around distributed authority.
Tether is a stablecoin. These are digital currencies that are tied to real-world assets to maintain stable value, unlike most cryptocurrencies, which are known to be volatile. Tether was designed to be pegged to the dollar. Tether currently ranks as the third-largest cryptocurrency. It is still far behind market leaders Bitcoin and Ethereum, but it remains well ahead of several popular coins, including: Cardano, Dogecoin, XRP.
Not Your Typical Crypto – What’s it Used For?
As aforementioned, Tether’s price usually holds steady at $1.00. Since Tether’s price is meant to mirror the dollar, it’s not the type of cryptocurrency that you buy and hold in hopes of the price going up.
Tether can be used for purchasing other cryptocurrencies. Crypto traders often use tether to buy cryptocurrencies, as an alternative to the greenback. Traders may seek safety in a more stable asset during times of market volatility in the crypto market.
It can take days to transfer money from a bank account to a crypto exchange. If you want to keep funds in your account to buy crypto without waiting, you can buy Tether. Then, you just use your Tether to make the purchase.
Tether is also used for transferring money. Tether can be used to send money between exchanges or crypto wallets. The crypto can be used to transfer money between exchange accounts or to send money to another person. Tether doesn’t charge fees for transactions between Tether wallets although there are standard blockchain fees. Some crypto exchanges pay interest if the holder is willing to lend the crypto. The benefit of doing this with Tether is that its value shouldn’t fluctuate. With most cryptocurrencies, you can earn interest, but you could still end up losing money if the price of the crypto you’re lending drops.
There are some concerns, however, that Tether’s issuer doesn’t have enough dollar reserves to justify its dollar peg. Only a fraction of Tether’s holdings are in cash, while the vast majority is in commercial paper. With more than $60 billion worth of tokens in circulation, Tether has more deposits than that of many US banks. Analysts continue to warn that there could be a severe liquidity shock to the broader cryptocurrency market if there is a sudden loss of confidence in tether.
Tether Limited was also the subject of a lawsuit for an alleged cover-up related to a crypto exchange called Bitfinex. Both Tether Limited and Bitfinex are owned by the same company. According to the New York AG, when $850 million went missing from Bitfinex, it drained at least $700 million from Tether’s reserves to cover the loss. The case was settled with the owner of Tether Limited and Bitfinex paying a fine of $18.5 million. The companies didn’t admit or deny any wrongdoing.
Tether’s white paper can be found through this link.
5. Binance Coin
Binance Coin is the cryptocurrency issued by the Binance exchange and trades with the BNB symbol. As the world’s largest cryptocurrency exchange, Binance facilitates vast amounts of trading volume every day. Binance Coin, the native token of the Binance platform, helps to reduce transaction fees for users and its popularity is growing even more as we head through 2021.
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BNB was initially based on the Ethereum network but is now the native currency of Binance’s own blockchain, the Binance chain. The Binance Smart Chain operates using a Proof-of-Authority consensus mechanism.
Every quarter, Binance uses one-fifth of its profits to repurchase and permanently destroy, or “burn,” Binance coins held in its treasury.
Binance was created as a utility token for discounted trading fees in 2017, but its uses have expanded to numerous applications, including payments for transaction fees (on the Binance Chain), travel bookings, entertainment, online services, and financial services. At the time of writing, Binance had a market cap of more than $56 billion and ranks behind only Bitcoin, Ethereum, and Tether in terms of market cap.
Binance coin initially ran the Ethereum blockchain with ERC 20 standard but has since become the native coin of the Binance chain. It was launched during an initial coin offering (ICO) in July 2017 and has a strict maximum of 200 million BNB tokens. It offered 10%, or 20 million, BNB tokens to angel investors, 40%, or 80 million, tokens to the founding team, and the remaining 50%, or 100 million, to the various participants through the ICO process. Almost half the funds raised during the initial coin offering process were intended to be used for Binance branding and marketing, while around one-third were used to build the Binance platform and perform necessary upgrades to the Binance ecosystem.
In PoA, the block creators are known as validators. These validators, of which there are only 21, are pre-approved and chosen by Binance. To be approved, they must confirm their identities, invest money to prove long-term commitment, making PoA reputation-based by design. Participating in the blockchain is not free and open to the public, making the Binance Smart Chain closer to a federated or even private blockchain.
Both Bitcoin and Ethereum are open and public ledgers, which means that anyone has the ability to participate as a node or a miner without revealing their identity or purpose if they choose. However, participants in the Binance Smart Chain are vetted and chosen by Binance itself. In this model, Binance has absolute control over the blockchain and can decide who becomes a validator, as well as remove validators at their discretion.
For a review of XRP, see our article posted recently. We dedicated a full article to explain the intricacies of this blockchain company. You can also follow this link to the company’s white paper.
Solana is a blockchain platform for decentralized apps. It’s an open-source project maintained by the Geneva-based Solana Foundation, and built by developers at San Francisco-based Solana Labs. Solana is a decentralized computing platform that uses SOL to pay for transactions.
Solana aims to improve blockchain scalability by using a combination of proof of stake consensus and so-called proof of history. The Solana network is known as a fourth-generation blockchain that aims to create a fast and scalable network, without compromising on its security or decentralization. The protocol introduces eight core technologies that enable transactions to scale proportionally with the bandwidth, resulting in industry-leading transaction speed and enterprise-level security.
Solana claims to be able to support 50,000 transactions per second without sacrificing decentralization. One way Solana achieves high transaction speeds is via a combination of the proof-of-stake consensus mechanism and a new mechanism called “proof of history.” Proof of history is designed to keep time between computers on a decentralized network without all the computers having to communicate about it and come to an agreement.
Why Use Solana?
Solana is a computing platform that can interact with smart contracts. Smart contracts power a wide range of applications, from NFT markets and DeFi to games and decentralized lotteries. One reason a user might choose an app that runs on Solana over, say, Ethereum, is that speeds are high and congestion is low — resulting in very low fees.
Solana rivals Ethereum, which is currently the largest decentralized apps platform, by promising faster operation and lower transaction fees. It is a PoS (proof of stake) blockchain, which makes it more environmentally friendly than PoW (proof of work) blockchains such as Bitcoin.
Its native cryptocurrency is also called Solana and has the ticker SOL. Ethereum has struggled with fees for transactions, which sometimes skyrocket at times of high network congestion. Solana has a larger theoretical throughput, which means it can handle more transactions per second than Ethereum.
Solana is a place where you can use SOL to interact with various decentralized apps. Most of those apps are tied to finance, such as platforms that let you lend or borrow money, trade crypto, or invest in various assets. There are also apps that let you buy and sell NFTs.
Solana Uses PoS and PoH
Both PoW and PoS mechanisms reward validators / miners for their efforts; Bitcoin miners get BTC, and on Solana, validators are rewarded in SOL. In the case of Solana, end users don’t have to run a validator node to earn rewards; they can delegate their stake to a validator who will pass the rewards on to them for a fee.
Solana also uses a technology called Proof of History, which it claims helps the network more efficiently determine the time of transactions. This and other innovations, Solana claims, make it more secure and perform better than other blockchains.
Solana’s white paper is linked below. In it, the founder, Anatoly Yakovenko, offers the first description of proof of history. https://solana.com/solana-whitepaper.pdf
Polkadot (DOT) runs on a programmable blockchain. These blockchains hold self-executing code that lets users build applications that don’t need third parties to operate. As such, they can take the middleman out of many everyday interactions.
Polkadot is a network protocol that allows arbitrary data to be transferred across blockchains. This means Polkadot is a multi-chain application environment where things like cross-chain registries and cross-chain computation are possible. Polkadot can transfer this data across public, open, permissionless blockchains as well as private, permissioned blockchains. This makes it possible to build applications that get permissioned data from a private blockchain and use it on a public blockchain.
Reasons Why Polkadot Stands Out
Polkadot can talk to other networks. Polkadot is faster and more scalable than the Ethereum network and it is also designed to work with other networks. Developers can build applications that use both the Ethereum and the Bitcoin blockchain, for example.
Polkadot uses parachains to solve congestion problems. Rather than pushing all the applications through one network, each application has its own blockchain, known as a parachain, that connects back to the main chain. That means if there’s a surge of demand for one particular application, it won’t affect the performance of applications on Polkadot’s blockchain.
Ethereum was the brainchild of Vitalik Buterin and Dr. Gavin Wood, who was Ethereum’s former Chief Technology Officer. One factor to look at is the management team. Similarly, more developers are putting time into the project. Polkadot almost doubled its development community from 197 people in 2019 to 400 in 2021.In summary, this is still an indication of Polkadot’s growth and popularity.
9. USD Coin
USD Coin (USDC) is a stablecoin pegged to the US dollar. It was launched in September 2018, in collaboration between Circle and Coinbase. USDC is an alternative to other USD backed cryptocurrencies like Tether (USDT) or TrueUSD (TUSD). USD Coin is a service to tokenize US dollars and facilitate their use over the internet and public blockchains.
USDC tokens can be changed back to USD at any time. The execution of issuing and redeeming USDC tokens is ensured with ERC-20 smart contract. USD Coin is developed by the Centre consortium, a partnership between Circle and Coinbase. The technology and governing framework are developed by Centre, while Circle and Coinbase are the first commercial issuers of USDC.
Circle is an official Money Transmitter, which makes the company an open financial book. Money Transmitters are US money service businesses that must comply with all appropriate federal laws and regulations. Before the issuance of USDC, the equivalent amount of US dollars is with one of Circle’s accredited partners. Consequently, all USDC tokens are regulated, transparent and verifiable. Besides, Circle is known as the crypto startup backed by Goldman Sachs.
What Makes USDC Valuable?
Bringing US dollars on the blockchain allows moving them anywhere in the world within minutes, and brings much-needed stability to cryptocurrencies. Also, it opens up new opportunities for trading, lending, and risk-hedging.
How Does USDC Work?
USD Coins aren’t just being printed out of thin air. Circle guarantees that every USDC token is backed with a single US dollar. The process of turning US dollars into USDC tokens is called tokenization. Tokenizing USD into USDC is a three-step process:
1) User sends USD to the token issuer’s bank account.
2) Issuer uses USDC smart contract to create an equivalent amount of USDC.
3) Newly minted USDC are delivered to the user, while the substituted US dollars are held in reserve.
Redeeming USDC for USD is as easy as minting the token, except the process is reversed.
Unlike the most popular stablecoin Tether, creators of the USD Coin are obligated to provide full transparency and work with a range of financial institutions to maintain full reserves of the equivalent fiat currency. All USDC issuers are required to regularly report their USD holdings, which are then published by Grant Thornton LLP.
Dogecoin is a parody cryptocurrency created by entrepreneur Jackson Palmer and software engineer Billy Markus in 2013. In an interview, Palmer said the idea for the project came from two internet tabs he had open on his computer at the time: one with a viral internet meme and the other with a list of the recently added cryptocurrency projects. Palmer jokingly coined the phrase “Dogecoin” to himself and took to his Twitter account to post the now-infamous line, “Investing in Dogecoin, pretty sure it’s the next big thing.”
It immediately sparked interest from the meme-fueled crypto community. However, Dogecoin was initially designed to be “as ridiculous as possible,” in keeping with its parody theme and to prevent people from actually using it over the long term.
In early 2021, Dogecoin gained cult status on Reddit’s WallStreetBets message board—the prime instigator behind the GameStop affair in January—where enthusiasts had promised to propel its value “to the moon” (that was before all discussion of crypto was banned on the subreddit).
All holders carry an identical copy of the Dogecoin blockchain ledger. Like other cryptocurrencies, Dogecoin’s blockchain network uses cryptography to keep all transactions secure. People called miners use computers to solve complex equations in order to process transactions and record them on the Dogecoin blockchain. Dogecoin uses a “proof of work” system. In exchange for processing transactions and supporting the blockchain ledger, miners earn additional Dogecoin.
Dogecoin may be used for payments and purchases, but it’s not a very effective store of value. This is chiefly because there is no lifetime cap on the number of Dogecoins that may be created by mining. The cryptocurrency is highly inflationary, by design.