If you are learning about cryptocurrency and you're wondering how many cryptocurrencies the market has to offer or if there are good or bad brands this article is just for you!
You've probably heard of Bitcoin, a cryptocurrency invented in 2008 by an unknown person or group of people using the name Satoshi Nakamoto. Or Ethereum, which was created by Vitalik Buterin in 2013 and put out in the market by 2015.
These two are the leading and most popular versions of cryptocurrency in the market. But these currencies aren't the only ones, currently, there are around 5,000 other cryptocurrencies circulating in the world.
You can continue reading and learning about this subject on A guide to Cryptocurrency.
Diversification is key
Right now, as we mentioned, there are over 5,000 cryptocurrencies listed on Coin Market Cap and probably thousands of others that aren't even listed. You probably have many questions, five thousand is an overwhelming number and it might as well be a billion.
- Where to start?
- Which one is the best?
- How to know which is best this year?
Based on what we know, the answer to all your questions and the key to good cryptocurrency management is to buy different altcoins to have a diversified portfolio. Investors catalog cryptocurrency as a risky investment, and investing only in one coin is even riskier.
You should look for cryptocurrencies that are somewhat easy for trading and easier to store. You also need to find the ones that make sense with your financial portfolio and investment strategy. Finally, look for different coin categories and choose the ones that are less volatile in each category.
If you're still a little confused or lost, you can learn more about crypto on What is Cryptocurrency?
Bitcoin is a decentralized digital currency that does not need a central bank or a single administrator and it can be sent at any time from one user to another on the bitcoin network without an intermediary. The transactions are verified through cryptography by network nodes that are recorded and distributed in a ledger called a blockchain.
Bitcoin is the world's first cryptocurrency and also the most popular one based on market cap and trading volume. Many investors want to put their money on the line and invest in Bitcoin because it's been baptized as digital gold, but it is decentralized and highly volatile therefore a risky investment.
However, its blockchain technology allows people to do secure, peer-to-peer transactions over the internet which is why everyone wants to buy it.
Bitcoin is widely accepted by the public and is primarily used for transactions. One of its pros is that it is well-known and therefore secure, but it's been criticized for having slower transaction speeds and unpredictable fees.
If you want to learn how to invest in cryptocurrency be sure to read Is cryptocurrency a good investment?
Ethereum is the second-largest cryptocurrency by "market capitalization", after Bitcoin and it is the most actively used blockchain.
Ethereum was developed and proposed in 2013 by a Russian programmer called Vitalik Buterin. Its development was crowdfunded in 2014, and with a supply of 72 million coins, the network finally went live in July 2015.
Ethereum is mostly used for three different things. First, decentralized finance, which means that users can create a variety of financial products and services using the Ethereum blockchain environment.
With custom development language customers can create blockchain-based applications that use smart contracts. These contracts can replace many transactions that usually need brokers or banks. Smart contracts are one area where Ethereum differentiates itself.
Second, Ethereum is used to create and exchange NFTs. NFT is a "non-fungible token" or a unit of data on a digital ledger or the blockchain. Each NFT can represent a unique digital item, which means that they are not interchangeable. NFTs can represent digital files such as videos, art, items in video games, audio, and other forms of creative work.
Finally, Ethereum is used for many initial coin offerings (ICO). An ICO is a type of funding that uses cryptocurrencies. However, even though it is often designed for crowdfunding, a private ICO which does not seek public investment is also possible. In an ICO, a quantity of cryptocurrency is sold in the form of a token or coins to speculators or investors, in exchange for legal tender or other cryptocurrencies.
If you're in a country where cryptocurrency is not banned, you can learn what to do with it on the Best way to use cryptocurrency.
Here is a list of five other cryptocurrencies that are popular and just below Bitcoin and Ethereum.
Litecoin is another popular currency and it is known for being the one that solves some of the problems you find on the Bitcoin platform. Litecoin has successfully reduced transaction processing speeds and has four times the total supply of Bitcoin.
This cryptocurrency is born from the original Bitcoin project therefore both Litecoin and Bitcoin have similar basic codes. Its top use is value transaction but it's been criticized for lack of good security and unique design.
Cardano is another cryptocurrency network that, similar to Ethereum, is known for bringing together two aspects of decentralized finance, quick transactions, and smart contracts.
Cardano is a fast-growing crypto network used for value transfers and as a software development platform. It's less popular than Ethereum and Bitcoin because there are accountability and security issues and concerns with its network.
Ripple (XRP) shares many characteristics with Bitcoin but it is still different and therefore not as wel-known as Bitcoin. Ripple (XRP) is a platform for currency exchange or exchanges where transactions are instant and verified by independent servers.
According to Coin Market Cap, XRP has allocated coins through "pre-mining" and there are 100 billion of them in circulation. This cryptocurrency will work with banks which allows for transactions and payments to be faster.
Tether has one important difference when compared with the rest of cryptocurrencies, its value attached to the United States Dollar and therefore, the value will never change according to demand.
With Tether investors have an opportunity to store cash on a digital platform. In other words, Tether users can enjoy all the benefits that cryptocurrency has to offer without the fear and risk of loss.
Finally, a famous platform is Stellar, a network distributed in a blockchain-based database. From Stellar Lumens is born but it can also support other token assets on its blockchain. In other words, Stellar is the payment network and Lumens is the cryptocurrency.
To continue learning about this subject check out this article: Legality of cryptocurrency.