The Top Six Most Popular Cryptos Explained
Blockchain. DeFI. Nodes. Public keys. Hard forks. Soft forks. If you’re here, you know it can take time to wrap your head around the concepts and terminology behind cryptocurrencies. Understanding the many coins that rise to fame (and fall from grace) makes everything even more complicated.
What, if anything, makes one coin different from or better than another? Many people wonder which cryptocurrency is best.
That largely depends on intent.
Bitcoin is the most popular cryptocurrency, known in the mainstream and by market capitalization – that is, the total value of all coins in existence – with an astonishing record as an investment asset. But some smaller coins have arguably better technology behind them and more potential for use as a means of exchange.
Here are six of the top cryptocurrencies by market cap as of the end of 2021, and what inspires each of their followings.
The Most Popular Cryptos
The jargon of cryptocurrency – phrases such as proof of work and proof of stake – can be difficult to penetrate.
For instance, proof of work and proof of stake are essentially two different base technologies for building a coin. “Proof of stake” is more environmentally friendly, which has the potential to resolve crypto’s notoriety as being bad for the environment due to high electricity demands. However, proof of stake systems lack the demonstrable track record of “proof of work” when it comes to security and resilience against manipulation.
Today, the blockchains that cryptocurrencies are built on fill two desires: as a store of value and to fulfill decentralized finance needs. Decentralized apps and smart contracts, for instance, use code and blockchain technology to supplant traditional banks, allowing you to offer capital for loans and collect the interest yourself, secured by a smart contract.
Exciting new financial products are just the beginning of what programmable cryptocurrencies have to offer, and even rudimentary coins can still bring a lot to the table.
Bitcoin is the original cryptocurrency created by the enigmatic, pseudonymous Satoshi Nakomoto. It was an impressive technical feat in the early 2000’s and demonstrated how one might make a digital currency that was immune to manipulation and control by central banking authorities.
Since then, BTC remains the largest cryptocurrency by market cap, at over $1.2 trillion today.
While newer cryptocurrencies have taken blockchain technology further and may have more potential, Bitcoin enthusiasts and asset-gatherers in general see BTC as a digital gold and store of value. Since the number of Bitcoins in the world is fixed while major state currencies are inflationary, the intent is that Bitcoin continually gains value against traditional currencies at the same rate (or greater) than inflation. Furthermore, the way that Bitcoin has captured investment interest from the general public has made it the #1 cryptocurrency in terms of ROI since inception.
Today, the position in favor of BTC is essentially that it’s the premier digital store of value, with the staying power of name recognition and existing market share. While BTC doesn't have as much potential for innovative blockchain development, the investment argument has certainly proven right in recent years.
With a market capitalization of over $500 billion, Ethereum was the first major cryptocurrency to innovate after BTC by launching with far more flexibility for ongoing development. It is the second largest cryptocurrency by market capitalization.
Developers on ETH can design far more complex, rich smart contracts and can make much more out of the coin than with BTC. ETH also has an impressive level of name recognition, and steady public interest has driven up the value of the coin in recent years.
If you ask an ETH devotee, they'll laud it as the flagship cryptocurrency and argue that cheap fees and environmental friendliness make this coin and system unrivaled, particularly with the arrival of a planned proof of stake update.
However, up-and-coming coins already have working proof of stake and development potential that rivals or exceeds ETH. While Ethereum is a powerhouse in the crypto industry, its reputation and value rely on the strength of this underlying technology. Some coins are already challenging the technical dominance of Ethereum, particularly Cardano.
Cardano is much smaller than either ETH or BTC and hasn't seen the same level of investment interest. However, this upstart coin has still grown to the sixth-largest by market share at $67 billion thanks to strong technical credentials. It's already gained a reputation as the so-called Ethereum killer, as Cardano fans will readily remind you.
Cardano does genuinely have key advantages over Ethereum, such being less expensive to use, and transactions consume far less electricity thanks to its proof of stake system. Acolytes believe ADA’s blockchain will prove far superior and adaptable than rival coins.
But there's one other big player that claims to be an Ethereum killer: Solana.
Ethereum remains the go-to choice for app development today, but Solana has some agile solutions to the legacy problems that plague this older rival. Solana may be the most technologically advanced cryptocurrency on the market. And while Cardano iterates on the same technology that underpins Ethereum, Solana operates on its own blockchain with unique strengths.
Transaction capability is one of the major sticking points of electronic currencies or payment systems, and most cryptocurrencies perform poorly in this regard.
Solana combines the proof of stake system with an innovative, original proof of history mechanism that increases the speed with which the network can process transactions. Solana boasts up to 50,000 transactions per second, for example, compared to Bitcoin’s tens.
These perceived advantages have propelled Solana to a position as one of the larger cryptocurrencies by market cap, at over $65 billion.
Binance Coin (BNB)
BNB is the third-largest cryptocurrency, at $102 billion in market cap, owed to its relationship with Binance, one of the most popular cryptocurrency exchanges.
Binance operates BNB as a utility coin, which means that it has particular benefits within the Binance network. Completing transactions in the exchange with BNB cuts all fees related to that transaction in half. Furthermore, BNB has a fixed, non-inflationary supply of coins, just like Bitcoin and the other leading cryptocurrencies.
Overall, it has an impressive source of utility and practical value as well as sound footing as an investment coin.
Tether is unique in that it's a type of cryptocurrency known as a stablecoin, which provides utility to the crypto markets since it has a fixed exchange rate. Most cryptocurrencies are not backed by anything, which means that their value is inherently volatile. Bitcoin's rallies and crashes are the stuff of legend – you don't see any of that with Tether. That’s because Tether is backed by reserves of USD; 1 USDT will always approximate one dollar.
Naturally, this means that USDT doesn't fulfill the normal roles that people associate with cryptocurrency. There are few Tether zealots to be found, but any crypto enthusiasts will use tether from time to time. It offers many of the basic advantages of cryptocurrency such as private, peer-to-peer transactions while also performing on a 1:1 basis with the global reserve currency. USDT is a compelling approach to keeping your money in crypto while temporarily avoiding volatility, facilitating purchases “off the books” and various other factors.
Tether offers pure utility, which is why it often has double the trading volume of Bitcoin despite being a fraction of the market cap, at ~$70B.
Which Cryptocurrency is Best?
If someone tells you that a single cryptocurrency is the best, they may be telling you more about their views than anything. A DeFi enthusiast who wants to be part of a purely digital currency future will have a different opinion from an investor seeking a hedge against inflation. Yet even these generalizations are unfair in the world of crypto.
After working with dozens of crypto enthusiasts, we’ve found that most people simply relish the diversity of coins available – and diversify their holdings accordingly.
If you’re concentrated in a single cryptocurrency position and looking to liquidate without selling, we can help. We work with lenders who can help you borrow against Bitcoin, borrow against Ethereum, and more. Our lenders operate in almost every liquid cryptocurrency; closings are fast; and the process is easy.