Deciding whether or not to invest in Bitcoin? Here are the other big names in crypto
For investors new to the space, the myriad of coins can be daunting. Here is an overview of the five biggest cryptocurrencies.
Launched by an anonymous creator in 2009, the digital currency runs on blockchain technology – another crypto buzzword. Essentially, blockchain is a decentralized ledger system where records of transactions are stored. This is the main difference between bitcoin and traditional fiat currencies like the US dollar or the euro, which are controlled by central banks.
Part of bitcoin’s value is determined by the finite number – 21 million – of coins that can be created. Not all are in circulation yet. Bitcoin “miners” use computers to solve complex puzzles to create a new block on the chain. This process is in turn rewarded with bitcoin, although the reward is halved for 210,000 blocks mined.
These “halving” events have in the past caused volatility in the price of bitcoin. And the mining process consumes a lot of computing power and electricity, which has raised concerns about bitcoin’s environmental impact.
Ethereum is the eternal second fiddle in the crypto world.
The value of Ethereum, launched in 2015 as open-source blockchain-based software with its own cryptocurrency, has risen over 540% this year. It has been boosted by investors who believe Ethereum, also known as Ether, will be the key to decentralized finance, including smart contracts and NFTs (non-fungible tokens).
The software was created to extend the use of blockchain beyond bitcoin so it could be used in broader applications, making it more than just a cryptocurrency.
And unlike bitcoin, ether supply is not capped. New tokens are continuously created through a similar mining process.
The third-largest crypto, with a market capitalization of over $100 billion, Binance Coin, or BNB tokens, is a different beast. A product of Binance Exchange, the largest cryptocurrency platform by traded volume, it was created as a way to pay fees on its own Platform.
It has a cap of 200 million BNB tokens, but the tokens are regularly destroyed – or “burned” – to reduce the total supply and stabilize their value over time. This means that people’s Binance holdings should not fluctuate in value as much as other cryptos.
Binance Coin is also different in that it can only be exchanged for other cryptocurrencies, not dollars or any other fiat currency.
Last summer, Binance hired Brian Brooks, who was acting head of the Office of the Comptroller of the Currency during the last eight months of the Trump administration, to lead its US operations. Brooks resigned in August after only a few months on the job. He is now the CEO of Bitfury, another bitcoin mining company.
Tether has risen to fourth among the five largest digital currencies, with a market capitalization of nearly $74 billion.
Solana is essentially a competitor to Ethereum. It is a blockchain network with its own digital currency called Sol.
That’s right: the crypto has grown from a modest value of $2 per unit to a value of over $200, taking its market capitalization to over $70 billion and overtaking other cryptos Cardano and XRP, which have also spent time in the top five.
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