With new “coins” cropping up all the time, it’s hard to keep track of what’s worth paying attention to and what might not be here to stay.
Their market caps range from more than $1 trillion to around $50 billion. But that doesn’t tell us anything about how they work and how valuable the single coins might be in a broader context.
Here’s your guide to the biggest digital currencies today.
Bitcoin is the biggest and most recognized fish in the crypto sea, with a market cap of more than $1 trillion.
Created anonymously in 2009, the digital currency runs on blockchain technology, another buzzword from the past decade. Essentially, the blockchain is a decentralized ledger system where records of transactions are stored. That’s a key difference between bitcoin and traditional fiat currencies like the US dollar or the euro, which are controlled by central banks.
Many bitcoin bulls call it a store of value — a label that has historically been reserved for safe haven investments like gold — and argue that that the digital currency is a good investment to hedge against inflation.
Part of bitcoin’s value is determined by the finite number — 21 million — of coins that can be created. Not all of the coins are in circulation, and bitcoin “miners” use computers to solve complex puzzles to create a new “block” on the chain. That process is in turn rewarded with bitcoin, though the reward halves for every 210,000 blocks mined. These “halving” events have in the past led to volatility in the bitcoin price.
Ethereum is an open-source blockchain-based software, which has its own cryptocurrency called Ether. It is the second-largest digital currency by market cap at nearly $300 billion.
The software was created with the idea to expand the use of the blockchain beyond bitcoin and use it in wider applications, which makes it more than “just” a cryptocurrency.
Ethereum was launched in 2015.
The third-largest crypto with a market cap of nearly $90 billion, Binance Coin is a bit of a different beast.
The Binance Exchange is the largest cryptocurrency platform by volume traded, and created Binance Coin, or BNB tokens as a means to pay for fees on its platform.
Another way Binance Coin is different is that it can only be exchanged into other cryptocurrencies.
Most recently, Binance hired Brian Brooks, the acting head of Office of the Comptroller of the Currency during the latter years of the Trump administration, to head its US business.
XRP is the digital currency on payment platform Ripple. The neat thing about Ripple is that any currency — digital or otherwise — can be exchanged for another. That means users can pay someone in bitcoin without owning bitcoin, simply by using XRP as the bridge between the currency they own and the one their recipient wants to be paid in. This makes it a very fast means of payment.
XRP also doesn’t run on the blockchain but on a data structure called HashTree, which makes it different from other digital currencies. It can’t be mined, and its total number of coins is set at 100 billion.
The suit is a reminder that there is still a lot of regulatory uncertainty when it comes to cryptos, which could spell volatility in the years ahead as governments and institutions figure out what to do.
Tether rounds off the top five of biggest digital currencies, with a market cap nearly $50 billion.
It’s an example of a so-called “stablecoin” because it is pegged to the US dollar. This keeps Tether relatively stable compared with other cryptocurrencies, which can be very volatile. When it was first created in 2014, the value of each token was set at $1.
Honorable mention: Dogecoin
Dogecoin hit an all time high in mid-April at $0.43. That’s right, the currency is still super cheap.
There are 129 billion coins in circulation now and new ones will be available to mine every year. That’s what keeps the value of each coin relatively low — especially compared with bitcoin, which is a scarce resource in comparison.