But all cryptocurrencies are not all created equally—they can have different uses, different values, and will likely have different staying power.
This list covers the top 10 cryptocurrencies by market capitalization (as of November 2019) and what differentiates them.
Bitcoin was the first decentralized cryptocurrency. Launched in 2009 by elusive founder Satoshi Nakamoto, Bitcoin has had a storied rise (and occasional fall). Since its entry into the market, the crypto asset has experienced substantial price swings. Currently, however, it leads the crypto market, with a market capitalization of $168.2 billion USD (as of November 2019).
What makes Bitcoin revolutionary is its premise and its technology. The pseudonymous Nakamoto, whose identity is still unknown, proposed a peer-to-peer (P2P) system for exchanging money that eliminated the need for third-party financial institutions (and their associated fees) to process the transactions. Bitcoin was developed using blockchain technology, which uses computer processing and cryptographic algorithms to securely process and secure exchanges of money or other value.
Bitcoin’s staying power has been hotly debated, but after nine years it is still the highest-valued cryptocurrency in the world. Proponents hail the decentralized nature of Bitcoin, though traditional financial leaders have expressed skepticism about its long-term value. There is no debate, however, that the creation of Bitcoin heralded the beginning of a new era and inspired the launch of the other coins on this list (referred to as altcoins because they were created after Bitcoin).
In terms of supply, Bitcoin currently has the lowest circulating supply of any cryptocurrency listed here. Its total supply of 21 million coins is limited by design to avoid inflation. Once they are all mined, that is all that will ever be in circulation (assuming there are no fundamental changes made to the asset’s programming). As of late 2019, 18 million Bitcoin had been mined. The remaining three million will be mined during the next 120 years, during which time the amount of bitcoin miners receive will gradually be reduced. When there are no more coins to be mined, miners will earn money on transaction fees rather than receiving new coins for their efforts.
It is the most stable digital currency, but that does not mean it lacks volatility. One of the primary drivers of volatility for Bitcoin, as well as other crypto assets, is that it has been banned in several countries. It is legal in the U.S. and Canada, but the leaders of several large U.S. banks have expressed skepticism over its usefulness. Given the financial industry’s size and influence, that could spell continued volatility even as Bitcoin maintains a high value.
Ethereum entered the market in 2015. Despite coming after Bitcoin, it is not a copycat of the original crypto. In fact, Ethereum is a public distributed ledger system that uses its own blockchain algorithm to not only allow for money exchanges, but also to execute smart contracts. Ethereum’s crypto coin is called Ether, and it has the dual purpose of being a currency and being used to run applications on the Ethereum network.
What makes Ethereum really interesting is that the distributed ledger system can be used for a number of different functions, including the deployment of smart contracts and the use of decentralized client-server models. In short, Bitcoin was designed to disrupt fiat currencies and traditional financial transactions. Ethereum, on the other hand, was designed to disrupt centralized data-sharing and computing infrastructures and for use in decentralized app (DApp) development.
Currently, Ethereum’s market cap stands at $20.2 billion USD. However, the price per coin is significantly less than that of Bitcoin, at just under $187 per coin. The distributed ledger technology holds real implications for the future of collaboration and business infrastructures, so the broader Ethereum system is perhaps more attractive than the Ether coin.
Used by Ripple, a global payments disruptor, the Ripple blockchain and XRP are unabashedly designed to replace traditional money transfer systems. Ripple describes XRP, which entered the marketplace in 2014, as being financial institutions’ “fastest, lowest cost option for sourcing liquidity in cross-border payments.”
The difference between Ripple and XRP is similar to that of Ethereum and Ether. XRP is a cryptocurrency that can be used for peer-to-peer (P2P) transactions as well as cross-border money exchanges, while Ripple is both the exchange platform and a conduit for broader blockchain-based services. The Ripple platform and XRP are open-source technologies, meaning that professional and amateur developers can enhance or update them.
The draws of both Ripple and XRP are access to lower global transfer fees and fast settlement times, in contrast with traditional services, such as SWIFT wire transfers. They can also be used for peer-to-peer money transfers and in e-commerce payments, among other applications. Ripple uses XRP as a tradable asset bank, and clients can use it to exchange money on the Ripple network.
XRP’s current market capitalization is $12.6 billion USD, and less than half of its total supply of about 100 billion was in circulation as of November 2019. As far as investments go, an emphasis on the XRP coin is risky, as all cryptocurrencies still are. However, Ripple as a company may be worth watching because it has developed fast, cost-effective money transfer technologies that could well withstand the volatility of the cryptocurrency market.
Bitcoin Cash is, unsurprisingly, an offshoot of the original cryptocurrency. Created via a forking of Bitcoin in 2017, Bitcoin Cash brings the original Bitcoin concept back to its roots. A fork is when an alternative version of an existing blockchain is created by changing its rules. In this case, the fork started a new cryptocurrency.
Developers created Bitcoin Cash because they were concerned about Bitcoin’s long-term scalability potential. They were not the only ones. Other developers had already implemented changes to how Bitcoin blocks process data and had increased block sizes to deal with scalability constraints. But Bitcoin Cash’s developers took issue with how the changes were implemented and worried about Bitcoin’s future as a transparent and decentralized currency.
Bitcoin Cash emphasizes peer-to-peer value exchanges and global access to using and innovating the technology—in alignment with the vision of Bitcoin creator Satoshi Nakamoto. The altcoin has a larger block size than Bitcoin, which bodes well for faster verification and transaction times (and lower transaction costs). But there have been concerns about Bitcoin Cash’s security and its susceptibility to hacks. Still, it is worth watching, considering its potential for user growth in peer-to-peer transactions.
In November 2018, Bitcoin Cash was forked into Bitcoin Cash ABC (still known simply as Bitcoin Cash) and Bitcoin SV (for Satoshi Vision, discussed below). As of November 2019, Bitcoin Cash’s market capitalization was $5.1 billion USD.
Tether distinguishes itself from the above cryptocurrencies because it is a stablecoin. This means it is backed by a fiat currency, which insulates it somewhat from the wild valuation swings experienced by such decentralized assets as Bitcoin. Tether theoretically offers the flexibility of a cryptocurrency with the stability of fiat money. Its value is currently tied to the U.S. dollar at a 1-to-1 ratio. Tether was initially created for use on the Bitcoin blockchain, but it can also be used on the Ethereum protocol.
Although Tether was designed to provide some stability to crypto holders and investors, as well as to offer options for liquidity, there are real concerns about the asset’s security after an alleged $31 million hack. New York’s Attorney General investigated Tether’s parent company, Bitfinex, with regard to $850 million in losses of commingled client and corporate funds that it allegedly covered up. Questions have also arisen about whether Tether holds enough fiat reserves to back the coins. However, on its website, Tether says the crypto asset is 100% backed by its fiat reserves and that it updates publication information on its reserves daily. As of November 2019, Tether had a market cap of $4.12 billion.
A popular altcoin, Litecoin is described as a fully decentralized, open source project users can deploy to transfer money instantly and at very low costs. It is also user-friendly in the sense that anyone can mine for Litecoins using their average personal laptop. That is a drastic difference from Bitcoin mining, which requires significantly more processing power and therefore more powerful computers. The difference in mining ability comes down to the cryptographic algorithms each cryptocurrency program runs, as they demand different requirements for processing and verifying transactions on the blockchain.
One of Litecoin’s purported advantages over Bitcoin is that block generation happens more frequently, allowing for greater transaction volume and faster transaction confirmations. And with 84 million Litecoins available for mining, the supply exceeds the total number of bitcoins available several times over. Litecoin’s market cap was $3.05 billion as of November 2019.
A more recent entrant into the crypto market, the blockchain company Block.one introduced the EOS cryptocurrency in 2018, ahead of its initial coin offering. Block.one developed the EOS.IO open-source blockchain, which software developers can use to build enterprise-level apps. Block.one’s fast, cutting-edge solutions have regularly drawn headlines, particularly since its massively successful ICO, through which it raised $4 billion.
EOS’s core advantages are speed, cost, and scalability. The low transaction fees and fast processing times give it an edge in the market, and it has rapidly gained popularity for decentralized app development. As BitGo noted when Block.one launched support for EOS, the platform has proven to be particularly viable for computation-intensive applications such as decentralized game development.
Block.one’s potential has drawn high-profile investors, including Peter Thiel and Chinese bitcoin mining company Bitmain. Early investors received a 6,567% return in 2019. Its groundbreaking ICO did, however, draw negative attention from the SEC. Block.one was ordered to pay $24 million in civil penalties to settle with the SEC after the agency asserted that Block.one’s ICO ran afoul of federal guidelines because it was unregistered. Block.one is not the only start-up to settle with the SEC on similar charges, and it settled without admitting or denying the allegations.
As of November 2019, EOS’s market capitalization was roughly $3.3 billion USD.
The Binance Coin was created by and for Binance, a cryptocurrency exchange platform. In its first incarnation, the Binance Coin was designed as an ERC20-compliant token, but it was ultimately adopted as the native token of the Binance blockchain.
Binance initially incentivized the use of Binance Coin by offering discounts on its exchange fees. However, it can be used for a broad range of purposes, including booking travel reservations and ecommerce payments. Binance purports to have a one-second confirmation time on the Binance Chain, making this coin especially fast and cost-effective to use.
Binance launched its coin via an initial coin offering in 2017. Currently, there are 155,536,713 Binance Coins in circulation, out of a total supply of 187,536,713. However, the company “burns” (destroys) a portion of the Binance Coin supply on a quarterly basis to stabilize the coin’s value. Ultimately, it aims to destroy half the total supply of Binance Coin.
In July 2019, the Binance team burned the Binance Coin allotments they received for their work in starting the company for a total of nearly 809,000 tokens burned. They acknowledged that the team will still hold the majority of Binance Coins, since they have purchased their own and are also paid in the coin.
Binance is rapidly growing in terms of its offerings. Earlier this year, it offered Futures and Margins trading options, among other features. In a letter on the Binance website, founder Changpeng Zhao emphasized that the company is committed to investing in long-term projects rather than focusing on short-term gains and that it aims to keep exchange fees as low as possible for sustained support of the crypto community.
Binance Coin’s market capitalization as of this writing was $3.2 billion USD.
As noted above, Bitcoin SV was created from a fork of Bitcoin Cash, which itself was created from a fork of Bitcoin. The SV stands for “Satoshi Vision,” which refers to the fact that the developers and proponents of this coin view it as the original bitcoin—or as close to Satoshi Nakamoto’s original vision as they can get.
The goal of Bitcoin SV is to enable low-cost, scalable transactions that can be used by individuals and businesses around the globe. Theoretically, it avoids the scalability and price issues that arise with Bitcoin by increasing the block size to allow for fast, scalable transactions. You may recall block size was also an impetus for the original Bitcoin/Bitcoin Cash fork. The four pillars of the Bitcoin SV project are stability, scalability, security, and instantaneous, secure transactions.
Proponents of Bitcoin SV claim the protocol will encourage innovation and ultimately will make it possible for Nakamoto’s vision of decentralized exchanges to come to fruition. Bitcoin Cash SV’s market cap was $2.33 billion as of this writing.
Stellar is a decentralized global payments system, and its cryptocurrency is called Stellar Lumens. To use the Stellar system, users must own and pay transaction fees using Lumens.
One of Ripple’s (see above) co-founders is also a co-founder of Stellar, perhaps inevitably drawing comparisons. But a key difference is that Ripple solves enterprise-level transaction pain points (although average consumers can use it), while Stellar focuses more on remittances and individual accessibility. However, both aim to reduce the costs of global money transfers and enable users to send funds anywhere in the world instantly and for little cost.
Stellar users can exchange any type of currency on the platform, including fiat and crypto assets. Just as Ripple can be used by noninstitutional users and enterprise clients, Stellar also offers value to average consumers and institutions. The platform allows banks that want to use the protocol to implement Know Your Customer (KYC) requirements and other security features needed for compliant transactions.
Stellar’s market cap as of this writing was just under $1.6 billion, and less than half of its total supply is currently in circulation.
The top 10 cryptocurrencies have a combined market capitalization of $223.7 billion (as of November 2019) in a rapidly expanding financial instrument (digital assets) as they push for mass adoption from consumers and businesses. These virtual currencies are set to shake up the central banking system with their simplified ledger processes and public/private key cryptography.
Bitcoin continues to lead the pack with a massive share of 75% of the market cap for these top 10. But other altcoins are also seeing acceptance from enterprise solutions, therefore do not discount the nano-to-mid cap altcoins just because of their current size.
Q: What is a satoshi?
A: A satoshi is a hundred millionth of a bitcoin, written as 0.00000001 BTC. A satoshi is the smallest unit of the cryptocurrency recorded on the blockchain, and is named after Bitcoin’s pseudonymous creator, Satoshi Nakamoto, whose true identity is still unestablished.
Q: What is a stablecoin?
A: Stablecoins are digital assets whose market value is tied to an external reference like gold or the U.S. dollar, e.g. RMG, DAI, TUSD, DGX.
Q: How does cryptocurrency mining work?
A: Mining is a process that adds blocks to the blockchain, verifying transactions, as well as minting digital assets and releasing them into circulation. The process involves miners trying to solve a complex proof-of-work puzzle with powerful computing devices called application-specific integrated circuits, or ASICs. If a miner is successful, they publish a block of new transactions to the blockchain and earn new coins.