What Are Cryptocurrencies?
A cryptocurrency is a digital asset that can circulate without the centralised authority of a bank or government. According to CoinMarketCap, there are more than two million cryptocurrency projects out there that represent the entire $US1.76 trillion crypto market.
1. Bitcoin (BTC)
- Market cap: $US1.25 trillion
Created in 2009 by Satoshi Nakamoto, Bitcoin (BTC) is the original cryptocurrency. As with most cryptocurrencies, BTC runs on a decentralised blockchain technology, which is a ledger logging transactions distributed across a network of thousands of computers. Because additions to the distributed ledgers must be verified by solving a cryptographic puzzle, a process called proof of work, Bitcoin is kept secure and safe from fraudsters.
Bitcoin’s price has skyrocketed as it’s become a household name. In May 2016, you could buy one Bitcoin for about $US500. As of April 20, 2024 (when the most recent Bitcoin halving event occurred) a single Bitcoin’s price was around $US63,750. That’s a growth of more than 12,650%.
2. Ethereum (ETH)
- Market cap: $US367 billion
Both a cryptocurrency and a blockchain platform, Ethereum is a favourite of program developers because of its potential applications, like so-called smart contracts that automatically execute when conditions are met and non-fungible tokens (NFTs).
Ethereum has also experienced tremendous growth. From April 2016 to April 2024, its price went from about $US11 to around $US3,050, increasing 27,627%.
3. Tether (USDT)
- Market cap: $US109.6 billion
Unlike some other forms of cryptocurrency, Tether (USDT) is a stablecoin pegged to the value of US$1. This is achieved by having a 1-1 backing between the token and USD which hypothetically keeps a value equal to one of those denominations because one token should always be able to be redeemed for one dollar. In theory, this means Tether’s value is supposed to be more consistent than other cryptocurrencies, and it’s favoured by investors who are wary of the extreme volatility of other coins.
4. Binance Coin (BNB)
- Market cap: $US83 billion
Binance Coin (BNB) is a form of cryptocurrency that you can use to trade and pay fees on Binance, one of the largest crypto exchanges in the world. Since its launch in 2017, Binance Coin has expanded past merely facilitating trades on Binance’s exchange platform. Now, it can be used for trading, payment processing or even booking travel arrangements. It can also be traded or exchanged for other forms of cryptocurrency, such as Ethereum or Bitcoin.
BNB’s price in 2017 was just $US0.10. By April 20, 2024, its price had risen to around $US557, a gain of approximately 556,900%.