The Growing Importance of Bitcoin and Cryptocurrency
When Bitcoin was first introduced, no one could have imagined how the market would evolve today. Now, Bitcoin is just one of many cryptocurrencies, and the market is valued at over a trillion dollars. Every day, billions are traded, and the innovations brought by blockchain and cryptocurrency are truly impressive.
If you’ve stayed out of the crypto world until now, it’s becoming harder to ignore. Cryptocurrency has officially entered the mainstream and is something everyone should pay attention to.
“Crypto and NFTs will only continue to grow. Businesses that team up with the right fintech companies and banks early on will be the ones that succeed in the long run. Many companies are still exploring how and why they should adopt crypto as a payment method, and I believe we’ll see more real-world uses for it this year.”
Cryptocurrency Growth and the Challenge of Tracking Coins
According to Menda Sims, Chief Payments Officer at Stax, “Crypto and NFTs will only continue to grow.” By 2022, there were over 10,000 different cryptocurrencies in circulation. Trying to keep up with all of them could be a full-time task. However, not all of these coins will become significant. Only a small portion of these cryptocurrencies have real potential and the ability to make an impact in the real world.
TL;DR
Cryptocurrency is a type of digital or virtual currency that relies on cryptography for secure transactions and managing new coin creation. Popular cryptocurrencies include Bitcoin, Ethereum, Tether, and Cardano. Cryptos fall into different categories such as mining-based coins, stablecoins, memecoins, and security tokens.
What are Cryptocurrencies?
What is Cryptocurrency and How Does it Work?
A cryptocurrency is a type of digital currency that uses cryptography to secure transactions and manage the creation of new units. This process protects electronic information by converting it into a code that’s hard to break.
What makes cryptocurrency unique is its semi-anonymous and fully transparent nature. Every transaction is recorded on a digital ledger known as a blockchain, which holds a public record of every transaction ever made. Because of this, cryptocurrencies are considered “decentralized,” meaning no central authority controls or regulates them. The blockchain manages this system without the need for a middleman.
Blockchain technology is a crucial part of the crypto ecosystem. It’s open-source, so developers can access and build on it, which is why we see so many crypto-based financial products on the market today.
Is An Altcoin Different From a Cryptocurrency?
What Are Altcoins in Cryptocurrency?
When exploring cryptocurrencies, you’ve probably heard the term “altcoins.” This can be a bit confusing, as many cryptocurrencies are called altcoins. Essentially, Bitcoin is considered the original cryptocurrency, and all other coins are seen as alternatives, or “altcoins.”
In the bigger picture, they’re all still cryptocurrencies. As blockchain technology evolves, new types of coins are being created. While all of them fall under the category of crypto, they can serve different purposes and be created in various ways, such as:
Mining-Based Coins
Mining-based coins operate similarly to Bitcoin, relying on computer networks to create new coins. This mining process requires a significant amount of energy, raising concerns among environmentalists and others about whether the benefits outweigh the costs.
Stablecoins
Stablecoins are designed to be linked to other assets, making them less affected by the dramatic price swings often seen in the cryptocurrency market. These assets are usually fiat currencies, like the US dollar. Two of the largest stablecoins in this category are Tether and USD Coin.
Security Tokens
Security tokens function like receipts, representing a fractional ownership interest in various assets. Companies can issue security tokens to validate ownership of their shares, while they can also be used in the art world to verify ownership of artworks. There are numerous applications for this type of blockchain-based, crypto-like token.
Memecoins
Most people have heard of Dogecoin and Shiba Inu, even if they don’t know much about them. These cryptocurrencies are based on memes and have gained unusual popularity, often due to their humorous nature. While they may seem silly, that doesn’t mean they lack value. Just one tweet from Tesla’s Elon Musk can significantly boost the value of these seemingly absurd memecoins.
What are Cryptocurrencies Used For?
The Use of Cryptocurrency Beyond Investment
Many people buy cryptocurrencies as an investment, but now most can also be used to purchase goods and services. For merchants, accepting cryptocurrencies opens up new opportunities for transactions.
“As customers change the ways they shop and pay, merchants will have to offer a wider range of alternative payment methods that not only provide consumers with options at checkout but also reduce their acceptance costs. For small and medium-sized businesses (SMBs), the cost of accepting payments is often a significant expense. With that in mind, they want to offer consumers more peer-to-peer payment options…”
– Menda Sims, Chief Payments Officer, Stax.
Since crypto holders manage their own assets without financial institutions in between, these transactions are peer-to-peer, making it easier for merchants and friends to transfer funds.
For investors, decentralized finance (DeFi) solutions simplify the process of collecting and holding cryptocurrencies. Crypto holders can stake their coins, trade, and invest in other blockchain-based projects and decentralized organizations. Just like in traditional financial markets, there are crypto equivalents operating on the blockchain.
Next, we will explore the most popular cryptocurrencies and their specific uses.
Are Cryptocurrencies Regulated?
Regulation of Cryptocurrency in the U.S.
In the U.S., regulators are working to find a balance that allows cryptocurrency to thrive while maintaining the systems essential for society to function. In March 2022, President Biden signed an Executive Order on Ensuring Responsible Development of Digital Assets.
This Executive Order recognizes the industry’s potential and emphasizes the need for cross-department research to address associated risks.
Stay tuned for new developments to better understand what this means for your investments and transactions involving cryptocurrencies.
20 of the Most Popular Cryptocurrencies to Watch This Year
Overview of Popular Cryptocurrencies
In this section, we will explore the most widely used cryptocurrencies, their applications, and the reasons behind their popularity, highlighting both established favorites and emerging assets.
1. Bitcoin (BTC)
Bitcoin is the original cryptocurrency and remains the most well-known, created in 2009. It is currently the largest cryptocurrency by market capitalization.
Often referred to as “digital gold,” Bitcoin is viewed by many as a reliable way to store value. With a long history of steady growth, it’s considered a solid investment, although this is not guaranteed. As the cryptocurrency that most people trust, its value continues to rise.
Bitcoin is also widely accepted for transactions, similar to traditional currencies. Many shops and online retailers accept Bitcoin, making it the preferred choice for purchasing both physical and digital goods and services.
2. Ethereum (ETH)
Ethereum was launched in 2015 and quickly became the second-largest cryptocurrency. Unlike Bitcoin, which primarily serves as a store of value, Ethereum is designed for a different purpose and is widely used for various decentralized applications (DApps).
Ethereum is a decentralized platform that enables smart contracts—self-executing programs built on its blockchain. These contracts run exactly as programmed, eliminating the risk of fraud or third-party interference.
Smart contracts open up a world of possibilities, from gaming to finance. Ethereum is also the birthplace of NFTs (non-fungible tokens). Through smart contracts, NFTs can be created, sold, and programmed in innovative ways, allowing artists to earn royalties and giving NFTs unique functionalities. For example, gamers can purchase outfits and tools using Ether and use them within their games.
3. Tether (USDT)
Tether is a stablecoin that is pegged to the US dollar, making it the third-largest cryptocurrency and one of the most popular stablecoins available.
The primary purpose of Tether is to “tether” or stabilize the value of other cryptocurrencies. During periods of high market volatility, investors often shift their funds into USDT to protect their investments from losses. This helps stabilize the market and provides an opportunity to buy cryptocurrencies when prices are low and sell them when prices rise.
4. USD Coin (USDC)
USD Coin is a stablecoin created by Circle and Coinbase, backed 1:1 by the US dollar. It is available for trading on Coinbase.
Similar to Tether, USD Coin is used to stabilize other cryptocurrencies. Its availability on Coinbase makes it one of the more accessible stablecoins. As one of the most popular crypto exchanges, Coinbase allows users to easily buy, sell, and transfer cryptocurrencies.
5. BNB (BNB)
BNB is the native token of Binance, one of the most popular platforms for buying, selling, and transferring cryptocurrencies.
Users can use BNB to pay transaction fees on the Binance platform, often at a lower rate than paying with other currencies. Additionally, BNB can be used to purchase other cryptocurrencies on the Binance exchange.
6. Binance USD (BUSD)
Binance USD is another stablecoin created by Binance, backed 1:1 by the US dollar.
Like other stablecoins, BUSD is used to stabilize the value of cryptocurrencies. Because it is issued by Binance, it can also be used to pay transaction fees on the Binance platform and to purchase other cryptocurrencies.
7. XRP (XRP)
XRP is the native token of Ripple, a payment network designed for banks and financial institutions. It operates on its own blockchain platform called the XRP Ledger, allowing banks to settle transactions quickly and at a low cost.
Due to its practical application in the financial sector, XRP has been adopted by some of the largest banks in the world.
8. Cardano (ADA)
Cardano is a smart contract platform created in 2015 by Charles Hoskinson, a co-founder of Ethereum.
What sets Cardano apart is its use of a proof-of-stake consensus algorithm instead of proof-of-work, making it more energy-efficient than other blockchain protocols. For comparison, processing Bitcoin transactions consumes around 110 terawatt-hours of energy per year—similar to the annual energy usage of small countries like Sweden. In contrast, Cardano is reported to be 1.6 million times more energy-efficient than Bitcoin, according to Forbes.
Currently, Cardano is working on integrating a new programming language called Plutus, which will simplify the development of smart contracts.
9. Solana (SOL)
Solana is a high-speed blockchain protocol that can handle thousands of transactions per second. It was created in 2017 by Anatoly Yakovenko, the former Chief Technical Officer at Qualcomm.
The main advantage of Solana is its speed. It processes transactions much faster than other protocols like Ethereum, making it ideal for applications that require quick transaction processing, such as video streaming and gaming.
10. Dogecoin (DOGE)
Dogecoin was created in 2013 as a joke, inspired by the popular Doge meme featuring a Shiba Inu dog.
Despite its humorous origins, Dogecoin has become one of the more popular cryptocurrencies, largely due to its low price, which makes it accessible to a wide audience.
Often described as a “coin for the people,” Dogecoin has been used for charitable initiatives, such as funding projects in Kenya to build water wells.
11. Polkadot (DOT)
Polkadot was launched in 2016 as a “next-generation” blockchain protocol designed to be scalable, flexible, and interoperable.
What sets Polkadot apart is its use of “parachains,” which are specialized chains built for specific applications. This design allows for more efficient and customizable use of resources.
Additionally, Polkadot is developing “Polkaswap,” a decentralized exchange that will enable users to trade DOT, ETH, and other assets in a trustless manner.
12. Dai (DAI)
Dai is a stablecoin backed by the US dollar, created by MakerDAO, a decentralized autonomous organization (DAO) on the Ethereum blockchain.
What sets Dai apart is its use of “collateralized debt positions.” This means that Dai is backed by other assets, such as ETH (Ethereum) or BAT (Basic Attention Token).
This unique structure makes Dai a very stable coin, as it is less affected by the volatility that typically impacts other cryptocurrencies. As a result, Dai is a popular choice for users looking for stability in the crypto market.
13. Polygon (MATIC)
Polygon is a scalability solution for Ethereum, functioning as a “layer 2” solution that enhances Ethereum’s performance.
One of the key features of Polygon is its use of “sidechains,” which are separate chains designed to process transactions. By offloading some of the workload from the Ethereum blockchain, Polygon helps improve overall scalability and efficiency.
Additionally, Polygon is developing a “stake-mining” feature that will allow users to earn rewards by staking their tokens on the network. This creates more opportunities for users to engage with the platform and benefit from its growth.
14. Shiba Inu (SHIB)
Shiba Inu is another cryptocurrency created as a “joke coin” in 2021, inspired by the Dogecoin meme featuring a Shiba Inu dog.
Unlike Dogecoin, which has a market cap of around $1 billion, Shiba Inu boasts a market cap of approximately $5 billion. This popularity stems from its creation on the Ethereum blockchain, which allows for “token cloning.”
As a result, anyone can create their own version of Shiba Inu, leading to the emergence of over 100 different versions of the coin. This unique aspect contributes to its widespread appeal within the crypto community.
15. TRON (TRX)
TRON is a decentralized entertainment protocol founded in 2017, aimed at “decentralizing the web” and promoting a more open internet.
TRON features its own scalable blockchain, allowing it to process transactions quickly and efficiently. This speed makes it an attractive option for various applications.
Currently, TRON is involved in several exciting projects, including TRON Arcade, a gaming platform that supports developers and gamers alike. Additionally, TRON is working on “Project Atlas,” an initiative focused on further decentralizing the internet.
16. Avalanche (AVAX)
Avalanche is a platform designed for launching decentralized finance (DeFi) applications and enterprise blockchains. Its key features include scalability, security, and interoperability.
Avalanche uses a “proof-of-stake” consensus model, allowing users to earn rewards by staking their tokens on the network. This incentivizes participation and strengthens the platform.
By leveraging smart contracts, Avalanche is continuously improving the usability of its platform, making it easier for developers to create innovative applications in the DeFi space.
17. UNUS SED LEO (LEO)
UNUS SED LEO is a utility token used on the Bitfinex exchange, launched in 2019. Users can utilize LEO to pay for trading fees on the platform, receiving discounts when they do so. This makes it an attractive option for frequent traders on Bitfinex.
Additionally, UNUS SED LEO enables users to earn rewards by staking their tokens on the exchange. Staking involves locking up tokens to help enhance the network’s security. In return for this contribution, users receive rewards in the form of LEO tokens, providing an extra incentive for participation.
18. Litecoin (LTC)
Litecoin is a cryptocurrency created in 2011 as a “lightweight” version of Bitcoin. It offers several unique features, including faster transaction times and improved storage efficiency.
Often referred to as a “testnet” for Bitcoin, Litecoin allows developers to test new features before they are implemented on Bitcoin. As one of the oldest cryptocurrencies, aside from Bitcoin, Litecoin has built a strong community of supporters who value its reliability and innovation.
Litecoin is frequently used for everyday transactions, making it a practical choice for those looking to use cryptocurrency in their daily lives.
19. Stellar (XLM)
Stellar is a payments network designed for fast, cross-border transactions. It aims to be scalable and compatible with existing financial systems. Unlike many cryptocurrencies, Stellar operates on a “consensus protocol,” which means it doesn’t require mining to validate transactions, making it more energy-efficient.
In addition to its cryptocurrency, Stellar is developing projects like “StellarX,” a decentralized exchange that allows users to trade assets directly. They are also working on the “Lightning Network,” which aims to enhance Stellar’s speed and scalability even further.
Stellar’s innovative features make it a popular choice for facilitating global payments and connecting different financial systems.
20. Bitcoin Cash (BCH)
Bitcoin Cash is a “fork” of Bitcoin, meaning it started as a copy of Bitcoin but with some important changes. The main difference is the block size, which is eight times larger on Bitcoin Cash. This allows the network to process more transactions per second, improving its overall efficiency.
Additionally, Bitcoin Cash uses a different mining algorithm than Bitcoin. This change makes it more accessible for miners who may not have specialized equipment, allowing a wider range of participants to join the network.
Overall, Bitcoin Cash aims to provide a faster and more efficient alternative for everyday transactions compared to its predecessor.
Crypto For Merchants
While Stax does not currently accept cryptocurrencies, we believe it’s important to pay attention to how customers are increasingly choosing to transact.
As the government explores cryptocurrency regulations and the media discusses the normalization of crypto transactions, customers are likely to start considering these payment options. Staying informed is crucial. Keep an eye on the most popular cryptocurrencies and explore other crypto-based financial solutions that could add value to your business.
By understanding these trends, you can better position your business to meet the evolving needs of your customers.
Quick FAQs about the most popular Cryptocurrencies
Q: What are Cryptocurrencies?
A cryptocurrency is a type of virtual or digital currency that uses cryptography to secure transactions and control the creation of new units. Cryptocurrencies are somewhat anonymous but fully transparent, as every transaction is recorded on a digital ledger called a blockchain.
Q: Is an Altcoin Different From a Cryptocurrency?
Altcoins refer to any cryptocurrency that is not Bitcoin. While they are still considered cryptocurrencies, altcoins can serve different purposes and be created in various ways, including mining-based coins, stablecoins, memecoins, and security tokens.
Q: What are Cryptocurrencies Used For?
Cryptocurrencies can be used for various purposes, including investment, purchasing goods and services, and participating in decentralized financial services (DeFi). They can also be used for staking, trading, and investing in other blockchain-based projects and decentralized organizations.
Q: Are Cryptocurrencies Regulated?
In the US, regulation is in progress to create a balance that allows cryptocurrencies to thrive without undermining essential societal systems. In March 2022, President Biden signed an Executive Order on Ensuring Responsible Development of Digital Assets, emphasizing the need for research across departments to address potential risks.
Q: What is the Difference Between Bitcoin and Ethereum?
Bitcoin is the original cryptocurrency, primarily viewed as a store of value and used for purchases. In contrast, Ethereum is a decentralized platform designed for running smart contracts, enabling a wide range of applications, including decentralized applications (DApps) and Non-Fungible Tokens (NFTs).
Q: What are Stablecoins?
Stablecoins are cryptocurrencies tied to other assets, usually fiat currencies like the US dollar, to minimize their vulnerability to market fluctuations. Popular examples include Tether (USDT) and USD Coin (USDC).
Q: What is the Purpose of Tether (USDT)?
Tether is a stablecoin pegged to the US dollar, providing stability during market volatility. Investors often move their funds into USDT to protect against losses when the market is unstable, which also helps stabilize the overall market.
Q: What is Litecoin (LTC)?
Litecoin is a cryptocurrency created in 2011 as a lighter version of Bitcoin. It offers faster transaction times and improved storage efficiency. Litecoin is often used as a testnet for Bitcoin, allowing developers to test new features before applying them to Bitcoin.
Q: What is Bitcoin Cash (BCH)?
Bitcoin Cash is a fork of Bitcoin, meaning it is a modified version of Bitcoin with specific changes, most notably a larger block size that allows for more transactions to be processed simultaneously. It also features a different mining algorithm, making it more accessible for miners without specialized equipment.
