What exactly makes the top 5 Cryptocurrencies popular?

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What exactly makes the top 5 Cryptocurrencies popular?

Crypto currency is digital money that exists as a code and only the sender and the receiver of it can view its content. Unlike other forms of currency,it is decentralized such that no single entity has monopoly of control over its operations. Similar information in the operations is stored in ledgers known as blocks. Furthermore, these blocks are connected to each other using links that mimic a chain hence the name blockchain. The first virtual currency was introduced in 2008 and since then a lot more of them have mushroomed in the last decade. Although they are all crypto, they are quite distinctive in the way they come into existence and how users utilize them. Here are some of the most popular cryptocurrencies.

Bitcoin

Bitcoin was the pioneer in the crypto arena. With a market cap of 708 billion, it’s the most popular Virtual currency today. An anonymous entity called Satoshi Nakamoto Introduced it with the aim of eliminating third parties in monetary transactions. In the 2008 white paper, Satoshi wrote down the inner workings of the currency and in 2009 they mined the first block. Bitcoin runs on its own blockchain technology hence it’s a coin since it has its own infrastructure. The maximum number of this currency is 21 million and as at April 2022 we are at 19 Million Bitcoins in circulation. To make an extra Bitcoin, miners have to solve complex mathematical problems using sophisticated hardware. One can argue that its success so far is the reason we have over 1500 cryptos in the market.

Ether

Coming in second with market cap of 332 billion is Ether. A programmer and a bitcoin enthusiast named Vitelik Buterin came up with the concept. Later on, he and other cofounders launched Etherium which is the infrastructure which Ether runs on. Although it has some similarities with bitcoin, there are several distinctions between these two cryptos. For instance, we can create infinite ether coins as opposed to bitcoin which has a fixed number. Secondly, etherium is faster in carrying out transactions than bitcoin. In addition we can do more than financial transactions with etherium e.g. creating smart contracts. It is due to its versatility that Ether is amongst the most popular Cryptos today.

Tether

Crypto Number 3 in popularity is Tether that has managed to amass 83 billion in market cap. Tether runs on Bitcoin’s and Ether’s blockchain networks. As it is evident, latter cryptocurrencies developers were trying to solve a challenge with their predecessors. Due to the high volatility in crypto markets, investors were skeptical about the stability of virtual money. Additionally, there was no physical asset backing many of these coins meaning they could disappear as fast as they appeared. To mitigate this skepticism, Brock Pierce and other cofounders created Tether. According to Tether limited, this crypto is backed with US dollar in the ratio of 1:1 hence the nickname “stable coin”.

Binance

Number 4 on the list is Binance coin (BNB) with a market cap of 62 billion. Binance exchange (Biggest cryptocurrency exchange platform) developed this coin with the aim of financing its operations. The company did so by having an ICO where 100 million coins were offered. Today, BNB’s utility mostly happens on Binance’s ecosystem. Traders on the platform use it to pay for trading and transactional fees among other things. Outside of Binance exchange, holders of this currency can use it to pay for trips, hotels and even do online shopping. Just like Bitcoin, BNB has a finite number of coins in circulation which is 200 million. However, Binance exchange carries out a regular burning of the coins to increase BNB’s valuation.

Dogecoin

Last but not least is Dogecoin. If you ever need proof that social media has effect on finance, then look no further. The story of Dogecoin is unconventional and dates back to 2013. Launched by Palmer (a crpto-sceptic) and Markus (who wanted to have a less uptight crypto), Dogecoin was off to an interesting start. The founders presented it as a meme but the overwhelming reception from the netizens changed their perception. Although it’s commonly known for receiving pumps from reddit, Tiktok, and Elon Musk’s tweets, this currency has managed raise above that notion. Dogecoin holders utilize it the same way they do other cryptocurrencies. However, they have gone a step further and now use it for charitable programs. For a currency that started off as a joke, Dogecoin has surely surpassed our expectations.

Conclusion

In a nut shell, Invention of cryptocurrency was a turning point in the financial Industry. While the initial drive was to have a decentralized financial system, we have managed to accomplish much more with it. Launching of Bitcoin paved a way and a reference point to its altcoins. We now have cryptocurrencies that are faster and more secure than Bitcoin. In the recent past Virtual money has received endorsement from some governments declaring it as a legal tender. However, we still have cynics in the longevity of the crypto field. Only time will tell how far it goes but in the meantime, we can only hope for more innovations.