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But despite the many types of cryptocurrencies that exist on the market and the many more that get created daily, there are a few that are the most well-known. In this article, we’ll discuss the five top cryptocurrencies, what they are, how much they’re currently worth, and how you can get your hands on them.
Cryptocurrencies, also known simply as “crypto,” are a sort of encrypted digital currency designed to deter fraud and double spending. Blockchain technology, which underpins digital currencies like Bitcoin and Ethereum, is a distributed ledger managed by a network of computers located in different locations.
In principle, the inability of governments to manipulate or regulate virtual currencies stems from the fact that they lack a central issuing entity, like a bank. However, decentralization is a cornerstone of what the Web3 landscape will look like — so that doesn’t look to be changing any time soon.
As a decentralized, peer-to-peer payment mechanism, cryptocurrency facilitates trade across borders. Cryptocurrency transactions are not supported by any government or central bank but instead exist as entries in a public ledger recording purchases. A “crypto wallet” is a digital wallet used to store cryptocurrency, while the public ledger records all cryptocurrency transactions.
Some experts believe that blockchain and other associated technologies, such as cryptocurrencies, will have an impact on a wide variety of industries, including the legal and financial sectors. Discussions have even begun on the use of blockchain to digitize governments — including for digital identities and voting in elections.
Before we continue, it is important to be aware of the distinction between a coin and a token. When talking about cryptocurrencies, you will likely hear the terms “coin” and “token” used quite a bit. There is a distinction between the two, despite the fact that the terms may sound interchangeable. Let’s quickly look at the two:
A digital coin is something that is generated on its own blockchain and functions in a manner that is comparable to that of conventional money. Both as a place to store value and as a medium of exchange between two parties conducting business with one another, it can serve both of these functions. Crypto coins and cryptocurrencies go hand-in-hand.
Tokens, on the other hand, can be used for a lot more than just as a kind of digital currency. Tokens are generated on top of an existing blockchain. They can be used as a component of a software application for a variety of purposes, including but not limited to granting access to an app, verifying an individual’s identity, or tracking products as they move through a supply chain.
When it comes to digital currency, “coin” refers to anything that operates on its own separate blockchain. Bitcoin, which operates on its own network, fits the definition of a “currency.” Ethereum’s blockchain also serves as the backbone for Ether’s operations.
With that being said, “altcoin” generally refers to any cryptocurrency that is not Bitcoin. Bitcoin’s functionality is mirrored by many altcoins — where it runs on its own blockchain with only a limited number of coins in existence. Dogecoin, on the other hand, is quite unlike the others. In contrast to Bitcoin’s restriction of 21 million coins, for example, Doge allows for an infinite supply.
Now we’ve wrapped our heads around what cryptocurrency is as well as the concepts of coins and tokens and altcoins, let’s get into the top five cryptocurrencies. As we’ve mentioned before, there are currently 9,314 active cryptocurrencies in circulation today. This number fluctuates as new ones become available or older ones drop out.
However, while many currencies have come and gone, the coins on this list have kept the top spots consistently since their respective inceptions.
Bitcoin (BTC) is the first cryptocurrency and has had dips on the top spot since its launch. Its creator, the anonymous Satoshi Nakamoto, released it to the public in 2009.
Bitcoin, like most cryptocurrencies, is powered by a blockchain — a distributed record of transactional data kept on thousands of computers. Bitcoin is protected from hackers and other malicious actors by requiring them to verify transactions by completing a cryptographic challenge (known as proof of work).
As Bitcoin has gained widespread attention, its value has increased exponentially. One Bitcoin cost roughly $370 in May of 2016. On the 2nd of December in 2022, the price of a single Bitcoin was close to £13,820. A 3,635% increase, to be precise.
When conducting transactions on the Ethereum network, Ether (ETH) is the token of choice. Ethereum is a distributed computing platform built on blockchain technology, which allows developers to build decentralized applications such as smart contracts. Without the need to distribute through app stores like Apple’s App Store or the Google Play Store, where developers may be forced to pay up to as much as 30% of their earnings to the app stores, developers may keep more of their hard-earned money.
In addition to being a cryptocurrency, Ethereum is also a platform for building decentralized applications, or dApps for short. Developers who want to build and run dApps on the Ethereum platform, or, more recently, investors who want to buy other digital currencies using Ether are the primary buyers of Ether, which acts like a currency within the Ethereum ecosystem.
In September of 2022, Ethereum finally made the switch to the proof-of-stake validation technique. As opposed to proof-of-work, which requires a lot of processing power, proof-of-stake uses less power since it eliminates the incentive for mining it and improves blockchain efficiency and scalability.
One of the first and most widely used stablecoins, Tether (USDT) aims to limit price fluctuations in the cryptocurrency market by being pegged to a fiat currency or another external reference point. Tether and other stablecoins aim to reduce the wild price swings witnessed by other digital currencies, including Bitcoin, in the hopes of attracting users who are wary of the market. There is a one-to-one correlation between Tether and the value of the US dollar.
Tether was released in 2014 with the intention of simplifying the digital use of fiat currencies. Users can quickly and conveniently transfer funds from one cryptocurrency to U.S. dollars without having to convert them to fiat money.
This coin effectively enables people to use a blockchain network and associated technologies to transact in fiat currencies while mitigating the usual complexity and volatility of digital currencies.
The value of USD Coin, like that of other stablecoins, is pegged to the value of the US dollar through the use of fiat-collateralized reserves. This implies that for every USD Coin in circulation, the same value in fiat money is held in reserve. Circle and Coinbase, who make up the Centre Consortium, released USD Coin in 2018. Unfortunately, unlike Tether, USD Coin is a regulated stablecoin since Circle is located in the United States and is therefore subject to regulation.
USD Coin’s goal was to make a completely “digital” Dollar, one that is as secure as U.S. fiat currency but doesn’t require its owner to have a bank account or even be located in the United States. USD Coin is intended to function more like regular currency that can be used with online retailers than as an investment vehicle.
The Binance Exchange is one of the largest cryptocurrency exchanges in the world, and the Binance Coin (BNB) is a utility cryptocurrency used to pay for trading fees on the Binance Exchange. Discounts are available to Binance users who pay with the Binance Coin instead of fiat currency (or other crypto!).
Binance’s decentralized exchange runs on the same blockchain as Binance Coin. According to trading volume, Changpeng Zhao’s Binance Exchange is one of the most popular exchanges in the world.
To begin with, Binance Coin was an ERC-20 token that could be used on the Ethereum network. Eventually, its own mainnet went live and it currently uses a proof-of-stake consensus model, just like Ether. Nowadays, BNB can be used for buying and selling, collecting payments, and even making trip reservations. Coins can be bought and sold using other cryptocurrencies like Bitcoin and Ethereum.
Now you know all about the top types of cryptocurrencies, you must be itching to grab some of your own. In more recent years, it’s become a lot easier to obtain many forms of coin compared to when cryptocurrencies were starting out. As crypto becomes more accepted in the public space, it has also become more accessible.
Nowadays, you can buy the many types of cryptocurrencies that exist through one of two channels:
You can use these platforms to purchase and sell Bitcoin and Ethereum, as well as stocks, bonds, and exchange traded funds (or ETFs, for short). In exchange for lower trading fees, these marketplaces limit the usage of cryptocurrencies to purely investment purposes. So, if you’re looking to buy crypto to eventually spend in one of the few countries where crypto is legal tender — such as El Salvador — you might want to avoid keeping crypto in your broker account.
Also, when it comes to using a broker for investing in cryptocurrencies, you should know that the options can be severely limited. Because of the volatility of the crypto space, broker platforms only allow trading of more well-known coins like Bitcoin and Ether.
There are many cryptocurrency exchanges to choose from, each offering its own unique selection of tradable coins, wallet services, and interest-bearing account options. Many exchanges will charge you a fee according to the total value of your holdings — usually in the form of a service fee to help them keep their platforms running.
The cryptocurrencies accepted, fees levied, security provided, simplicity of storing and withdrawing funds, and the availability of educational resources are all factors to consider when comparing platforms. Binance, Coinbase, and Crypto.com are some of the most well-known cryptocurrency exchanges — but there are also many others. Here are five of the best exchanges you should consider using:
Most people who have heard of cryptocurrency will have heard of Coinbase. Many people saw the exchange’s public launch last year as a validation of the cryptocurrency market because it is one of the biggest and most well-known in the United States.
Coinbase provides a user-friendly interface, a wealth of resources covering topics as diverse as blockchain technology and market volatility, and dependable safety measures.
With one of the most forgiving cost regimes among all trading platforms, Binance is often regarded as the best cryptocurrency exchange for low fees.
When it comes to trading volume, Binance is unrivaled, and its U.S. counterpart, Binance.US, provides many of the same benefits. Its low, competitive maker/taker fee cap of 0.1% is one of its best features. The charge is cheap to begin with and decreases further as your trading volume does. Build and Build (BNB) is one of the most widely held utility tokens, and the network rewards its users with discounts when they use BNB to make purchases or sells.
Bisq (formerly Bitsquare) is a decentralized cryptocurrency exchange that mimics the simplicity and breadth of functionality found in centralized markets. Additionally, it is the most Bitcoin-like in that it is a decentralized, open-source platform that doesn’t cap the number of currencies it may support. The platform is based on open-source software, which means its blueprints can be accessed by anybody, and it is being developed with money saved by its users and donations.
Trading on Bisq does not necessitate the use of a third party or the disclosure of private information from its users. It’s a great option for Bitcoin users who also want access to other cryptocurrencies like Dogecoin, XRP, and Cardano. As a matter of fact, it is unusual for decentralized exchanges to support both digital assets and fiat cash.
When compared to other respected cryptocurrency exchanges, Crypto.com distinguishes out due to its exceptional security measures. According to the Cybersecurity Ranking and CERtification Platform, this market is the most secure of the top 100 exchanges. Over 250 different coins can be traded on the exchange, making it one of the greatest selections of its kind.
Offline cold storage for all crypto, a regulated custodian bank account for fiat currency, and routine software peer-review are just some of the methods used by Crypto.com to keep its users’ cryptocurrency safe on its trading platform. Password, biometric, email, phone, and authenticator verification are all a part of its multi-factor security system.
People who speculate in cryptocurrencies should not invest more money than they can afford to lose because the market is volatile and unpredictable. There has been a lot of volatility this year, with crypto assets changing wildly. Since the market peaked in November of 2021, it has steadily declined. It might be especially challenging for inexperienced traders because they may be up against experienced professionals.
Web3 is on its way, and cryptocurrencies are a key aspect of it, so getting into crypto sooner rather than later would help keep you ahead of the game. But, if you’re really keen on investing in cryptocurrencies, it’s important to make sure that you do plenty of research beforehand and avoid falling into the trap of the various “crypto scams” that exist nowadays. Start off small, and never go all-in
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