20 Most Popular Cryptocurrencies and How They Work
In this post, I will walk you through the 20 most popular examples of cryptocurrency and how
they work. After reading this post, you will understand what 90% of the protocols in the crypto
market do.
1. Bitcoin
Bitcoin lives on a decentralized public ledger. Think of this like a large string of files everyone
can access. There are two things you need to know about Bitcoin.
The first is that the supply of bitcoin is fixed. There can only ever be 21 million Bitcoins. This
fixed supply is what gives Bitcoin its value. The closest thing we have to Bitcoin in the physical
world is gold. Gold's supply increases by 2% per year on average. For this reason, people
consider Bitcoin to be a good store of value.
The second is that there is no central authority to mint more Bitcoin or to intermediate and
change the rules about who owns what. The Bitcoin ledger is immutable. Once you own a
Bitcoin, no one can take it away from you.
People consider Bitcoin a type of money because it has some desirable properties of money.
Divisibility: you can buy up to 100 million of a Bitcoin, which is called a Satoshi
Durability: like gold, Bitcoin does not spoil or deteriorate over time
Uniformity: you are indifferent to which bitcoin you hold. They are all the same.
Limited supply: 21 million
Acceptability: It has become more and more acceptable
Unit of account. Bitcoin is not there yet. You don't see things in the grocery store priced
in Bitcoin. Though you do see NFTs priced in BTC, sometimes
Medium of exchange: most people don't use BTC to buy stuff yet.
2. Ethereum
The second largest coin by market capitalization is Ethereum. The Ethereum blockchain is
similar to the Bitcoin blockchain in that anyone can check and verify its transactions. However,
it also uses a technology called smart contracts, which means developers can build apps on top of
it. For example, you can have an automated app that is a marketplace for buying and selling
cryptocurrencies. This app can run on its own without any interference. Everyone can see the
rules and cross-check the code. In addition, Ethereum allows you to mint your own token. This
can be a nonsense token, such as a meme coin or a token with some kind of utility. For example,
maybe you need it to pay for stuff on the app, or maybe you can use it to vote on app parameters,
e.g., interest rates.
Ethereum copycats are Solana, Cardano, Polkadot
3. Solana
The third largest blockchain network by market cap is Solana. Solana can process transactions
much faster than Ethereum; however, Ethereum has licked in network effects because it was the
first. Think of the power of network effects like this: If everyone is on Facebook, why switch to
something new, such as Google+? However, Solana has seen a lot of growth in price and
development of its ecosystem during the bear market. Despite breaking down from time to time,
there are many who consider Solana a serious contender to Ethereum.
4. Cardano
After the launch of Ethereum, its founders split up. Charles Hoskinson, one of them, decided to
launch his own blockchain. This would be a super duper blockchain that is faster and scales
better than Ethereum. What's special about Cardano is that it is peer-reviewed by academics.
Detractors argue that it has a very large market cap with very little to show for it.
5. Polkadot
Another Ethereum Founder, Gavin Wood, founded an even more general-purpose blockchain
than Ethereum. Gavin is actually the person who wrote the code for Ethereum. The idea is that
the Polkadot blockchain can talk to all the other blockchains. While Polkadot is a good idea, it
sucks when it comes to marketing itself, and the concept did not catch on. However, Polkadot is
in the process of revamping its tech stack, and many think it could see multiple growth
opportunities during this bull run.
6. Tether USDT
Tether is a type of cryptocurrency known as a stablecoin. Unlike Bitcoin or Ethereum, which can
experience significant price volatility, Tether is designed to maintain a stable value by pegging
itself to a reserve of real-world assets, typically US dollars. For every Tether issued, an
equivalent amount of USD is held in reserve. This makes Tether a useful tool for traders and
investors who want to avoid the wild price swings often associated with cryptocurrencies. It
facilitates easier trading between cryptocurrencies and is a stable store of value.
7. Binance Coin (BNB)
Binance Coin is the native cryptocurrency of the Binance Exchange, one of the largest
cryptocurrency exchanges in the world. Initially, BNB was an ERC-20 token that operated on the
Ethereum blockchain. However, it has since migrated to Binance's own blockchain, the Binance
Chain. BNB is primarily used to pay for transaction fees on the Binance Exchange, where users
can get discounts for using BNB. Additionally, it is used in various applications on the Binance
Smart Chain (BSC), which supports smart contracts and decentralized applications (DApps).
8. XRP (Ripple)
XRP is the native cryptocurrency of the Ripple network, which aims to facilitate fast and low-
cost international payments. Unlike Bitcoin, which requires significant computational power to
process transactions, Ripple uses a consensus ledger and a unique consensus algorithm, which
allows for quicker and cheaper transactions. XRP is used by financial institutions as a bridge
currency to facilitate cross-border transactions more efficiently than traditional methods.
9. Dogecoin (DOGE)
Dogecoin started as a joke or meme coin but has grown to become one of the most recognized
cryptocurrencies. It was created in December 2013, based on the popular "Doge" meme featuring
a Shiba Inu dog. Despite its origins, Dogecoin has a strong community and has been used in
various charitable events and crowdfunding campaigns. It operates on a proof-of-work consensus
mechanism similar to Bitcoin but is inflationary, meaning there is no cap on the total supply of
Dogecoins.
10. Litecoin (LTC)
Developed by former Google engineer Charlie Lee, Litecoin was created in 2011 as the "silver to
Bitcoin's gold." It is a peer-to-peer cryptocurrency that shares many similarities with Bitcoin but
with some key differences. Litecoin's block generation time is 2.5 minutes, compared to Bitcoin's
10 minutes, allowing faster transaction confirmations. It also uses a different hashing algorithm
called Scrypt, which is less resource-intensive than Bitcoin's SHA-256.
11. Chainlink (LINK)
Chainlink is a decentralized oracle network that aims to connect smart contracts with real-world
data. Smart contracts cannot interact with external data sources on their own, which limits their
functionality. Chainlink provides a way for smart contracts to access off-chain data, such as price
feeds, weather data, and event outcomes. This expands the potential use cases for smart
contracts, making them more versatile and useful.
12. Stellar (XLM)
Stellar is a blockchain platform designed to facilitate fast and low-cost cross-border payments. It
was created by Jed McCaleb, one of the co-founders of Ripple, and operates on a similar premise
but with some key differences. Stellar's native cryptocurrency is Lumens (XLM), which is used
to pay transaction fees and maintain the network. Stellar aims to connect financial institutions,
payment systems, and individuals to enable seamless and efficient value transfers.
13. USD Coin (USDC)
USD Coin is another stablecoin that is pegged to the US dollar. It was launched by the CENTRE
consortium, which includes Circle and Coinbase. Like Tether, each USDC is backed by a reserve
of US dollars, ensuring its value remains stable. USDC is widely used for trading, lending, and
earning interest in the cryptocurrency ecosystem, providing a stable alternative to more volatile
digital assets.
14. Uniswap (UNI)
Uniswap is a decentralized exchange (DEX) that operates on the Ethereum blockchain. It allows
users to trade cryptocurrencies directly from their wallets without the need for an intermediary.
Uniswap uses an automated market-making (AMM) system, where liquidity providers supply
pools of tokens that traders can swap between. The native token, UNI, is used for governance,
allowing holders to vote on protocol upgrades and changes.
15. Aave (AAVE)
Aave is a decentralized finance (DeFi) protocol that enables users to lend and borrow
cryptocurrencies. It operates on the Ethereum blockchain and allows users to earn interest on
their deposits or borrow assets against their holdings. Aave introduced the concept of "flash
loans," which are loans that must be repaid within the same transaction block, providing
opportunities for arbitrage and other short-term strategies. The AAVE token is used for
governance and staking within the protocol.
16. Filecoin (FIL)
Filecoin is a decentralized storage network that aims to transform cloud storage by leveraging
blockchain technology. Users can rent out their unused storage space in exchange for FIL tokens,
creating a marketplace for decentralized storage. This provides a more secure, efficient, and cost-
effective alternative to traditional cloud storage services. Filecoin's network ensures that data is
distributed and stored in a decentralized manner, enhancing security and redundancy.
17. VeChain (VET)
VeChain is a blockchain platform designed to enhance supply chain management and business
processes. It uses a combination of blockchain technology and IoT to provide greater
transparency and efficiency in the supply chain. VeChain's dual-token system includes VET,
which is used for transactions and governance, and VTHO, which is used to pay transaction fees.
VeChain aims to revolutionize the way products and information move through supply chains.
18. Bitcoin Cash (BCH)
Bitcoin Cash is a fork of Bitcoin that was created in August 2017. The main difference between
Bitcoin and Bitcoin Cash is the block size limit. Bitcoin Cash increased the block size limit to
8MB and later to 32MB, allowing for more transactions to be processed per block. This was
aimed at improving Bitcoin's scalability and transaction speed. Bitcoin Cash retains many of the
same features as Bitcoin, such as its decentralized nature and fixed supply of 21 million coins,
but aims to be a more practical and usable form of peer-to-peer electronic cash.
19. Shiba Inu (SHIB)
Shiba Inu is an Ethereum-based token that was created as a meme coin similar to Dogecoin.
Launched in August 2020 by an anonymous person or group known as "Ryoshi," Shiba Inu
quickly gained popularity due to its dog-themed branding and the growing trend of meme coins.
The project also introduced a decentralized exchange called ShibaSwap, where users can trade
and stake their SHIB tokens along with other tokens within the Shiba Inu ecosystem, such as
LEASH and BONE. Shiba Inu aims to build a vibrant community and ecosystem around its
tokens, leveraging the power of memes and social media.
20. Dogecoin (DOGE)
Dogecoin started as a joke or meme coin but has grown to become one of the most recognized
cryptocurrencies. It was created in December 2013, based on the popular "Doge" meme featuring
a Shiba Inu dog. Despite its origins, Dogecoin has a strong community and has been used in
various charitable events and crowdfunding campaigns. It operates on a proof-of-work consensus
mechanism similar to Bitcoin but is inflationary, meaning there is no cap on the total supply of
Dogecoins.
FAQs
Is crypto money?
Many cryptocurrencies are accepted as a form of payment by platforms seeking to appeal to
crypto holders. For example, you can use BTC to buy gift cards, and there are numerous
merchants who accept Dogecoin as payment just because it's cool. However, most people
convert their digital currencies to fiat currency, such as euros and dollars, on crypto exchanges.
Crypto exchanges are large marketplaces where you can deposit fiat and buy and sell crypto
assets.
Who is the No. 1 cryptocurrency?
The largest cryptocurrency by market cap is Bitcoin. At the time of writing, the market cap of
Bitcoin was 1.3 trillion.
What are the most popular 4 types of cryptocurrency?
1. Cryptocurrencies such as Bitcoin (BTC) and Litecoin (LTC): Digital currencies used as
a medium of exchange or store of value. Bitcoin is the most well-known, offering a
decentralized and secure way to transfer
2. Smart Contract Platforms such as Ethereum (ETH) and Cardano (ADA). Such
platforms allow developers to create decentralized applications (DApps) using smart
contracts. Ethereum is the leading platform, supporting a wide range of applications.
3. Stablecoins such as Tether (USDT) and USD Coin (USDC). Cryptocurrencies are
pegged to fiat currencies to maintain a stable value. They are used for trading payments
and as a store of value, reducing volatility.
4. Decentralized Finance (DeFi) Tokens such as Uniswap (UNI) Aave (AAVE). These
Tokens are associated with DeFi protocols that enable lending, borrowing, and trading on
decentralized platforms. They often provide governance rights for protocol changes.
