In addition to Bitcoin: Investors should know these ten other important cryptocurrencies

In addition to Bitcoin: Investors should know these ten other important cryptocurrencies

Bitcoin is still the largest cryptocurrency by market capitalization and is likely to be further ahead in terms of popularity. However, numerous other digital coins have now emerged that compete with Bitcoin.

Ether

Next to Bitcoin, Ether is probably the best-known cryptocurrency in the world. Ether is Ethereum’s own cryptocurrency, a “technology for building applications and organizations, holding assets, carrying out transactions and communicating”, and is used on the Ethereum network to pay for certain activities, as the company itself explains on its website. Ethereum was launched in 2015 and, like Bitcoin, allows users to use “digital money without payment providers or banks”. This primarily offers opportunities for people who would otherwise not have access to bank accounts, loans or other financial products. But while Bitcoin is “just a payment network,” Ethereum sees itself more as “a marketplace for financial services, games, social networks and other applications.” Because Ethereum is programmable, users can develop applications that use the blockchain to store data or control what the application can do.

The Ethereum merger, which had been prepared for years, took place in September 2022 – possibly the most important upgrade of all time for the cryptocurrency Ether. The old Proof-of-Work blockchain was merged with the Proof-of-Stake system of the new Beacon Chain, thus converting the main chain to the new Proof-of-Stake consensus process. With this change, the energy requirements of the Ethereum blockchain will be significantly reduced and the inflation rate will fall as the distribution of new coins will be drastically reduced.

Tether

Released for trading by Tether Limited in 2014, Tether is a “blockchain-enabled platform designed to facilitate the use of fiat currencies in a digital manner,” Tether says on its website. Tether is a so-called stablecoin, meaning the currency is pegged to the US dollar to reduce volatility. The tokens “exist as digital tokens built on multiple blockchains,” the company said on its website. Since most cryptocurrencies repeatedly experience periods of high volatility, stablecoins such as Tether can be interesting for investors who tend to act cautiously. According to the company, each token is “100% backed by Tether’s reserves,” so a USDT payout is always possible.

USD Coin

The USD Coin is also a stablecoin and can “always be exchanged for cash 1:1,” as Circle, the company behind USDC, writes on its website. The USD Coin is available around the clock and moves “at internet speed”. USDC lives “natively on the internet” and runs “on many of the world’s most advanced blockchains.” According to Circle, billions of USDC change hands every day.

Circle, the company behind USDC, describes itself as “a global financial technology company that helps move money at internet speeds.” The company’s mission is “to increase global economic prosperity through the seamless exchange of value.”

Binance Coin

The Binance Coin is used to trade and pay fees on the Binance crypto exchange and, according to Binance, “is also the cryptocurrency coin that powers the BNB chain ecosystem.” The company describes BNB as “one of the world’s most popular utility tokens” that is “useful for users in a variety of applications and use cases.” In 2017, BNB was launched through an Initial Coin Offering (ICO), but “does not entitle users to Binance profits and does not constitute an investment in Binance.”

Binance USD

Binance USD, unlike Binance Coin, is a 1:1 US dollar-backed stablecoin that, according to Binance, is “approved by the New York State Department of Financial Services (NYDFS) and issued in partnership with Paxos.” According to the company, all reserves are held 100% in cash and cash equivalents, which is why customer funds are always available for 1:1 redemption. As Binance explains on its website, BUSD is available across multiple blockchains, on over 30 exchanges, and has many popular use cases.

XRP

In 2012, the XRP Ledger launched with its native currency XRP. In the same year, the company now known as Ripple was founded. XRP was designed, according to Ripple’s website, “to be the most practical cryptocurrency for applications across financial services.” XRP powers innovative technology that is transforming the global financial services space, and so the cryptocurrency and the blockchain it runs on are used by companies, institutions, developers and individuals around the world because of their exceptional utility.

Ripple cites speed as one of the advantages of XRP. In addition, the fees are on average very low. Another advantage is scalability. In addition, stability is emphasized. Sustainability and decentralization are mentioned as further advantages.

ada

ada, named after Ada Lovelace – a 19th-century mathematician considered the first female computer programmer – is the native token of proof-of-stake blockchain platform Cardano. According to the company, this is “the first based on peer-reviewed research and developed using evidence-based methods.” Cardano combines “groundbreaking technologies to provide unparalleled security and sustainability to decentralized applications, systems and societies.” As the company writes on its website, any user, from anywhere in the world, can use the digital currency ada “as a secure exchange of values ​​- without a third party having to mediate the exchange.” Every transaction is recorded permanently, securely and transparently on the Cardano blockchain. In addition, every ada holder also receives a stake in the Cardano network. The tokens stored in a wallet can also be delegated to a stake pool to earn rewards and participate in the successful operation of the network – or staked to a stake pool to increase the pool’s likelihood of receiving rewards, according to Cardano. As Cardano explains, over time ada will also be usable for a variety of applications and services on the Cardano platform.

SOL

Solana is an open source project and says it was developed to enable scalable, user-friendly apps. The Solana Foundation, which maintains the open source project, is based in Geneva, Switzerland. Solana describes itself as the “world’s fastest blockchain and the fastest-growing crypto ecosystem with thousands of projects spanning DeFi, NFTs, Web3 and more.” Solana’s scalability should ensure that transactions remain at less than $0.01 for developers and users. Solana also focuses on speed. Solana writes on its website about block times of 400 milliseconds – this is how the blockchain platform has made a name for itself as an “Ethereum killer”.

Solana’s native token is called SOL. This can be “passed to nodes in a Solana cluster in exchange for running an on-chain program or validating its output,” Solana explains on its website. The system can also carry out micropayments of partial SOLs. These were named Lamports in honor of Solana’s greatest technical influence, Leslie Lamport, and are worth 0.000000001 SOL.

Dogecoin

Dogecoin is an open source peer-to-peer digital currency that uses blockchain technology and was originally intended as a fun currency. “At its core, Dogecoin is the random crypto movement that makes people smile!” says the Dogecoin website. However, the Dogecoin Foundation, the non-profit organization behind the cryptocurrency and founded in 2014 by members of the Dogecoin team, and the Dogecoin project defend themselves against the accusation that Dogecoin has no use: “The simple fact is that money has a use – and Dogecoin is money!” As a tipping currency, Dogecoin has never stopped working for its intended purpose for much of its existence thanks to its low fees and transaction speeds compared to competing chains, and in recent years adoption of the cryptocurrency has “exploded,” the website says.

DOT

Polkadot is the flagship project of the Web3 Foundation, which was founded to enable a fully functional and user-friendly decentralized web, as the Swiss foundation writes on the project’s website. “Polkadot is a network protocol that allows any data – not just tokens – to be transferred across blockchains,” explains the Web3 Foundation. Polkadot can “transfer this data across public, open, permissionless blockchains as well as private, permissionless blockchains.”

The token of the Polkadot network is the DOT. This should fulfill three key functions. The first function of the cryptocurrency is to give holders the right to take full governance control of the platform, the website says. This includes setting the network’s fees, auction dynamics, the schedule for adding parachains and extraordinary events. The second function is to facilitate the consensus mechanism that underlies Polkadot. Polkadot relies on DOT holders to play an active role. The third feature of DOT will be the ability to add new parachains through so-called “bonding”.

Editorial team finanzen.net