What Are Some Popular Cryptocurrencies?

At this point, most of the world has heard of Bitcoin. It dominated the media in 2017 as its price shot up to almost $20,000 and investors readied themselves to jump on board. However, as we’ve discussed previously, the cryptocurrency market is more than just a single coin – it’s made up of thousands of ‘altcoins’ that in many cases offer unique value.

Today, though, we’re just going to cover three of the more popular cryptocurrencies, which TradeStation Crypto happens to offer. Let’s talk a bit about Bitcoin and Ethereum first:

Bitcoin (BTC)

Bitcoin was the first cryptocurrency to launch, and it has enjoyed market dominance ever since. Crafted by a pseudonymous person or group of people known as Satoshi Nakamoto, and handed to the world in 2008 by a whitepaper, it quickly began to garner attention.

Though peer-to-peer payment systems weren’t a new idea, Bitcoin was the first to execute the concept with no central authority required at scale. Behind the coin “bitcoin” is a clever technology called Bitcoin, which is the technology layer also known as the ‘blockchain,’ a group of distributed computers that verifies every transaction in an immutable ledger.

Many cryptocurrencies make use of the blockchain, Bitcoin enjoys the advantage of being the first and most trusted. Support by major companies such as Amazon (AMZN) Web Services, Microsoft (MSFT), Starbucks (SBUX), Twitter (TWTR), Square (SQ) and as well as PayPal (PYPL), have lent it credibility and contributed to its multi-billion-dollar market cap.

Ethereum (ETH)

Ethereum and its native token, Ether, holds the prize of being the most actively used blockchain in the world. Though its underlying blockchain borrows from Bitcoin, it extends its functionality with its so-called smart contracts.

Smart contracts allow users to define terms which must be met before another user gets paid. Crucially, it does so without any third-parties and the cost associated with them. Compared to a traditional contract, they allow for the exchange of money, stock, property, and more.

Ethereum also enables the building of decentralized applications (dapps) on its blockchain, with similar benefits to smart contracts. Applications built on Ethereum don’t require a third party, and may help to mitigate fraud.

USD Coin (USDC)

Investors often falsely associate cryptocurrencies with being highly volatile in nature. While this notion is certainly the case in many instances, it holds less true for USD Coin (USDC). USDC debuted in 2018 via a strategic partnership between crypto exchange Coinbase (COIN) and fintech company Circle, named CENTRE. At its inception, the project ran solely on the Ethereum blockchain. However, today, the cryptocurrency runs on other networks such as Solana (SOL) and is currently the most popular Stablecoin.

Stablecoins are digital assets that obtain value by being pegged to an underlying external asset such as a precious metal or fiat currency. In the case of USDC, the intention is to have the cryptocurrency be pegged one-to-one with the U.S. Dollar, the world’s reserve currency. To ensure that the USDC is tantamount to the underlying dollars which back it, the cryptocurrency is backed by equal dollars or dollar-denominated assets which are held at regulated financial institutions. By being pegged one-to-one to the Dollar, USDC perpetually hold the same value, hence the term “stable.”

If USD Coin maintains a constant value of $1, why would someone want to hold USDC as opposed to USD? One hypothetical example of a benefit would be a cryptocurrency investor who anticipates a volatile crypto environment ahead. If the investor wants to avoid the price volatility without having to convert their crypto to fiat, the investor may want to move assets over to a low volatility digital asset such as USDC. In this case, the investor may also be potentially eligible to earn interest for holding the USDC, which at times produces a much higher yield than that attained by holding fiat in a traditional banking institution, for example. Another potential application is payments and remittances. Some find that USDC can be sent internationally in an efficient manner and at a relatively low cost when compared to competing methods. Other examples of how USDC can be used is as a medium of exchange for applications such as Decentralized finance (DeFi) and the trading of Non-Fungible Tokens (NFTs).

Stablecoins Move Past Bitcoin in Value and Volume

Market BasicsCryptocurrenciesWhile cryptocurrency asset prices remain in the cellar, as compared to their all-time highs in late 2017, a new crypto dawn has risen with “stablecoins.” A novel and newer type of digital token, “stablecoins,” are...

What Are Stablecoins?

Market BasicsCryptocurrenciesStablecoins are a type of cryptocurrency. Unlike most crypto coins, stablecoins aim to sustain a consistent trading price and stable valuation. To do so, they are backed by relatively stable external assets or collateral,...

What is Cryptocurrency?

Market BasicsCryptocurrenciesWhen the trading price of two cryptocurrencies, Bitcoin and Ethereum, rocketed to the stratosphere in 2017, the term cryptocurrency rose to global popularity. It soon became part of the world’s vocabulary when The...

Market Basics