Top 10 Cryptocurrencies March 2022
Cryptocurrencies are a digital-only form of financial exchange that uses cryptography as a means of security. They are not physical currencies in the same way as, say, pounds or dollars.
Bitcoin, the original cryptocurrency, debuted over a decade ago and paved the way for the creation of thousands of rival cryptocurrencies.
Top 10 Cryptos
If you are unfamiliar with the crypto world, here are the top 10 largest cryptocurrencies by market capitalization. Often abbreviated as “market capitalization”, this figure represents the total value of each coin in circulation.
The law of supply and demand means that market capitalization figures are continually subject to change. For the purposes of the list below, the figures refer to March 22, 2022 and are necessarily approximate.
The abbreviation after each cryptocurrency, BTC for example, relates to its ticker symbol – a means of identification for trading purposes.
Please note: investing in cryptocurrencies is not for everyone. The UK’s financial watchdog, the Financial Conduct Authority (FCA), regularly issues warnings to consumers about the crypto industry. The FCA reminds future traders that crypto-assets are unregulated and high risk, which means people “are very unlikely to have protection if things go wrong, so people have to be prepared to lose. all their money if they choose to invest in them”. .
- Market capitalization: £610 billion
The original cryptocurrency, Bitcoin, was first hinted at in 2008 by an anonymous individual or group of people, using the pseudonym Satoshi Nakamoto. His invention was a breakthrough in cryptography.
As with most cryptocurrencies, Bitcoin runs on a blockchain – software that acts as a digital ledger that records transactions spread across a network comprising thousands of computers.
Because additions to the distributed ledger must be verified by solving a cryptographic puzzle—a process known as “proof of work”—Bitcoin is safe from fraudsters.
Although it has become a household name, the price of Bitcoin has swung wildly in recent years. As of this writing, one piece is worth just over £31,000, having peaked at just over £51,000 in November last year. In 2016, a single Bitcoin could be purchased for around £370.
2. Ethereum (ETH)
- Market capitalization: £273 billion
Ethereum is both a cryptocurrency and a blockchain platform and is popular with program developers due to its potential applications.
These include so-called “smart contracts” that automatically execute when conditions are met, as well as non-fungible tokens – or NFTs. NFTs are digital assets that represent real-world objects, such as unique works of art.
Ethereum is another cryptocurrency that has seen phenomenal growth. For example, from April 2016 to date, its price has risen from £8 to around £2,000.
3. Tether (USDT)
Unlike some of its cryptocurrency rivals, Tether is a type of “stable coin”.
Stablecoins attempt to peg their market value to an external benchmark. For Tether, this means that it is backed by established “fiat” currencies such as the British Pound, US Dollar or Euro and hypothetically holds a value equal to any of these denominations.
The value of Tether, according to the theory, should be more consistent than that of other cryptocurrencies. It tends to be preferred by investors who are wary of the extreme volatility associated with other coins.
4. Binance Coin (BNB)
Binance Coin is a version of cryptocurrency where users can trade and pay fees on Binance, one of the largest crypto exchanges in the world. Fees paid on the Binance Coin exchange are discounted.
Launched in 2017, Binance Coin has grown from simply facilitating transactions on the Binance exchange. It can now be used for commerce, payment processing, and even travel booking. It can also be exchanged or exchanged for other forms of cryptocurrency, such as Bitcoin or Ethereum.
In 2017, a coin was priced at less than 10p, but this month it traded around £300.
5. US Dollar Coin (USDC)
The US dollar (USDC) is another stablecoin. It is redeemable on a 1:1 basis against US dollars, backed by dollar-denominated assets held in segregated accounts with regulated financial institutions in the United States. USDC is powered by Ethereum and can be used to transact worldwide.
XRP aims to be a fast and profitable cryptocurrency for cross-border payments.
Created by some of the same founders as Ripple, a digital technology and payment processing company, XRP can be used on this network to trade different types of currencies, including fiat currencies and other major cryptocurrencies. .
7. Earth (LUNA)
Terra is a blockchain payment platform for stablecoins that relies on maintaining a balance between two types of cryptocurrencies.
Terra-backed stablecoins, such as TerraUSD, are pegged to the value of physical currencies. Their counterpoise, Luna, powers the Terra platform and is used to mint more Terra stablecoins.
Terra and Luna stablecoins work in tandem based on supply and demand. When the price of a stablecoin exceeds the value of its linked currency, users are incentivized to “burn” their Luna to create more of that Terra stablecoin.
Burning cryptocurrency means permanently removing a number of tokens from circulation. This is usually done by moving the tokens in question to a “burn address”, such as a digital wallet from which they can never be retrieved.
Similarly, when the value of a stablecoin drops against its base currency, this prompts users to burn their Terra stablecoins to produce more Luna. As adoption of Terra platforms increases, so does Luna’s value.
Luna was worth around 47p at the start of last year, hitting £72 in March.
8. Gimbal (ADA)
The latest in the crypto scene, Cardano stands out for its early adoption of “proof-of-stake” validation.
It is the second (along with “proof of work”, see Bitcoin above) of the two main consensus mechanisms that cryptocurrencies use to verify new transactions, add them to the blockchain, and create new tokens.
This method speeds up transaction times and reduces energy consumption and environmental impact by removing the competitive and problem-solving aspect of transaction verification that exists through platforms such as Bitcoin.
Cardano also works like Ethereum to enable smart contracts and decentralized applications, powered by ADA, its native currency.
9. Solana (SOL)
Solana is a public and open-source blockchain that supports smart contracts, including NFTs and a variety of so-called decentralized applications also called “dApps”.
dApps are digital applications or programs that run on a network of blockchain computers instead of a single computer. Outside of the jurisdiction and control of a single authority, dApps can be developed for a variety of purposes, including gaming, finance, and social media.
Solana operates on a unique hybrid of proof-of-stake and proof-of-history mechanisms that help it process transactions quickly and securely. Its native token, SOL, powers the platform.
SOL was worth around 57p when it launched in 2020 and is now priced at just over £68.
10. Avalanche (AVAX)
Avalanche describes itself as an open, programmable smart contract platform for dApps. It is used to pay transaction fees and is compatible with Solidity, Ethereum’s programming language.
Like Ethereum, Avalanche can power a wide variety of applications such as stablecoins and NFTs. Its price has risen from just under £4 in July 2020 to around £67 in March 2022.
Frequently Asked Questions
What are cryptocurrencies?
A cryptocurrency is a type of currency that exists only in digital form. Cryptocurrencies are increasingly used to make purchases online, avoiding going through a third party such as a bank. They are also used for investment/speculation.
What is the difference between cryptocurrency trading and traditional stocks?
Buying a share in a company means that you own a very small part of the company concerned. Shares also give their holder the right to vote on key decisions made by a company – from its direction of travel to the compensation of its board of directors.
If a company goes bankrupt, shareholders may be entitled to compensation once creditors who are higher in the hierarchy have been paid.
In contrast, buying a cryptocurrency only grants the holder ownership of the token itself. If a cryptocurrency loses values, that’s it. There is no additional layer of compensation for the holder.
There are several key differences between stocks and cryptocurrencies to keep in mind:
- Trading hours: traditional stock exchanges such as London and New York are only open for fixed times daily, five days a week. However, cryptocurrency markets never close, allowing participants to transact 24/365.
- Regulation: stock trading is subject to strict regulations, and the reports and accounts of listed companies are in the public domain. Cryptocurrencies are unregulated. Unlike other parts of the financial services market, there is no financial safety net for customers in case a cryptocurrency company goes bankrupt.
- Volatility: Investing in stocks and cryptocurrencies involves risk. Investors can lose money in both cases and, in extreme cases, end up with nothing. While stock prices tend to rise and fall based on company performance, cryptocurrency prices tend to be more speculative. This can make price movements in these extremely volatile, susceptible to something as insignificant as a celebrity tweet.
How to buy crypto?
You can buy cryptocurrencies through a number of exchanges such as Coinbase.
Do you have to pay tax on cryptocurrencies?
Find out here how HM Revenue & Customs taxes crypto-assets such as cryptocurrencies.