Types of Cryptocurrency: Top 10 Cryptocurrencies

You may have noticed there’s a growing buzz about cryptocurrency, and if you’re crypto-curious, there’s a lot of information to wade through. Over the last decade or so, the crypto market has exploded—in 2009 Bitcoin was the sole player, but today there are more than 18,000 types of cryptocurrency available. 

Envisioned as digital money not controlled by a government or central bank, cryptocurrency is built to support decentralized peer-to-peer transactions, processes, and systems. These currencies are created using blockchain technology. You can use cryptocurrency as a source of purchasing power or an investment opportunity.  
If you’re ready to investigate just some of the crypto options available, this guide takes you through altcoin, tokens, the top 10 types of cryptocurrency in 2022, and everything in between.

What are altcoins?

In the early days, Bitcoin was nearly synonymous with cryptocurrency because it was the only coin for many years and established early dominance in the market. Therefore, subsequent coin-based cryptocurrencies were dubbed altcoins. The term altcoins, or alternative coins, simply refers to any type of coin-based cryptocurrency that is not Bitcoin. 

Like Bitcoin, altcoins function using blockchain technology. Altcoin creators often tout their cryptocurrencies as having qualities Bitcoin does not, such as greater transaction speed and increased security. Bitcoin, which was originally designed to transfer wealth and record those transactions, is somewhat limited when compared with altcoins like Ethereum that support applications and smart contracts. Some altcoins, like USD Coin, are pegged one-to-one with a fiat currency, which can make them less volatile than Bitcoin.

What are tokens?

Tokens are digital assets built on another cryptocurrency’s blockchain. Generally, it’s easier to create a token than it is to create a coin. Coins require a specific underlying blockchain, but tokens can be built on any programmable blockchain, essentially piggybacking on an already developed and validated complex network. All tokens fall into the altcoin category, since the Bitcoin blockchain does not support token creation. 
Tokens often have broader use cases than coins. For instance, most can be used in financial services on the public blockchain, known as decentralized finance, or DeFi. These services include things a traditional bank would usually support, like earning interest, purchasing insurance, borrowing, lending, and more. Non-fungible tokens, also known as NFTs, are also gaining popularity as a way to buy and sell digital artwork.

Top 10 cryptocurrencies by total market value in 2022

Market capitalization, or market cap, is a metric used to measure the relative size of a cryptocurrency, i.e. the total value of all the coins that have been mined. Market cap is calculated by multiplying the number of coins in circulation by the current market price of a single coin.

*as of March 2022

Bitcoin

Bitcoin was among the first cryptocurrencies, with specification and proof of concept published in 2009. It continues to dominate about 50% of the crypto market. Bitcoin issuance will halt completely once 21 million bitcoins are in existence. The number of bitcoins created each year is automatically halved to maintain a steady and predictable rate.

Ethereum

Ethereum, the second most popular cryptocurrency after Bitcoin, bills itself as “the world’s programmable blockchain.” In addition to powering ether, the currency of the Ethereum blockchain, it allows people to use other digital assets like bitcoins and altcoins on the network, as well as store data and run decentralized applications.

Tether

Founded in 2014, Tether is the first blockchain-enabled platform to facilitate the use of traditional currencies. A token-based system built on multiple leading blockchains, Tether tokens are referred to as stablecoins because they are pegged 1-to-1 to a fiat currency, which can offer price stability. Tether is pegged to currencies including U.S. dollars, euros, offshore Chinese yuan, and gold. 

Binance Coin

Initially, based on the Ethereum network, Binance Coin is now native to its own Binance blockchain. Binance has initiated a quarterly auto-burn program that removes about 50% of Binance Coin tokens from circulation as a deflationary measure.

USDC (US Dollar Coin)

USDC is a stablecoin, pegged to the U.S. dollar. The system allows traditional currency to be tokenized for use online and across blockchains. USDC can be changed back into traditional US dollars at a 1-to-1 rate.

Cardano

Individual units of Cardano cryptocurrency are known as ada. Cardano tokens can power multiple financial services beyond their use as currency. The total supply is capped at 45 billion tokens. As of February 2022, about 33.6 billion tokens were in circulation.

Solana

Solana is the name of both the blockchain platform and its native cryptocurrency. Launched in April 2020, Solana promises users faster operation and lower transaction fees than Ethereum. It operates on a “proof of stake” blockchain that consumes less power than a “proof of work” blockchain like Bitcoin, and is therefore considered more environmentally friendly.

XRP

XRP is the digital asset native to the XRP Ledger blockchain. Designed specifically for payments, XRP can be traded on more than 100 markets and exchanges worldwide. XRP is intended to serve as a kind of bridge between hard-to-match fiat currencies, enabling easier international transactions.

Terra

Terra is a stablecoin pegged to the US dollar through an algorithm and associated reserve token called Luna. This differs from most stablecoins, which are pegged to conventional currency through cash or cash equivalents. Slightly less decentralized than other networks, new coins are only minted when a percentage of Luna are burned. If you use the coins to buy something, that transaction generates a fee, similar to a credit card transaction. Then, similar to a stock dividend, that fee is distributed to people who own Luna tokens.

Polkadot

Polkadot protocol aims to integrate blockchains by creating a cryptocurrency network that connects them with “parachains.” The Polkadot token, DOT, is used both as a governance token and for staking, which is how the network verifies transactions and issues new DOT.

Why are there so many types of cryptocurrency?

A cryptocurrency can be launched by anyone who has an internet connection and can either build a blockchain or use one that serves as a platform for the creation of such assets. The popularity of cryptocurrency and the relative ease of creating one has inspired many new varieties that meet different needs.
Crypto assets go beyond coins and tokens, and new ones are surfacing daily. New cryptocurrencies may include advanced functionalities their predecessors do not. For example, Ethereum, Solana, and Polkadot, among others, support smart contracts, or programs stored on the blockchain that run when predetermined conditions are met. Smart contracts use “if/when…then” rules to automate the execution of agreements quickly, predictably, and without an intermediary.

What cryptocurrency is most widely accepted?

Bitcoin is holding steady as the most widely accepted cryptocurrency, but Ethereum and other types of cryptocurrency are gaining ground. Around 36% of small-to-medium-sized businesses in the United States are accepting bitcoin payments, as are some corporate giants like Amazon, Microsoft, and Starbucks.

How to invest in cryptocurrency

In addition to buying cryptocurrency you can use to make purchases, you can also invest in crypto. Cryptocurrency investment is gaining momentum as a way to participate in developing digital economies and projects. If you’re curious about cryptocurrency as an asset class, you may wish to read a more detailed explanation of how to invest in cryptocurrency. Like any investment, there are pros and cons, including the risk that you could lose money.

Are you a crypto-curious investor?

As the crypto boom continues, some investors are eager to stay on top of the trend. With so many types of cryptocurrency, investors have lots of options to explore. Be aware that cryptocurrency can be a risky investment: It can be volatile, it’s largely unregulated, and there are many unknowns about how it will continue developing. 

One way to gain exposure to select cryptocurrencies with Stash is through the Grayscale Bitcoin Trust (GBTC) and Grayscale Ethereum Trust (ETHE), which are now components of Stash Smart Portfolios.