 As they gain household recognition, the most popular cryptocurrencies are starting to make their way into our everyday lives, which leaves us wondering what to keep an eye on. You don’t have to be an expert to understand or use these virtual currencies. But if you decide to join the trend, it’s best to know which ones are worth your time and investment. When it comes to understanding the most popular cryptocurrencies, you must consider their rate of trade. Is Bitcoin popular because we talk about it, or are people actually trading it? We’ve heard of some other virtual currencies, but how much do people really trade Litecoin or Ethereum? This article tackles just that — what cryptocurrencies are the most popular, as in the most in use, trade, and recognition. What are Cryptocurrencies?First, let’s establish what a cryptocurrency is and how it works. Cryptocurrencies are digital assets that you can use as virtual currencies, exchanging them for goods and services, primarily online (for now) or transfers. Many people refer to them as “tokens,” which helps us visualize how to use them, almost like a casino. You exchange your country’s currency (like the US dollar) for virtual currency “tokens” and use them where accepted. Right now, we mostly just trade or transfer virtual money, which helps it rise in value and popularity. However, these currencies are starting to become widely accepted, not only in trading or online purchases. For example, BitPay is beginning a partnership with MasterCard, where you can use your Bitcoin or other virtual currency just like a debit card from your bank. And many nonprofits are accepting Bitcoin donations. Cryptocurrencies tend to be far more secure than traditional money because a blockchain manages them. This is a decentralized technology that records transactions of virtual currencies. Because it’s decentralized, it’s more secure and transparent, as there are no third parties involved (such as banks or the government). How Many Cryptocurrencies Are There?According to CoinMarketCap, the public currently trades over 6,700 virtual currencies. For the average person, many have only heard of Bitcoin, so this number may surprise you. But even if the public trades the virtual money, it doesn’t mean it’s popular or worth a high value. The most popular cryptocurrencies are those that the public uses more often, therefore growing their value over extended periods. The Most Popular Cryptocurrencies & Their ValueSo if cryptocurrencies gain popularity because of their rate of trade, which ones are the most popular, what are they worth, and what should you pay attention to? As you probably can guess, Bitcoin is at the top of this list. Bitcoin is undoubtedly the most popular cryptocurrency at this time. Although the value fluctuates each day (really, every minute of each day), its current worth (known as market capitalization) is over $1 trillion ($1,073,775,678,799). If you’d like to buy one Bitcoin, you’d have to pay over $57,000. About one year ago, that price was just over $6,000. Because of this exploding growth, one could conclude that Bitcoin is one of the most popular cryptocurrencies currently on the market. The Ten Most Popular CryptocurrenciesThe following is a list of the ten most popular cryptocurrencies and their current value (market capitalization) at the writing of this article. Remember, their popularity is a reflection of how much the public trades them.
As you can see, cryptocurrencies’ popularity depends on their current value. But popularity and name recognition aren’t the same things. Of the top ten above, the most popular in name recognition are Bitcoin, Ethereum, Litecoin, and XRP. Other popular names don’t even make the top ten list, including NEO and IOTA. Remember, the value fluctuates consistently, so the popularity of virtual currencies today may look different in a few months. Why Are Cryptocurrencies Popular?All this begs the question, how and why are cryptocurrencies so popular? Generally speaking, supporters of virtual currencies see them as the money of the future. Therefore, these supporters try to buy the cryptocurrencies now before the value is out of reach. Ironically, buying these virtual currencies drives their value up, attracting another set of supporters: investors. Other perks that people see in cryptocurrencies include security and transparency. As mentioned above, using virtual currencies as payments is more secure and transparent without the involvement of third parties because of the blockchain. Banks and governments influence inflation, which reduces the value of money. Without bank involvement, Bitcoin may not be as susceptible to inflation concerns. The Most Recognized CryptocurrenciesLet’s take a slightly deeper look at four of the most popular cryptocurrencies, also based on name recognition. We’ll look at what they are and how they influence value and popularity. What is Bitcoin?Many consider Bitcoin to be the original cryptocurrency, which launched in 2009. Under the pseudonym Satoshi Nakamoto, Bitcoin worked as an alternative to government-issued currency. According to the Bitcoin founders, traditional government-led currency systems cause centralized wealth, inflation, and social and financial immobility. Bitcoin aims to fix these common problems by only releasing a set number of units. Using its peer-to-peer blockchain technology, Bitcoin didn’t need financial institutions like banks to manage the transactions. Users simply transfer the virtual currency from their “wallet” to another. Because this original cryptocurrency started it all, it’s undoubtedly the most popular, and its value impacts the rest of the market. What is Ethereum?Ethereum comes in second in this popularity contest, but it works quite differently than Bitcoin. Ethereum is the virtual currency’s blockchain name, which uses “smart contracts,” whereas the actual money is called Ether. It’s known as a utility cryptocurrency, meaning its purpose is to pay for its blockchain platform to allow people to trade money independently. Unlike Bitcoin, Ether’s mission isn’t providing an alternative to traditional currency. You can use Ether (Ethereum) to transfer money without using a bank but also sell decentralized (independent) apps, such as games or IPOs (crypto crowdfunding). What is XRP?Much like Ethereum, XRP is another utility currency. You can use its blockchain platform to transfer traditional money across international borders more effectively and efficiently. Banks and other financial institutions have supported XRP from its start, consistently growing in transfer opportunities. Many believe XRP will eventually make its way into the traditional fiat money system. What is Litecoin? Litecoin works like Bitcoin as an alternative to traditional government-led currency. The virtual currency strives to be a competitor of conventional money, used for everyday transactions like paying for groceries or gas, or at restaurants and shops. It’s doing this by being faster than Bitcoin in terms of its transactions. With Litecoin, waiting times to transfer virtual currencies to traditional currencies are faster than Bitcoin. Keep an Eye on All The Most Popular CryptocurrenciesSo, which alternative currencies should you watch? Keep an eye out for the top ten in value and those that are popular in name recognition. Maybe Polkadot is worth more than Litecoin, but it may never reach name-recognition popularity like its competitors. And, therefore, it may not break into the traditional money scene anytime soon. But, you never know, so still, watch its value.
If you have any questions about cryptocurrencies or how to use them or donate them, check out our blogs and FAQs, or contact us. We’re here to help!
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AuthorRandy Tarpey CPA Archives
December 2022
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