By: Rachel Gore
ryptocurrency is an encrypted and decentralized form of digital currency based on blockchain technology. But what exactly does that mean? To find out, let’s break this definition down into its key parts.
Decentralized means that cryptocurrency is not issued by a centralized controlling entity or authority like a government or bank. This differs from currencies like the dollar, euro, yen and peso. Instead, crypto is distributed on the blockchain. Blockchain is a decentralized digital database or distributed ledger that manages and records transactions across a network of computers.
Don’t let the term “coin” fool you—cryptocurrency is not a physical coin. Rather, it is exclusively traded and generated in a digital format. The value of most cryptocurrencies does not depend on the value of government-issued currencies or a physical asset like gold. The exception to this is stablecoins, which are a form of crypto that is backed by fiat currencies. Fiat currencies are government-issued currencies not backed by a physical commodity like the U.S. dollar.
The Top 5 Cryptocurrencies by Value:
Bitcoin (BTC): Value (2/21/2022): $38,130.50 | Market Cap: $718.181 Billion
Bitcoin is by far the most valuable form of cryptocurrency. Bitcoin launched on Jan. 3, 2009, when it was barely worth more than $0. It had a slow start, reaching $1.00 in valuation in 2011. Bitcoin’s value surged beginning in 2013, and Bitcoin was worth $38,144.50 as of Feb. 21, 2022. This is down from 2021’s record high value of over $60,000.
In 2010, a man famously bought two large Papa John’s pizzas using 10,000 bitcoins, which at the time was worth roughly $41. Those 10,000 Bitcoins would be worth over $381 million in February 2022. Today, major companies including Wikipedia, Microsoft, Burger King, KFC, Subway, Overstock, Twitch, Pizza Hut and more accept Bitcoin as a payment form.
Ethereum (ETH): Value (2/21/2022): $2,640.56 | Market Cap: $317.042 Billion
Ethereum is the second-largest cryptocurrency behind Bitcoin. Ethereum (ETH), the transactional token used to power the Ethereum network, is worth $2,631.44 as of Feb. 21, 2022. Like Bitcoin, Ethereum can be used as a digital currency. However, it is better known as the funding source needed to use the Ethereum blockchain. The Ethereum blockchain has a decentralized computing platform that runs a variety of applications ranging from decentralized finance (DeFi) apps and services to smart contracts. Combined, Bitcoin and Ethereum made up more than half of the global cryptocurrency market in 2021.
Tether (USDT): Value (2/21/2022): $1.00 | Market Cap: $79.088 Billion
Tether differs from Bitcoin and Ether because it is a stablecoin. Stablecoins are backed by a fiat currency like the U.S. dollar or euro. Tether specifically is backed by the U.S. dollar. This means that one Tether always has the same value as one U.S. dollar. As a result, Tether and other stablecoins are less volatile than cryptocurrencies like Bitcoin and Ethereum. This makes stablecoins a preferred choice for investors wary of the instability crypto is often known for.
Binance Coin (BNB): Value (2/21/2022): $371.58 | Market Cap: $61.17 Billion
Binance Coin, once based on the Ethereum network, can be found on the Binance chain. Binance Exchange supports more than 1.4 million transactions per second, making it the largest cryptocurrency exchange in the world. Binance Coin was originally created in 2017 as a utility token for discounted trading fees but can now be used for payments on the Binance Chain, travel and entertainment bookings, online services and financial services. Use cases for Binance Coin will undoubtedly continue to expand over time.
U.S. Dollar Coin (USDC): Value (2/21/2022): $1.00 | Market Cap: $52.64 Billion
The USD Coin is a stablecoin backed by U.S. dollars. It is powered by Ethereum’s blockchain network and can be used to complete global transactions. USD Coins are advertised as a more global, scalable and efficient alternative to traditional banking rails without the volatility of non-fiat backed crypto types.