Since the debut of Bitcoin over 14 years ago, many new typ of cryptocurrencies have emerged.
From stablecoins to NFTs to dog memes, a wide range of cryptos are now available. What the cryptocurrencies have in common is blockchain technology.
According to data from CoinMarketCap as of early March 2023, there are currently around 22500 cryptocurrencies with a total market capitalisation of 819 billion dollars. This is a significant figure because the ‘original’ cryptocurrency, Bitcoin, has been on the market since 2009 – a date many consider to be the birth of crypto.
The first alternatives to the original cryptocurrency – later called altcoins – only appeared in the cryptocurrency world in 2011, such as Litecoin (LTC) and Namecoin (NMC), but altcoins only became popular after the emergence of Ethereum (ETH) in 2014.
Some cryptocurrencies, such as Bitcoin, are used as investment vehicles, while Ethereum, for example, is used for transactional purposes.
There is also a difference between coins and tokens.
Bitcoin and Ethereum, which run on their own blockchain, are considered coins. When most people think of cryptocurrency, they probably think of cryptocurrencies like Bitcoin.
Crypto coins run on their own blockchain and are primarily used as a means of payment. A token is a digital asset, that represents a product or utility. Unlike coins, tokens do not need their own blockchain, they can run as part of another network’s ecosystem, for example, there are countless tokens on the Ethereum network.
The definition of an altcoin has changed a lot since the beginning of crypto, as there were only a few crypto assets at the beginning, so anything other than Bitcoin was considered an altcoin at the time.
Today, the world of cryptocurrencies is much larger, with a variety of coins and tokens whose use cases go well beyond being a medium of exchange. Many of these cryptos are not necessarily in competition with Bitcoin.
The leading altcoin today is Ethereum, with a market capitalisation of $150 billion compared to Bitcoin’s $325 billion. Other significant altcoins include Solana (SOL) and Cardano (ADA). SOL and ADA are considered to be competitors to Ethereum.
Altcoins can have different purposes beyond serving as a mere digital currency. While Bitcoin is a form of decentralised currency, Ethereum is a computing network that allows users to run decentralised applications on the blockchain and accept smart contracts.
Meme coins are the comedians of the crypto world. These coins gain popularity and traction through memes and social media. The term is also used somewhat jokingly to describe coins that explode on social media.
The original meme coin that started it all, is the Dogecoin (DOGE), which is based around the “doge” Shiba Inu dog meme. But what started as a joke turned into a demonstrable cult asset as users flocked to the tool. As a result, more meme coins began to appear.
More than 200 tokens have been created since Dogecoin was first launched. But while the concept of tokens is fun, they can fall as quickly as they rise. DOGE is now only a tenth of what it was at its peak just over a year ago. But it’s an important lesson for all cryptocurrency investors to bear in mind.
While cryptocurrencies represent important technological, financial, economic and IT innovations, investing in them is as risky as any form of investment.
If you have questions about cryptos or crypto mining, book an appointment for a personal or online consultation.
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