Cryptocurrencies have not only changed the world’s expectations surrounding money. They’ve also continued to evolve in their own space since the first Bitcoin block was mined back in 2009. Since then, thousands of unique cryptocurrencies have popped up. Of these, Bitcoin remains the most popular.
In fact, a recent survey found that 8% of Americans have invested in cryptocurrency and of that 8%, 5.15% have invested in Bitcoin.
Curious to see why Bitcoin is the most popular and what other cryptocurrencies are running close behind? Keep reading.
1. Bitcoin (BTC)
It’s been about a decade since Bitcoin expanded currency into the digital space of the internet. Since that time, it’s remained the most popular cryptocurrency in the world.
With Bitcoin, users transfer money from one digital wallet to another digital wallet with ease. Each transaction is then verified by other users and recorded on the public ledger, known as the blockchain.
Some key factors that have contributed to Bitcoin’s popularity include:
- Although it fluctuates, its price is high. A single Bitcoin is worth $4,931 U.S. dollars as of this writing. This is significantly higher than other cryptocurrencies that exist.
- Major companies are starting to accept Bitcoins. These include Microsoft, Overstock.com, and more.
- Bitcoin is easy to set up. Bitcoin is supported by the most notable exchanges and digital wallet platforms, such as Coinbase. This makes getting in the game easier.
- Investors have been supporting Bitcoin’s growth for years. Bitcoin has been around longer than all other cryptocurrencies. This has allowed them to gain a strong following of investors.
Bitcoin also has the highest market capitalization among cryptocurrencies, which is often considered by investors. Market caps are calculated by multiplying the current supply of the currency by the current price. This is known as the circulating supply of currency, and can indicate if a currency is risky to invest in. High market caps usually indicate less risk, as there are more users. Therefore, Bitcoin is believed to be a better choice than other cryptocurrencies out there.
2. Ethereum (ETH)
Putting the Bitcoin hype aside, another popular cryptocurrency is Ethereum. This cryptocurrency uses a blockchain that’s similar to Bitcoin’s but has a different currency. Ethereum’s currency is Ether, which gets managed by an open network of users, just like Bitcoin.
The biggest place Ethereum branches off from Bitcoin is with its smart contracts. These contracts are digital contracts that pay users only after certain conditions get met. Benefits of smart contracts generally include:
- Eliminating third parties in transactions. For example, say you have a smart contract for your home. In a traditional transaction, you’d need a realtor to help you with paperwork and mediate transactions with the buyer. Smart contracts, instead, transfer ownership of the home to the buyer without anyone else’s involvement. You also don’t have to pay third parties , as you would a realtor.
- Quick transactions. You don’t have to wait for paperwork to process. Smart contracts are faster and easier. Everything is done online. In fact, you avoid large amounts of paperwork altogether.
- Transactions get verified by hundreds of other users. In addition to your transactions getting verified, they’re also encrypted and stored on a public ledger. This helps keep a documented record of your transaction, ultimately helping secure it.
3. Ripple (XRP)
Most cryptocurrencies pride themselves on providing fast transactions. For Ripple, and its digital tokens known as XRP, fast transactions are a core piece of their identity. In fact, Ripple processes transactions in as little as four seconds. You can compare this to Ethereum, which takes two minutes, and Bitcoin, which takes about an hour. Traditional currencies can take a few days.
Ripple works by creating a platform for banks and other payment providers to send money around the globe. XRP can be exchanged in any currency. For instance, it can be used for exchanges in dollars or in euros. Being able to send money around the globe in seconds allows banks and financial institutions to reach new markets. The farther their reach goes, the more customers they can serve.
Other notable features of Ripple’s XRP tokens that contribute to Ripple’s popularity include:
- Being a cost-effective option for sending money. You can send money across borders in seconds without paying high foreign transaction fees.
- Having notable investors backing it. For example, both Accenture and Google Ventures have invested in Ripple.
- Having a high scalability. High scalability means faster transaction speeds, which are required for cryptocurrencies to compete globally. Ripple can handle 1,500 transactions per second—more than other cryptocurrencies that exist.
4. Litecoin (LTC)
Litecoin and Bitcoin have more in common than just the “coin” in their names: Litecoin has a blockchain, public ledger, and miners who verify transactions. However, there are three key features that make Litecoin stand out. These include:
- Processing speed. Litecoin processes transactions faster than Bitcoin. In fact, Litecoin processes transactions in about 2.5 minutes. Bitcoin processing can take up to 10 minutes.
- Larger supply of currency. Litecoin has 84 million Litecoins in total, compared to 21 million Bitcoins.
- Less complex algorithms. Compared to Bitcoin, Litecoin has algorithms that are easier to crack. This can make mining transactions easier to solve, and miners also won’t need as much equipment to solve them as they would with Bitcoin.
5. Bitcoin Cash (BCH)
Although Bitcoin is the most popular cryptocurrency, that doesn’t mean it comes without flaws. In fact, its relative, Bitcoin Cash, was created to help improve Bitcoin’s scalability, which affects transaction speed. This has led to a gain in popularity for Bitcoin Cash.
To help improve transaction speed, Bitcoin Cash increased each block size from 1 megabyte (MB) to 8 MBs. Each block represents a list of transactions that need to be verified. Increasing the block size allows more transactions to be verified at a time.
Increasing the number of transactions that can be processed should help Bitcoin Cash compete with bigger companies, such as PayPal and Visa. In addition, Bitcoin Cash also aims to reduce transaction fees.
With all the available cryptocurrencies out there, how do you know which, if any, to choose? The most effective way to determine if a cryptocurrency is popular is by looking at its market capitalization, which shows you the circulating supply of the currency worldwide. From there, you can research what features make sense for your future transactions. For instance, would smart contracts be useful to you? If so, you may want to use Ethereum. For super-fast processing, you might choose Ripple.
Regardless of what you’re looking for, cryptocurrencies are not likely to disappear anytime soon. Instead, they may just be the currency of the future.