Overview
In 2009, the mysterious Satoshi Nakamoto gifted the world with the Bitcoin white paper and devised the first blockchain database that led to the creation of Bitcoin. The world would never be the same.
In the last decade, one digital token after another has followed in Bitcoin’s glorious wake to meet global demand for a decentralised virtual currency that is virtually impossible to counterfeit or double-spend and, more importantly, is immune to government and central bank interference.
It’s estimated that there are now over 2 000 different cryptocurrencies in circulation. Bitcoin is the original cryptocurrency and the rest are hard or soft forks off a blockchain network. We now have the choice of altcoins and stablecoins that have been created by means of a radical change to the protocol of a blockchain network.
Trading cryptocurrencies is risky : which one is best?
Trading cryptocurrencies is high-risk and speculative, mainly because of this asset’s volatility. Before you start trading cryptocurrencies, you need to understand the risks and the fact that you could lose a lot of money when unexpected changes in market sentiment drive crypto-assets prices down.
If you are new to trading cryptocurrencies, it’s recommended you trade this combination of the 10 Best cryptocurrencies in 2021.
1. Bitcoin (BTC) ₿
Introduction to Bitcoin
Bitcoin is the largest cryptocurrency by market capitalisation and by the amount of data stored on its blockchain. Launched in January 2009, it was the first cryptocurrency on the market to successfully record transactions on a decentralised blockchain network.
The market supply of Bitcoin is capped at 21 million Bitcoins. New coins are released by Bitcoin miners who help maintain the network by adding new transaction data to the blockchain. BTC is the native token of Bitcoin.
Bitcoin is operated by a decentralised authority which means the digital coins are not issued or backed by any banks or government. There are no physical Bitcoins, only balances kept on a public ledger that everyone has transparent access to. Bitcoin transactions are verified by a massive amount of computing power.
The popularity of Bitcoin has triggered the launch of over 2 000 cryptocurrencies, known as altcoins or stablecoins. These were created as either hard or soft forks off a blockchain network.
FAQ
Bitcoin is a digital asset designed to work as a medium of exchange that uses cryptography to control the creation and manage the users rather than relying on traditional central banks.
The Bitcoin network came into existence on 3 January 2009, Satoshi Nakamoto mining the first block called “genesis” block zero witch had a reward of 50 bitcoins.
Bitcoin only started trading on July 2010 around R1.16 per coin.
A cryptocurrency, or crypto is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in the form of a computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership.
It typically does not exist in physical form (like paper money) and generally is not issued by a central authority.
Cryptocurrencies typically use decentralized control as opposed to centralized digital currency and central banking systems.
When a cryptocurrency is minted or created before issuance or issued by a single issuer, it is generally considered centralized.
When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database.
Bitcoin, first released as open-source software in 2009, is the first decentralized cryptocurrency. Since the release of bitcoin, other cryptocurrencies have been created.
You should be wary of online services and choose such service very carefully. You want to use bitcoin wallets with two-factor authentication.
Bitcoin halving is the process of halving the rewards of mining bitcoin after each set of 210,000 blocks is mined.
Bitcoin was the best asset of 2020
To short Bitcoins, you need to contact a trading agency or platform and place a short sell order. The agency will then sell the Bitcoins from their own supply, based on the assumption that in the future you will repay them with an equal number of Bitcoins.
2. Ethereum (ETH)
Introduction to Ethereum
Ethereum is an open-sourced, decentralised and distributed computing platform that enables the creation of smart contracts and deployment of decentralised applications, known as dApps. Smart contracts are computer codes on a blockchain network that automatically execute all or parts of an agreement between two or more parties.
Ether (ETH) is the native token of the open-source Ethereum blockchain and is used as ‘fuel’ to run the blockchain and generate smart contracts. The market supply of Ether is not capped like Bitcoin, rather it is determined by members of the Ethereum community.
Ethereum uses the Proof-of-work (PoW) protocol to verify transactions on its decentralised network but is in the process of transitioning to Proof-of-stake (PoS) mechanism.
3. Binance Coin (BNB)
Introduction to Binance Coin
Binance Coin (BNB) is the digital token used to trade cryptocurrencies and pay for fees on the Binance Exchange. Binance Exchange is the largest blockchain and crypto-asset exchange in the world by trading volume.
Today, the average daily volume of cryptocurrency traded through Binance is about 2 billion and about 1.5 million transactions occur per second on the cryptocurrency exchange. You can trade more than 45 digital coins through Binance.
BNB fuels the operations of the Binance Exchange and supports multiple functions on the ecosystem. This includes paying for exchange fees, trading fees and listing fees. At this time, BNB cannot be exchanged against fiat currencies, only for digital coins like Bitcoin, Ethereum and Litecoin.
4. Tether (USDT)
Introduction to Tether
Tether is a stablecoin or stable currency. This new-age blockchain fork created a fungible asset, meaning the digital token can easily be exchanged with another asset of the same type. Examples of fungible goods are the US dollar, gold, shares and options.
USDT is pegged to US Dollar on a 1:1 ratio. All Tether digital coins in circulation are allegedly backed with an equivalent amount of US dollars which can be deposited in an account at a mainstream bank. The price of USDT remains consistently around the $1 mark.
Whenever Tether issues new USDT tokens, it allocates the same amount of USD to its reserves. This ensures that USDT is fully backed by cash and cash equivalents. USDT protects investors from extreme price fluctuations that plague the cryptocurrency market, hence the name stablecoin.
Tether provides the market with a simple way to transact a US Dollar equivalent between regions, countries and continents using open-source blockchain technology. With USDT, you can bypass slow and expensive intermediaries like banks and third-party payment portals like Mastercard and PayPal.
5. Cardano (ADA)
Introduction to Cardano
Cardano is a cryptocurrency network and open-source project that operates a public blockchain platform to generate smart contracts. Smart contracts are computer codes on a blockchain network that automatically execute all or parts of an agreement between two or more parties.
ADA is the native token of Cardano and it’s used to fuel the Cardano network. The development of the software platform is overseen and supervised by the Cardano Foundation, based in Zug, Switzerland.
ADA has been one of the 10 Best cryptocurrencies by market capitalisation since it was released in 2015. It’s generated significant hype and its technology is advancing at rapid speed. It’s estimated Cardano (ADA) will eventually overtake the likes of Ethereum in building a massive blockchain ecosystem to generate smart contracts.
6. Polkadot (DOT)
Introduction to Polkadot
Polkadot is a software platform that allows diverse blockchains to transfer digital messages in a trust-free fashion. Polkadot’s native coin is called DOT and it’s used to incentivise a global network of computer nodes to operate a blockchain on top of which users can launch and operate their own blockchains.
Polkadot is designed to operate two types of blockchains; a main network called a relay chain where transactions are permanent, and user-created networks called parachains which feed into the main blockchain.
Polkadot is one of the most well-funded blockchain projects in history and competes with the likes of Ethereum as a heterogenous chain of networks.
7. Ripple (XRP)
Introduction to Ripple
To clear up some confusion, XRP is a digital asset and Ripple is a software company which founded and created the Ripple Protocol, an open-source protocol which includes the Ripple Consensus Ledger (RCL) and RippleNet. The latter is a suite of payment solution products marketed to financial and non-financial institutions.
XRP is the digital token of the RCL and is used to facilitate the transfer of money between different currencies across the network. XRP can be exchanged for other fiat and digital currencies and is unique in that traders avoid paying high money transfer fees charged by banks and payment is instant.
XRP is made up of a Hash Tree and not blockchain. It’s currency cannot be mined because it’s centrally controlled and there are a finite number of coins, 100 billion. XRP is very popular with banks because it acts as a bridge between the fiat and cryptocurrency worlds.
8. Litecoin (LTC)
Introduction to Litecoin
Litecoin (LTC) is a peer-to-peer cryptocurrency and open-source software that was released in October 2011 under the MIT/X11 license. It was an early Bitcoin spin off, and is known as an altcoin (alternative cryptocurrency coin).
The main difference between Litecoin and Bitcoin is Litecoin’s block generation time is significantly shorter than Bitcoin. It’s cut down the transaction processing time to 2.5 minutes while your average Bitcoin transactions can take up to 10 minutes. It has a different hashing algorithm (scrypt instead of SHA-256) and a slightly modified graphical user interface (GUI).
The revolutionary technology has created a digital coin (LTC) that is more useful as an affordable payment mechanism. The objective of LTC is to put the digital coin in the hands of the average man-in-the-street so they can have a digital coin they can use on a daily basis, for everything from shopping at stores and online to buying homes and cars.
9. Chainlink (LINK)
Introduction to Chainlink
Chainlink is a decentralised network of nodes that transfer real-world information from off-blockchain to on-blockchain sources via oracles to write smart contracts and deploy dApps. Chainlink is built on the Ethereum blockchain and is supported by its own native token, LINK.
Off-chain refers to any type of transaction or mechanism that occurs outside of a blockchain network protocol. They are popular because they don’t have a transaction fee, settlement is immediate and they offer greater anonymity and security than on-chain transactions. On-chain is simply any transaction that occurs on the blockchain. It involves the transaction being validated and authenticated by nodes.
LINK is a sub-token on the Ethereum blockchain and can be bought or sold for fiat currency or other digital currencies. LINK is used to incentivise the global network of Chainlink’s node operators to provide reliable, real-world data that is needed to write smart contracts and deploy dApps on the blockchain.
10. Bitcoincash (BCH)
Introduction to Bitcoincash
Bitcoin Cash (BCH) is a digital token that was created in 2017 as a hardfork of Bitcoin. In 2018, Bitcoin Cash split into two cryptocurrencies: Bitcoin Cash and Bitcoin SV.
Bitcoin Cash was created as a hardfork by ‘rebel’ Bitcoin miners who were concerned about the future of Bitcoin and the scalability of the cryptocurrency. Bitcoin Cash came to the market to address the limitations of Bitcoin because altcoins such as Ethereum, Litecoin and Ripple were increasingly becoming a threat to Bitcoin.
Bitcoin Cash competes with altcoins like Litecoin which have surged in popularity because its block generation time is significantly shorter than Bitcoin. Litecoin reduced its block generation time to 2.5 minutes while Bitcoin processing time is about 10 minutes. This means merchants can confirm a transaction in a shorter space of time. A faster transaction time allows Bitcoin Cash to compete against other altcoins as a digital payment method.
DISCLAIMER
Trading cryptocurrencies is a highly risky and speculative activity which can lead to you losing a lot of money due to extreme price volatility. All content in this article is meant for educational purposes only and does not provide readers with financial advice or promote risky trading of cryptocurrencies. Conduct your own online research on these cryptocurrencies or speak to a cryptocurrency expert before making the decision to trade these high-risk assets.
