Most of the world seems to be talking about bitcoin, but there are hundreds of other cryptocurrencies.
Bitcoin started the digital currency revolution.
The first bitcoin was mined in January 2009 – and like they say, the rest is history as bitcoin has grown in value and stature as an investment.
Cryptocurrencies are different to normal ways of transferring money because they rely on a peer-to-peer network without any processing firm or central bank involved to oversee transactions.
Instead, the blockchain, an uneditable database recording the details of each movement of tokens, tracks transactions.
The big players
But as the fast-moving world of cryptocurrency moves away from the creaking bitcoin technology, three new types of cryptocurrency are emerging:
- Tokens that store value – like bitcoin and litecoin
- Platforms for monitoring data and contracts – such as ethereum and factom
- Applications like initial coin offerings (ICOs) or exchanges
Bitcoin is by far the biggest player in the digital currency world – with a market cap of £150 billion.
Ethereum ranks next, with a cap of $63 billion, followed by ripple, with $31 billion. Most of the rest have market caps of less than $10 billion – some considerably less.
Litecoin is probably one of the best-known of the low-cap coins.
The sector has well over a thousand digital currencies, with many opening and closing literally every day.
Exchanges and wallets
Besides the market leaders, two other tokens that investors should know about are monero (Market cap $3 billion) which adds layers of encryption to transactions that make the sender and receiver anonymous online.
Zcash – with a cap of just $660 million – is also obsessed with privacy based on sharing ‘zero-knowledge’.
Most exchanges and price trackers only monitor a few coins and calculate values and market caps in slightly different ways.
Among the largest are Kraken, Coincompare and Coinbase, which is probably the biggest exchange with more than a million users.
Some financial firms, like the global deVere Group’s Crypto offer electronic wallets that incorporate trading.