You may have heard of pump-and-dump schemes — when investors take advantage of an asset in a steep price increase (pump) followed by an even faster price fall (dump). These schemes can happen with different types of assets, including cryptocurrency.
Pump-and-dump schemes typically happen when a group of investors enter an asset early and then convince other investors to make purchases and drive prices up further. Then the original investors “dump” most or all of their holdings into the market, precipitating a crash. The investors who were not first in on the trade could realize heavy losses.
The process is much the same with a crypto pump-and-dump scheme. Here, we’ll outline how it happens, offer examples and discuss the risks and legality of cryptocurrency pump-and-dump schemes.
Related: What Is a blockchain explorer?
How Does a Pump-and-Dump Work in Cryptocurrency?
Crypto pump-and-dump schemes are made up of two phases: the pump, in which the price of an asset is driven up, and then the dump, when a mass selloff ultimately drives the prices down.
Phase One: The Pump
In the first phase, a group of developers or investors try to get others to buy a coin by hyping it up or spreading misleading information about it. Imagine, for example, a promise like this one: “Buy this crypto and make millions this month, it’s going from $0.01 to $1.00 because it’s so unique and special!” It might be accompanied by many memes featuring rocket ships heading to the moon with different cryptocurrencies depicted on them.
Meanwhile, the investors spreading the misinformation already hold a large portion of the coins available. In some cases, it might even be the developers of the project themselves spreading these claims to initiate a cryptocurrency pump-and-dump.
Phase Two: The Dump
Once enough crypto holders have been convinced to buy the new token, the second phase of a pump-and-dump scheme begins. After waiting for the price to rise to unreasonable levels, the original investors begin selling their tokens. This causes the price to fall significantly, possibly inducing others to sell as well. The result: the investors who got in late typically wind up taking heavy losses.
Is a Pump-and-Dump Illegal in Crypto?
In the stock market, pump-and-dumps are illegal — but cryptocurrency markets still often fall into a legal gray area. The Securities and Exchange Commission (SEC) considers pump-and-dumps to be market manipulation and will pursue legal action against anyone found to be committing such crimes. But because most cryptocurrencies are not classified as securities, they don’t fall under the regulatory jurisdiction of agencies like the SEC.
So, while crypto pump-and-dumps are morally and legally questionable, they might not go against any actual laws that are currently on the books. However, this has begun to change, and anyone considering engaging in a crypto pump-and-dump would do well to think twice. In March of 2021, tech entrepreneur John McAfee was indicted by the Commodities Futures Trading Commission (CFTC) for pumping altcoins on his Twitter account without disclosing that he and his associates had already bought into the coins beforehand. He died before the case could go to court.
How to Identify a Crypto Pump-and-Dump Scheme
There’s no rule for figuring out if a cryptocurrency is being used in a pump-and-dump scheme, which leaves investors to do their own research and use their own best judgment when deciding to take a chance on a coin. That said, there are a few indications to watch out for:
1. Major Hype
The biggest indication of a pump-and-dump scheme might be the excessive hype built up around a token or project. When someone writes a marketing email or social media post using phrasing like “this crypto is the next big thing,” or “this is Bitcoin 2.0,” and the price quickly rallies, it might signal a pump-and-dump. When there seems to be an extraordinary amount of optimism around a crypto for no particular reason, or for reasons that don’t quite make sense, it might raise a red flag — and potential investors may want to consider investigating further.
2. Sharp Rise in Price
Another indication of a pump-and-dump scheme is the parabolic rise of a cryptocurrency’s price in a short period of time. This is especially true if the coin was previously unknown, ignored, or forgotten, but it can happen to any coin.
3. A Cycle of Publicity
When positive “news” tends to coincide with the purchases made by insiders, it adds to the illusion of something big happening. This creates a positive feedback loop where more potential buyers see what’s happening and bid prices up even further until what might just be an inevitable crash.
4. ICOs
Whenever a new cryptocurrency gets launched (in an initial coin offering or ICO), it often serves as a pump-and-dump for a time. People become intoxicated by the promise of a new project, bid up prices, then the initial investors begin to cash out. Over time, most move on to other, newer projects, repeating the process.
Examples of a Pump-and-Dump Scheme in Crypto
One recent example of a crypto pump-and-dump is Dogecoin (DOGE). The coin has no special use case or features and no limit on how many coins can be created. But with a wave of celebrity endorsements, an ocean of fresh memes and much clamor about prices skyrocketing, in early 2021, DOGE became one of the top 10 cryptos by market cap in a matter of months, previously trading at a fraction of a penny. Prices peaked at about 70 cents before tanking below 20 cents.
Risks of Pumping and Dumping Crypto
Trying to take part in a known pump-and-dump scheme might be among the most high-risk endeavors an investor can take. The potential for quick, outsized gains can often be a fantasy. When it comes to investing in altcoins, the risk of falling prey to a crypto pump-and-dump is practically always there. Many have seen their values decline 90% or more from their peaks, never to recover. Many altcoins have small enough market caps to be manipulated at any time, although this is changing as the cryptocurrency market grows and matures.
With a market cap of over $1 trillion, Bitcoin scams are much harder to pull off for would-be pump-and-dumpers. A successful pump-and-dump requires an asset with thin liquidity, as this makes it easier to cause big price moves. But market manipulation in some form or another can happen in practically every financial market.
The Takeaway
Crypto pump-and-dumps, in which investors drive up the price of a coin only to sell it all (or dump it), driving the price back down, are not technically illegal yet, though there is some movement in that direction. But legality aside, knowingly participating in one may be one of the riskiest moves an investor can make.
Countless altcoins have fallen victim to crypto pump-and-dumps at some point throughout the years, and while there’s no way to predict a pump-and-dump, there are red flags to watch for.
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This article originally appeared on SoFi.com and was syndicated by MediaFeed.org.
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Top 30 cryptocurrencies
Since the pseudonymous Satoshi Nakamoto penned a white paper for Bitcoin in 2009, an estimated 7,400 cryptocurrencies have been unleashed into the world.
Cryptocurrencies have become wildly popular trading vehicles. At one point, the entire cryptocurrency market ballooned to as much as $2.2 trillion in size, and the advent of digital coins has prompted even central banks to look into virtual versions of fiat currency.
For potential cryptocurrency investors, it may be daunting to sift through the thousands of digital currencies and try to pick one to trade. But one way to go about it may be looking at the market capitalizations of a virtual currency.
Here’s a closer look at what the market cap of a digital coin tells you and a list of the top cryptocurrencies by market cap.
Related: Crypto taxes 2021: How to pay taxes on cryptocurrency
tigerstrawberry / iStock
Calculating the market cap of a cryptocurrency involves taking the price of the digital currency and multiplying it by the number of coins in circulation.
Crypto Market Cap = Number of Coins in Circulation X Coin Price
The market cap of a cryptocurrency allows investors to gauge the total value of all the coins that are out there. In other words, it measures the size of that cryptocurrency’s market value.
SPmemory / iStock
Let’s take a look at Bitcoin, which was the very first cryptocurrency and has a price of $34,260.40 and about 18.7 million coins in circulation. That puts its market cap at $642 billion after multiplying the price by the number of coins in circulation.
To put that into perspective, that means the size of the Bitcoin market is more than double the size of the next largest cryptocurrency Ethereum, which has a market cap of $246 billion.
The market cap of Bitcoin is roughly equivalent to that of Tesla Inc. in the stock market, which has a market cap of $659 billion.
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The reason market cap is so important is because it gives investors a way to compare the value of one cryptocurrency network to another. Cryptocurrency A’s price might be $600 a share and Cryptocurrency B’s $6. But these prices don’t tell you much about the size or value of the entire market or network.
Let’s say the number of Cryptocurrency A coins in circulation was 1 million, while the number of Cryptocurrency B coins was 150 million. The market cap of Cryptocurrency B is actually higher than A’s, making its total market value much higher.
Cryptocurrency A’s Market Cap = $600 X 1 million = $600 million
Cryptocurrency B’s Market Cap = $6 X 150 million = $900 million
In the stock market, larger market caps can also be an indication of stability. Companies with the biggest market caps tend to be blue-chip stocks that have been publicly trading for longer.
But that same logic can’t be exactly applied to the cryptocurrency market yet, since digital currencies themselves are so new, untested and volatile. Even bitcoin, which has been in existence since 2009 and has the largest market cap, is prone to wild price swings.
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Fully diluted value refers to the market cap of the cryptocurrency if all the coins in its total supply were mined.
For instance, as mentioned, there are 18.7 million Bitcoin in circulation. However, the maximum number of Bitcoin that can be mined is 21 million. Therefore, the fully diluted value of Bitcoin is 21 million multiplied by its current price.
Phira Phonruewiangphing / iStock
According to the cryptocurrency exchange Coinbase, here are the categories for market caps in the cryptocurrency market:
- Large-cap cryptocurrencies: Cryptocurrencies that have a market cap of $10 billion or more
- Mid-cap cryptocurrencies: These virtual currencies have market caps between $1 billion and $10 billion
- Small-cap cryptocurrencies: These cryptocurrencies have market values of less than $1 billion
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The price of a cryptocurrency is dictated by the market forces of supply and demand. So how does the other part of the equation in market cap – number of coins in circulation – come about?
With cryptocurrencies, transactions are cleared by the blockchain technology. So-called “miners” can generate new coins by solving complex computer puzzles. Solving a puzzle leads to one block – a group of transactions – getting registered to the blockchain.
Because they earn one or a couple fresh coins for their computational work, miners are often motivated to mine cryptocurrencies like Bitcoin that are trading at higher prices. The higher the cryptocurrency’s price, the greater the incentive to mine it.
So when it comes to the formula for crypto market cap, one part of the equation can influence the other. The price of a cryptocurrency can influence the number of coins in circulation.
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Below is a list of the biggest cryptocurrencies by market cap, according to data from website CoinMarketCap.
Marc Bruxelle / istockphoto
- Market Cap: $2,780,265,388
- June 30, 2021 Price: $0.11
- Circulating Supply: 25,263,013,692
Crypto.com Coin is the native token of Crypto.com, an exchange that tries to be a network to payment cryptocurrency projects. Crypto.com tends to be much cheaper than exchange competitors like Coinbase.
Crypto.com
- Market Cap: $6,153,754,357
- June 30, 2021 Price: $482.36
- Circulating Supply: 12,754,905
Aave is on the Ethereum network and focuses on DeFi lending. It basically aims to let users lend and borrow a range of crypto assets, while sometimes earning interest.
Aave
- Market Cap: $3,276,672,704
- June 30, 2021 Price: $0.000008292
- Circulating Supply: 394,796,000,000,000
Created in August 2020 by an anonymous person known as Ryoshi, Shiba Inu is on the ERC-20 token on the Ethereum blockchain. While Shiba Inu is inspired by Dogecoin, which features a Shiba Inu dog on its logo, the cryptocurrency also calls itself a “Dogecoin killer.”
Shiba Inu does not have smart contract capability nor is it backed by any assets or rights. There’s also no defining technology or limited supply. Instead, Shiba Inu has enjoyed popularity in the cryptocurrency market during 2020 in the pattern that some meme stocks do.
Shiba Inu
- Market Cap: $3,722,430,916
- June 30, 2021 Price: $3.91
- Circulating Supply: 954,781,934
EOS is a blockchain-based system that aims to allow the development of the Apps on its platform. It’s sometimes seen as a competitor to Ethereum, which remains more popular. It has a platform focused on smart contracts and tries to eliminate transaction fees and conduct millions of transactions per second.
EOS
- Market Cap: $3,826,701,458
- June 30, 2021 Price: $212.77
- Circulating Supply: 17,942,846
Bitcoin leaves a visible trail of transactions on its blockchain. Monero is a privacy coin, hiding the senders, receivers as well as the transaction amount. Monero is increasingly used by criminals for illicit payments and money laundering. It’s also popular when hackers are cryptojacking.
The original white paper for Monero in 2014 argues that Bitcoin’s visibility of transactions was a “critical flaw.” Monero could come under greater regulatory scrutiny especially after high-profile ransomware incidents like the Colonial Pipeline and meatpacking plants hacking in the U.S.
Monero has outperformed Bitcoin since the beginning of 2020. The US Internal Revenue Service has offered a $625,000 award for any one able to develop tools to trace Monero. It’s tougher to trade on bigger cryptocurrency exchanges, given authorities insisting they have higher Know Your Customer (KYC) standards.
Pe3check / iStock
- Market Cap: $4,638,835,632
- June 30, 2021 Price: $0.06478
- Circulating Supply: 71,659,657,369
Tron is the cryptocurrency of Tron Foundation, a blockchain company that on its website says it is “dedicated to building the infrastructure for a truly decentralized Internet.” A report from the media outlet Verge reported that much of Tron’s original white paper overlaps with the white paper for Ethereum.
Tron uses something known as a delegated proof-of-stake to reach consensus on its ledger, unlike the traditional “proof-of-work” methods used by many cryptocurrencies including Bitcoin. Twenty-seven “super representatives” achieve consensus, with the representatives rotating regularly. The process is designed to be less energy intensive.
Tron’s founder Justin Sun is known for acquiring BitTorrent, a peer-to-peer file-sharing service.
Phira Phonruewiangphing / iStock
- Market Cap: $4,820,709,413
- June 30, 2021 Price: $58.11
- Circulating Supply: 83,612,398
Filecoin aims to be a decentralized storage network that maximizes data storage and retrieval. The Filecoin network aims to connect storage and retrieval miners with clients who pay to store and retrieve data.
Participants in the Filecoin network send tokenized rewards in the form of Filecoin for providing services on the network. The network uses specialized proofs to verify the quantitative and types of files on the network. Grayscale, a manager of cryptocurrency investment trusts, added Filecoin to one of its products in March.
Filecoin
- Market Cap: $5,346,751,563
- June 30, 2021 Price: $0.08354
- Circulating Supply: 64,315,576,989
Founded in 2015 by the former chief information officer of Louis Vuitton China, VeChain focuses on improving supply chain management and business operations with blockchain.
It has two tokens: VeChain (VET) and VeChainThro Energy (VTHO). The former is designed to transfer value across the blockchain network, while the latter aims to use energy or “gas” to power smart contracts.
Vechain
- Market Cap: $5,386,070,570
- June 30, 2021 Price: $1
- Circulating Supply: 5,383,336,912
Dai is another stablecoin with a one-to-one ratio to the U.S. dollar. Unlike some other stablecoins however, Dai aims for an even greater degree of decentralization.
For instance, Tether tries to back cryptocurrencies backed by a reserve, which is managed by a central body. Dai aims to use smart contracts instead to maintain the peg to the U.S. dollar.
Dai
- Market Cap: $6,067,833,949
- June 30, 2021 Price: $45.02
- Circulating Supply: 135,173,634
Internet Computer’s creator Dfinity Foundation is backed by Silicon Valley venture-capital firm Andreesen Horowitz. The basis for Internet Computer is to create apps and websites, recreating the web in a more decentralized form.
For this reason, some argue that Internet Computer is more useful as a blockchain technology network that powers apps than as a cryptocurrency. The platform allows anyone to create software on the Internet using its blockchain technology.
Dfinity.org
- Market Cap: $6,089,904,070
- June 30, 2021 Price: $52.45
- Circulating Supply: 116,313,299
Ethereum Classic (ETC) maintains the original, unaltered history of the Ethereum network. The new Ethereum network (ETH) was created in 2016 after a hack.
Daily active users of ETH far surpasses that of ETC, roughly close to 1 million versus in the tens of thousands. Ethereum Classic’s network has also experienced 51% attacks, suggesting it’s less secure.
While lacking any standout technology, Ethereum Classic experienced a resurgence in 2021 speculated that it may come back in favor if Ethereum or ETH moves to a proof-of-stake protocol, as opposed to the more traditional proof-of-work.
Ivan-balvan/istock
- Market Cap: $6,271,627,310
- June 30, 2021 Price: $0.2722
- Circulating Supply: 23,207,246,068
The Stellar network’s cryptocurrency is called lumen and trades under the symbol XLM. Stellar is a blockchain-based ledger that aims to connect banks and payment systems to facilitate low-cost, cross-border transfers.
Created by a co-founder of Ripple, Stellar says its focus is bank loans in developing economies or providing services to individuals outside the traditional banking system.
Stellar
- Market Cap: $6,551,813,342
- June 30, 2021 Price: $6.57
- Circulating Supply: 1,000,000,000
Theta posted massive gains in 2021. The Theta Network describes itself as a “decentralized streaming video protocol”–in essence, aiming to use blockchain technology to allow users to contribute excess bandwidth and computing resources in exchange for tokens.
Theta.tv was slated to be included in future Samsung Galaxy phones and the software added to 75 million existing devices.
ThetaToken.org
- Market Cap: $6,650,827,175
- June 30, 2021 Price: $34,290.76
- Circulating Supply: 194,125
Wrapped Bitcoin (WBTC) is a token that represents Bitcoin on the Ethereum blockchain. One Wrapped Bitcoin equals one Bitcoin.
However, WBTC tokens can be used with Ethereum’s decentralized apps and decentralized finance ecosystem. Another feature of Wrapped Bitcoin is its transaction speed, since it runs on the Ethereum blockchain.
Wrapped Bitcoin
- Market Cap: $6,920,008,608
- June 30, 2021 Price: $1.10
- Circulating Supply: 6,303,422,325
Polygon, formerly known as Matic Network, is an India-based cryptocurrency that was created in 2017. It aims to solve issues found on the Ethereum network, such as congestion and high transaction fees.
Polygon
- Market Cap: $8,038,538,683
- June 30, 2021 Price: $18.49
- Circulating Supply: 435,509,554
Chainlink’s blockchain network aims to provide a link between real world data and smart contracts. Its cryptocurrency is known as LINK, and it’s used to pay for smart contract transactions. As mentioned, smart contracts are agreements on the blockchain that automatically complete upon the filling of necessary preconditions.
In cryptocurrency markets, outside data sources are called oracles. Chainlink helps connect those outside data sources and the blockchain.
Chainlink
- Market Cap: $8,731,513,592
- June 30, 2021 Price: $32.12
- Circulating Supply: 272,637,428
Consensus is reached on various blockchains when members solve a mathematical puzzle, a process called “proof of work.” Miners are then rewarded coins for their work, a process that’s energy intensive and has been criticized for its environmental impact. It’s why Elon Musk did a U-turn on Tesla accepting Bitcoin as payment.
As mentioned, some coins are switching to “proof of stake,” a less energy-intensive process. But Solana creator Anatoly Yakovenko, a former engineer at Qualcomm, had an idea for “proof of history,” which timestamps transactions and disables the ability of miners to decide which transactions get recorded on the blockchain. Yakovenko has claimed the network can be as fast as “the speed of light.”
Solana
- Market Cap: $9,193,856,401
- June 30, 2021 Price: $137.72
- Circulating Supply: 66,752,415
Created in 2011, Litecoin was one of the earliest altcoins. New blocks on the Litecoin network are generated every 2.5 minutes, four times as fast as the Bitcoin network, where blocks are mined in 10 minutes.
Founder Charles Lee has said he designed Litecoin to be a compliment to Bitcoin, not as a replacement. In 2019, Litecoin rallied ahead of a halving. Charles Lee cashed out on his holdings in 2017, the last time cryptocurrencies peaked.
Weedezign / istockphoto
- Market Cap: $9,472,408,895
- June 30, 2021 Price: $503.84
- Circulating Supply: 18,777,488
Bitcoin Cash (BCH) launched in August 2017 after a controversial fork in which a faction of coders criticized the original Bitcoin’s network for being too slow and expensive.
The technology underpinning Bitcoin Cash is similar to that of Bitcoin, but changes were made during the fork to make transactions faster and lower fees. For instance, the BCH network can support more than 23 million transactions in a single day. That’s smaller than the 2 trillion transactions that Visa can handle, but far more than the 600,000 transactions that Bitcoin can facilitate.
However, this increased transaction capability hasn’t been taken advantage of by the market. In general, while it was created to rival Bitcoin, BCH hasn’t had the same popularity and has suffered deep declines in its price. Bitcoin Cash’s market cap is still a fraction of Bitcoin’s. However, it’s also still one of the most successful coins that has developed from a hard fork.
Bitcoin Cash
- Market Cap: $9,995,097,737
- June 30, 2021 Price: $17.32
- Circulating Supply: 575,244,185
Decentralized exchanges (DEX) are trading platforms that require users to hand over the keys of the coins, so without depositing or withdrawing cryptocurrencies. The system relies on smart contracts and is a feature of the DeFi movement.
Uniswap is estimated to be the largest DeFi exchange, and it’s popular for strategies like “yield farming,” where cryptocurrencies are lent out in exchange for interest. Founded by Hayden Adams, Uniswap is an exchange that has raised money from venture-capital firms like Andreesen horowitz and Union Square Ventures.
Uniswap (UNI) is the token native to the platform. While market cap growth has been tremendous, it also hasn’t been without hiccups. In August 2020, an anonymous group copied Uniswap’s code and crimped the DEX’s liquidity.
Uniswap
- Market Cap: $10,109,402,513
- June 30, 2021 Price: $0.9998
- Circulating Supply: 10,109,425,905
Binance USD (BUSD) is a stablecoin that is issued by Binance, the world’s largest cryptocurrency exchange. It’s pegged to the U.S. dollar on a one-to-one basis. It runs on the Ethereum network so can be accepted everywhere for payments or loans where other ERC-20 tokens are.
Binance USD
- Market Cap: $14,624,503,052
- June 30, 2021 Price: $15.30
- Circulating Supply: 956,244,736
Polkadot’s coin is called dot (DOT). Polkdot’s creator Gavin Wood is also the co-founder of Ethereum. He wrote the original white paper for Polkadot in 2016.
Central to Polkadot are “parachains”–blockchains that can run higher transaction throughput than Ethereum through design. “Parallel blockchains”–transactions that are spread across multiple computers, similar to parallel processing–have also been touted as having potential as an alternative to Ethereum.
Polkadot
- Market Cap: $25,203,864,990
- June 30, 2021 Price: $1
- Circulating Supply: 25,202,767,808
USD Coin (USDC) is a stablecoin powered by Ethereum blockchain that is pegged to the U.S. dollar. USD Coin is also linked to the cryptocurrency startup known as Circle. After the stablecoin Tether came under regulatory trouble for how much it actually backs in reserves, Circle has said its reserves are evaluated and audited by Chicago-based accounting firm Grant Thornton LLP.
In March 2021, Visa announced that it would allow the use of USDC to settle transactions on its payment network–a sign of mainstream acceptance of the crypto market. The move allowed for customers to pay for purchases using a Visa credit card without digital currencies first needing to be converted into traditional money.
Coinbase
- Market Cap: $30,462,825,137
- June 30, 2021 Price: $0.6577
- Circulating Supply: 46,146,927,647
Ripple XRP was developed by Ripple Labs Inc. Unlike Bitcoin and many other cryptocurrencies, XRP is not on a blockchain network. Instead, it’s based on what’s called a “hash tree.” This means XRP can’t be mined and instead there are a limited number of coins–100 billion to be exact.
Ripple network can process 1,500 transactions per second.
In 2020, the Securities and Exchange Commission sued Ripple and its executives for allegedly misleading investors in XRP by selling more than $1 billion of the virtual tokens without registering with the regulator.
Pe3check / istockphoto
- Market Cap: $31,646,744,193
- June 30, 2021 Price: $0.2429
- Circulating Supply: 130,234,209,886
Dogecoin had a meteoric rise in 2021, surging through the month of May. The cryptocurrency was started as a joke by its founders in 2013. One of Dogecoin’s most notable features is that it has a Shiba Inu dog on its symbol.
Dogecoin enjoyed popularity in a pattern similar to the way meme stocks did in 2020. Tesla CEO Elon Musk was an advocate of Dogecoin, touting it on social media. On June 1, cryptocurrency exchange Coinbase said it would accommodate Dogecoin, signaling more mainstream acceptance of the cryptocurrency.
Stuart Partridge/istock
- Market Cap: $41,876,184,686
- June 30, 2021 Price: $1.31
- Circulating Supply: 31,946,328,269
Cardano (ADA) was created by Charles Hoskinson, a co-founder of Ethereum who also has a popular YouTube channel. Cardano can’t yet run decentralized finance (DeFi) projects that let users lend, trade and borrow money with each other. But it recently had an upgrade in March, and smart-contracts are expected to later in 2021.
While Cardano lacks some features, it’s considered by some market participants to be a work in progress and has potential to be a cheaper alternative to Ethereum in being a basis for DeFi and NFT projects. It’s developed a loyal following on social-media platforms like Reddit, similar to so-called meme stocks.
A key feature of ADA is that it has a proof-of-stake blockchain. This means the complicated proof-of-work calculations and high electricity usage required for mining coins like Bitcoin aren’t necessary. Instead, all ADA coins are pre-mined. That could make Cardano appealing to investors who have been critical of the environmental costs of cryptocurrencies like Bitcoin.
Dennis Diatel Photography/istock
- Market Cap: $43,791,396,392
- June 30, 2021 Price: $284.65
- Circulating Supply: 153,432,897
Binance is the world’s largest cryptocurrency exchange–popular because of its low trading fees. Binance Coin (BNB) is the cryptocurrency “native” to the exchange, which means that it was designed specifically to be used in the Binance ecosystem. Binance Coin launched in 2017 with an ICO.
Binance tries to incentivize investors to use Binance Coin by allowing them to get a 25% discount on trading fees if they use BNB to pay for trades. That means if your trading fee total $1 for a trade, it’d only be 75 cents if you paid with BNB.
Another key fact for investors to know about BNB is that every quarter, Binance uses 20% of its profit to buy back and “burn” Binance Coins–a process that involves erasing them forever. Originally spelled out in a whitepaper, this system is designed to keep the supply of BNB low and will be done until 100 millions coins–50% of the total–are destroyed.
Binance Coin
- Market Cap: $62,463,121,114
- June 30, 2021 Price: $1
- Circulating Supply: 62,455,415,418
Tether (USDT) was the first cryptocurrency marketed as a “stablecoin”–virtual money designed to maintain a fixed value. In the case of Tether, the value of the coin is pegged to a fiat currency–the U.S. dollar. Hence, its ticker is USDT.
In February 2021, the New York attorney general’s office settled a two-year investigation on tether and its sister crypto exchange Bitfinex. The companies agreed to pay a $18.5 million fine for overstating their reserves and covering up $850 million in losses. Tether had claimed that all its tokens were backed on a one-to-one basis by U.S. dollars in cash reserves.
hello.artmagination.com / Deposit Photos
- Market Cap: $246,294,041,853
- June 30, 2021 Price: $2,117.16
- Circulating Supply: 116,503,783
Ethereum (ETH) was developed in 2013 by a Russian-Canadian teenager named Vitalik Buterin. He aimed to create a cryptocurrency that could utilize smart contracts–ones that self execute based on the defined terms of the agreement.
Similar to Bitcoin, Ethereum aims to connect a decentralized network of computers and record transactions on the publicly available blockchain. Like Bitcoin, Ethereum relies on proof of work for its mining, which means miners perform complex calculations in order to verify transactions, earning new coins in the process.
Ethereum helped fuel initial coin offerings (ICOs) of 2017, since many of the ICOs used Ethereum blockchain. Ethereum has also been behind the boom in non-fungible tokens (NFTs)–digital versions of art or collectibles that are linked to a blockchain and made one-of-a-kind.
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- Market Cap: $641,505,573,940
- June 30, 2021 Price: $34,260.40
- Circulating Supply: 18,745,206
Bitcoin (BTC) was designed to be a digital form of money that is independent of any government or central bank that controls its supply. Instead, the supply of Bitcoin was capped at 21 million by Satoshi Nakamoto.
Bitcoin relies on a network of computers to facilitate transactions. The transactions are logged permanently on the blockchain–an open ledger that everyone on the network can see.
Bitcoin holders have two keys: a public one that proves they own Bitcoin, and a private one that acts as a password and ensures only the holder can access their currency.
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Altcoins, Privacy Coins, Stablecoins, DeFi Coins – the cryptocurrency market has proliferated and diversified since Bitcoin was first introduced in 2009. One way investors can evaluate different coins and tokens in the cryptocurrency world is by looking at market cap, which can give a sense of the size and popularity.
Learn more:
- Crypto debit cards to consider in 2021: How to choose
- Crypto arbitrage: How it works & trading strategies
This article originally appeared on SoFi.comand was syndicated by MediaFeed.org.
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