Cryptocurrency is a form of digital currency that exists only in digital form. It can be used to pay for online purchases without going through an intermediary, such as a bank, or it can be held as an investment. With thousands of different cryptocurrencies available, it can be overwhelming when you first start out in the world of cryptocurrencies. To help you find your way around, here are the top 5 cryptocurrencies based on their market capitalization or the total value of all the currencies currently in circulation. The most popular cryptocurrency is Bitcoin (BTC).
It is the first and most widely used cryptocurrency, and it represents more than 45% of the total cryptocurrency market. Bitcoin's maximum supply is limited to 21 million coins, with 19 million coins currently in circulation. To create an offer, Bitcoin rewards cryptocurrency miners with a fixed amount of Bitcoin. To keep the process under control, the rewards awarded for Bitcoin mining are halved almost every four years. The second most popular cryptocurrency is Ethereum (ETH).
It is both a cryptocurrency and blockchain platform, and it is favored by program developers because of its potential applications, such as so-called smart contracts that execute automatically when conditions are met and non-fungible tokens (NFTs).The third most popular cryptocurrency is Tether (USDT). Unlike other forms of cryptocurrency, Tether is a stable currency, meaning that it is backed by fiat currencies such as the U. S. Dollar and the Euro and hypothetically maintains a value equal to one of these denominations.
In theory, this means that the value of Tether is supposed to be more consistent than that of other cryptocurrencies, making it a favorite of investors who are wary of the extreme volatility of other currencies. The fourth most popular cryptocurrency is USD Coin (USDC). It is also a stable currency, meaning it's backed by U. Dollars and objectives of a ratio of 1 USD to 1 USDC. USDC works with Ethereum, and you can use USD Coin to complete global transactions. The fifth most popular cryptocurrency is Binance USD (BUSD).
It was created by Paxos and Binance to create a U. S.-backed cryptocurrency. To maintain this value, Paxos owns a quantity of US Dollars equal to the total supply of BUSD. As with other stable currencies, BUSD provides cryptocurrency traders and users with the ability to transact with other cryptocurrency assets while minimizing the risk of volatility. When investing in cryptocurrencies, it's important to pay attention to cryptocurrency tax rules.
Cryptocurrencies are treated as an equity asset, like stocks, rather than cash. That means that if you sell cryptocurrency at a profit, you'll have to pay capital gains taxes. This is the case even if you use your cryptocurrencies to pay for a purchase. Given the thousands of cryptocurrencies that exist (and the high volatility associated with most of them), it's understandable that you want to take a diversified approach to investing in cryptocurrencies to minimize the risk of losing money. You can buy cryptocurrency through cryptocurrency exchanges, such as Coinbase, Kraken or Gemini.
In addition, some brokerages, such as WeBull and Robinhood, also allow consumers to buy cryptocurrency.