Forbes Advisor has provided this content for educational purposes only and not to help you decide whether or not to invest in cryptocurrency. If you decide to invest in cryptocurrencies or any other investment, you should always obtain appropriate financial advice and only invest what you can afford to lose.
From Bitcoin and Ethereum to Dogecoin and Tether, there are thousands of different cryptocurrencies, which can make it difficult when investors are first considering getting into the crypto world.
Here is our pick of some of the top cryptocurrencies based on their market capitalization – the total value of all coins currently in circulation.
What are cryptocurrencies?
A cryptocurrency is a high-risk digital asset that can circulate without the centralized authority of a bank or government.
To date, there are over 26,000 cryptocurrency projects that represent the entire crypto market, estimated at £917 billion.
1. Bitcoin (BTC)
- Market capitalization: £553 billion
Created in 2009 by Satoshi Nakamoto, Bitcoin (BTC) is the original cryptocurrency. As with most cryptocurrencies, BTC operates on a blockchain, or a ledger recording transactions distributed across a network of thousands of computers. Because additions to distributed ledgers must be verified by solving a cryptographic puzzle, a process called proof of work, Bitcoin is intended to be secure and protected against fraudsters.
The price of Bitcoin has soared and fallen over its lifetime. In May 2016, the price of a single Bitcoin was worth around £370. As of 7 November 2023, this figure was approximately £28,000.
2. Ethereum (ETH)
- Market capitalization: £184 billion
Both a cryptocurrency and blockchain platform, Ethereum is a favorite of some program developers because of its potential applications, such as so-called smart contracts that execute automatically when conditions are met and non-fungible tokens (NFT).
The price of Ethereum has also seen considerable ups and downs. From April 2016 to November 7, 2023, its price increased from around £8 to around £1,530.
3. Tether (USDT)
Unlike other forms of cryptocurrency, Attached (USDT) is a stablecoin, meaning it is tied to fiat currencies like the US Dollar and Euro and hypothetically maintains a value equal to either of these denominations. In theory, this means that Tether’s value is meant to be more consistent than that of other cryptocurrencies, and is preferred by some investors who are wary of the extreme volatility of other coins.
4. Binance Coin (BNB)
Binance Coin can be used for trading, payment processing, or even booking travel. It can also be exchanged for other forms of cryptocurrency, such as Ethereum or Bitcoin.
In 2017 the price was less than 10p. By November 7, 2023, its price had risen to around £203. As with other cryptocurrencies, the journey has been very volatile.
5. Ripple (XRP)
Created by some of the same founders as Ripplea digital technology and payment processing company, XRP can be used on this network to facilitate exchanges of different types of currencies, including fiat currencies and other major cryptocurrencies.
At the start of 2017, the price of XRP was £0.004. As of November 7, 2023, its price reached £0.55.
6. US Dollar Coin (USDC)
Like Tether, USD Coin (USDC) is a stablecoin, meaning it is nominally pegged to the US dollar currency and targets a ratio of 1 USD to 1 USDC. USDC is powered by Ethereum and can be used to make global transactions.
7. Solana (SOL)
Developed to help power decentralized finance (Challenge), decentralized applications (DApps) and smart contracts, Solana operates on unique hybrid proof-of-stake and proof-of-history mechanisms aimed at processing transactions quickly and securely. SOL, Solana’s native token, powers the platform.
When it launched in 2020, the price of SOL started at £0.57. As of November 2023, its price was around £33.34.
8. Cardano (ADA)
A little later on the crypto scene, Cardano (ADA) is notable for its early adoption of proof-of-stake validation. This method is designed to speed up transaction time and reduce energy consumption and environmental impact by removing the competitive aspect and solving the problems of verifying transactions on platforms like Bitcoin. Cardano also works like Ethereum to enable smart contracts and decentralized applications, powered by ADA, its native coin.
In 2017, the price of Cardano’s ADA token was around £0.015. As of November 7, 2023, its price was £0.28.
9. Dogecoin (DOGE)
Market capitalization: £8.5 billion
Dogecoin started as a joke in 2013, but quickly evolved into a leading cryptocurrency thanks to a dedicated community and creative memes. Unlike many other cryptocurrencies, there is no limit to the number of Dogecoins that can be created, leaving the currency susceptible to devaluation as supply increases.
The price of Dogecoin in 2017 was £0.00016. In November 2023, its price was £0.06.
10. TRON (TRX)
- Market capitalization: £6.9 billion
Much like Solana, TRON is a blockchain designed to run smart contracts and other DeFi applications. TRX is the platform’s native cryptocurrency, which powers its proof-of-stake consensus algorithm.
TRON was founded in 2017 and TRX was initially valued at 0.015 pence per token. TRX is currently valued at around £0.07.
*Market caps and prices from coinbase.com, current as of November 7, 2023.
Cryptocurrency is not regulated in the UK. The British regulator, the Financial Conduct Authority, has repeatedly warned investors that they risk losing all their money if they buy cryptocurrencies, without the possibility of compensation.
Frequently Asked Questions (FAQ)
What are cryptocurrencies?
Cryptocurrency is a form of money that exists only in digital form and is a high-risk investment. Cryptocurrency can be used to pay for certain online purchases without going through an intermediary, such as a bank, or it can be held as an investment.
How is trading cryptocurrencies different from stocks?
Although it is possible to invest in cryptocurrencies, they differ a lot from traditional investments, such as stocks and shares.
When an investor buys stock, they are purchasing a share of ownership in a company, which means they have the right to do things like vote on the direction of the company. If that company goes bankrupt, it may also receive payment after its creditors have been paid from its liquidated assets.
Purchasing cryptocurrency does not grant investors ownership of anything except the token itself; rather, it is about exchanging one form of currency for another. If the crypto loses its value, its owner suffers as a result of falling prices.
There are several other key differences to keep in mind:
- Trading hours:Stocks are only traded during stock market opening hours. For example, trading hours on the London Stock Exchange are from 8:00 a.m. to 4:30 p.m., Monday to Friday. Cryptocurrency markets never close, so trading takes place 24 hours a day, seven days a week.
- Regulation:Stock trading is subject to regulation and the finances of listed companies are a matter of public record. In contrast, cryptocurrencies are not regulated investment vehicles, so investors may not be aware of the internal dynamics of their crypto or the developers working on it.
- Volatility:Investing in both stocks and cryptocurrencies involves risks with the possibility of losing and gaining money. However, stocks are directly tied to companies and generally rise and fall based on the performance of those companies. Cryptocurrency prices are more speculative – no one is sure of their value yet. This makes them much more volatile and affected by something as small as a celebrity tweet.
Is there a tax to pay on cryptocurrencies?
It is important to pay attention to tax rules as they potentially apply to cryptocurrencies.
Cryptocurrency is treated as a capital asset, just like stocks, rather than cash. This means that if the cryptocurrency is sold for a profit, the profits are subject to capital gains tax.
This is the case even if crypto is used to pay for a purchase. If investors receive more value than they paid, then they will owe tax on the difference, subject to the usual tax reliefs.
Tax treatment depends on each person’s individual circumstances and may be subject to change in the future.
The content of this article is provided for informational purposes only and does not and does not constitute any form of tax advice.
Are there cryptocurrency exchange traded funds (ETFs)?
Given the thousands of cryptocurrencies in existence (and the high volatility associated with most of them), investors have the opportunity to take a diversified approach to investing in cryptocurrencies to potentially minimize the risk of waste of money.
Cryptocurrency ETFs began appearing in late 2021.