4.01 – Cryptocurrency Rankings by Market Cap

Different Types of Cryptocurrencies

By now, you probably have heard of the cryptocurrency that started it all: Bitcoin. But Bitcoin is hardly the only famous or even investment-worthy cryptocurrency out there anymore. Heck, some people even think that Bitcoin may be the worst cryptocurrency to own or to invest in. This is because so many other digital coins are available that have made massive improvements to the Bitcoin model to avoid its disadvantages.

This chapter covers some of the most famous cryptos as of 2021. But because the cryptocurrency market is ever-changing, you also find out how to navigate your way through all the up-and-coming cryptos for years to come.

Cryptocurrencies by Market Cap

One of the fastest ways to navigate through popular cryptocurrencies is to check out their ranking based on their market capitalization, or market cap. Traditionally, market cap is the value of a company that’s traded on the stock market. You can calculate it by multiplying the total number of shares by the present share price.

In the cryptoworld, market capitalization shows the value of all units of a specific cryptocurrency that are for sale right now. To calculate a cryptocurrency’s market cap, simply multiply the cryptocurrency’s current price by its circulating supply. Circulating supply is the best approximate number of coins that are circulating in the market and in the general public’s hands.

Market cap = Price x Circulating supply

Knowing about a crypto’s market cap and its ranking versus other coins is important because that information can quickly show you how popular the coin is and how much money you may be able to make from it. You can find out about all cryptocurrencies’ market caps by visiting websites such as  http://coinmarketcap.com, www.cryptocompare.com/, https://coincodex.com/, and www.coingecko.com/.

Market cap can’t tell you everything about a cryptocurrency’s investment potential. Lots of other factors, such as forks, regulation, rumor, and so on, can affect a cryptocurrency’s value. See Book 5, Chapter 4 to find out more about analyzing a cryptocurrency’s performance.

A higher market cap isn’t necessarily a good thing. Investors who can take higher risks may prefer cryptocurrencies with a lower market cap because those may offer more room for the market cap to increase. However, if you want to play it safe and avoid volatility or vanishing risk, you may prefer going with cryptocurrencies with a higher market cap. See Book 5, Chapter 2 for more.

With a knowledge of what role a coin’s market cap plays in the industry, you can start to evaluate cryptocurrencies based on that metric.

MINEABLE VERSUS NON-MINEABLE CRYPTOCURRENCIES

Where does cryptocurrency come from? Cryptocurrency can be mined – the least common form, actually – or it can be pre-mined.

To say that a cryptocurrency has been pre-mined, or is nonmineable, simply means that the cryptocurrency already exists. The blockchain is a ledger containing information about transactions. When the blockchain was first created, the ledger already contained a record of all the cryptocurrency that the founders planned for. No more will be added; it’s all there in the blockchain already.

Bitcoin

Ranking number one on the list, Bitcoin was developed in 2008. As of March 2023 , Bitcoin’s market cap is around $550billion. Although it did surpass a market cap of $1trillion in November 2021.

A bit of Bitcoin background

An entity called Satoshi Nakamoto invented Bitcoin. Satoshi claimed to be a man living in Japan, born on April 5, 1975. Kiana was actually living in Japan, completing her studies in electrical engineering in Tokyo, when Bitcoin hit the scene. Bitcoin wasn’t really a big thing in Japan at that time. That’s why most speculation about the true identity of Satoshi points to a number of cryptography and computer science experts of non-Japanese descent living in the United States and various European countries.

But Satoshi’s anonymity isn’t really a big deal, because Bitcoin (and other cryptocurrencies, for that matter) is supposed to be open source and decentralized, as we explain in Chapter 2 of this course. In fact, according to Bitcoin.org, no single person or entity “owns the Bitcoin network much like no one owns the technology behind email.” Bitcoin users around the world control Bitcoin, with the developer improving the software and the forkers making some radical changes. However, the main idea behind Bitcoin and Bitcoin’s protocol can’t be changed.

In mid-April 2011, Bitcoin’s market cap was about $6 million. In April 2021, the market cap was over a trillion dollars. If you had bought 1 Bitcoin for $2 in November 2011 (something Kiana’s investor friends told her to do that she ignored), your single Bitcoin would have been worth $64,000 in April 2021. Of course, many initial investors bought more than one Bitcoin at the time, which is exactly how all those Bitcoin millionaires were made. If you had bought 100 Bitcoins in November 2011 for a paltry sum of $200, by April 2021 they would have been worth $12.8 billion!

But by the time everyone started talking about Bitcoin, it went crashing down to around $120 billion and stayed there for most of 2018. It maintained its number one ranking among all other cryptocurrencies, though. The main reason behind this position may have been that most people had heard a lot (relatively speaking) about Bitcoin but not so much about other cryptocurrencies. So even though they had several hundred other altcoins to choose from, even some that may have been better long-term alternatives to Bitcoin, most newbies who wanted to get involved in the market started out with Bitcoin.

Another reason for Bitcoin’s huge market cap is its accessibility. It’s pretty safe to say that all cryptocurrency exchanges (see Book 5, Chapter 3) carry Bitcoin. But not all exchanges list all altcoins, at least for now.

Bitcoin characteristics

Here are some main features of Bitcoin:

» Bitcoin’s trading symbol is BTC.

» Bitcoin is mineable.

» Coin creation occurs through proof of work (PoW; see Chapter 2).

» Transaction time is between 10 minutes and 24 hours.

» Transactions aren’t fully anonymous.

» Bitcoin is decentralized.

» Mining Bitcoin requires a lot of (wasted) energy.

Because Bitcoin has been the superstar of all cryptocurrencies, it tends to pull the entire market along. Generally speaking, the whole market sentiment follows the volatility of Bitcoin in longer-term time frames (with many past exceptions). You can use this piece of information in technical analysis for investing, as covered in Book 5, Chapter 10. Head to Book 3 to find out more about Bitcoin.

Ethereum

Ranked number two based on coin market cap as of 2021, Ethereum is another major cryptocurrency. As of September 2021, its market cap is around $465 billion.

Brief Ethereum background

Compared to Bitcoin, Ethereum is a pretty young currency; Russian-American Vitalik Buterin proposed it in 2013. It’s almost five years younger than Bitcoin, which in the cryptoworld is still a big deal.

Buterin was born in 1994. That’s the year the Cranberries sang their hit song “Zombie” and two years before the Backstreet Boys and Spice Girls became famous. If this math makes you feel old, imagine how Bitcoin’s Satoshi must feel.

Ethereum uses the old Bitcoin’s wisdom and philosophy, but it has a different purpose and capability. According to its website, www.ethereum.org, “Ethereum is a decentralized platform that runs smart contracts.” Chapter 2 of this course explains that smart contracts allow people to create agreements without a middleman. Ethereum creates these smart contracts by employing the same blockchain technology as Bitcoin. Just as Bitcoin’s blockchain and network validate Bitcoin ownership, Ethereum’s blockchain validates smart contracts, which the encoded rules execute.

Ethereum versus Bitcoin

The main difference between Ethereum and Bitcoin is that Ethereum wants to be the place users go to execute their decentralized applications. In fact, its goal is to be a sort of massive, decentralized computer that executes smart contracts. That’s why many other cryptocurrencies can run on the Ethereum platform. The Ethereum blockchain forms a decentralized network where these programs can be executed.

Bitcoin is different in this sense. Its platform gets the miners to compete and solve complicated blockchain math problems. The first one who solves the problem is the winner and gets rewarded. But miners can use Ethereum’s platform as a co-working space to create their own products. They get compensated for providing the infrastructure so that inventors can cook their own new types of products. Book 6 covers cryptocurrency mining.

In fact, even major technology players like Intel and Microsoft and financial behemoths like JPMorgan and Credit Suisse are using the Ethereum platform to create new stuff of their own. Along with other giant founding members, various blockchain start-ups, research groups, and Fortune 500 companies have created a group called the Enterprise Ethereum Alliance (EEA). By October 2018, the alliance had more than 500 members, including Accenture, AMD, Credit Suisse, Dash, Pfizer, Samsung, and Toyota, to name a few. You can find out more about the EEA and their current memberships list at https://entethalliance.org/.

Ethereum characteristics

Here are some main attributes of Ethereum:

» Ethereum’s token symbol for investors is ETH.

» Ethereum is mineable.

» Coin creation occurs through proof of work (PoW).

» Transaction time can be as little as 14 seconds, although it can go higher based on confirmation requirements.

» Transactions aren’t fully anonymous.

» Ethereum is more decentralized than Bitcoin.

» Mining Ethereum requires less wasted energy than Bitcoin mining does.

You can find out about different cryptocurrencies’ mining profitability at any given time by visiting www.cryptocompare.com/mining/calculator/eth?HashingPower=20&HashingUnit=MH%2FsPowerConsumption=140&CostPerkWh=0.12&MiningPoolFee=1.

Ripple

For most of 2018, Ripple was the third-largest cryptocurrency by market cap, at around $19 billion. However, during the first half of 2021, Ripple’s market cap hovered at around $30 billion but dropped to sixth place in the ever-changing market cap listings. As of this writing, Cardano, Tether, Ethereum, and Bitcoin have larger market caps, but these rating orders can change overnight!

Some Ripple background

The idea of Ripple actually goes all the way back to 2004. That’s way before Satoshi and Bitcoin. In 2004, Ryan Fugger founded a company called RipplePay. According to https://blog.bitmex.com/the-ripple-story/, the idea behind the protocol was a “peer-to-peer trust network of financial relations that would replace banks.”

By 2011, Ripple’s target demographic started paying attention to Bitcoin, which was just becoming popular and was doing a better job as a peer-to-peer payment network than Ripple. Ripple’s architecture started to shift when an early Bitcoin pioneer, Jed McCaleb, joined the Ripple network in May 2011. Others joined the Ripple bandwagon as time went by.

Finally, Ripple’s XRP, a cryptocurrency that also acts as a digital payment network for financial institutions, was released in 2012, according to their website, https://ripple.com/xrp/. Like many other cryptocurrencies, XRP is based on a public chain of cryptographic signatures. That being said, Ripple is very different from traditional cryptos like Bitcoin and even Ethereum.

Some people don’t consider Ripple a true cryptocurrency. Also, Ripple as a company and Ripple the cryptocurrency are two different things, although they’re connected. Ripple the coin, which trades as XRP, is the cryptocurrency used with some of the company’s payment systems. Ripple the company does business as Ripple Labs, Inc., and provides global payment solutions for big banks and such using blockchain technology.

Ripple versus Bitcoin

Here are some of the key differences between these two cryptocurrencies.

» Ownership and decentralization: Bitcoin is not owned by any particular person or entity, and Bitcoin the cryptocurrency is pretty much the same as Bitcoin the open-source platform. That’s why Bitcoin is highly decentralized and open source, and owned by a community that agrees on changes. This setup can make upgrades tough and is why Bitcoin has had a ton of forks (hard and soft; see Chapter 2) in its history.

By contrast, Ripple is a private company called Ripple Labs, with offices all over the world. Ripple’s digital asset (cryptocurrency) is called XRP and is also owned by Ripple Labs. The company constantly looks to please everyone (especially its partners) and come up with consensus, which can allow for faster upgrades. It has an amendment system with which the developers seek consensus before making changes to the network. In most cases, if an amendment receives 80 percent support for two weeks, it comes into effect, and all future ledgers must support it. Basically, Ripple is a democracy that tries to avoid hard forks and nasty splits!

You can find out more about Ripple and its most recent updates at https://ripple.com/.

» Transaction speed and fees: This area is where Ripple really starts to shine. Bitcoin’s transaction speed can sometimes go up to an hour depending on fees. And the fees can reach $40 depending on demand.

Ripple’s transactions, on the other hand, can settle in as little as four seconds. Fee-wise, even when the demand was high in mid-2021, Ripple’s transaction fees averaged $0.003 – a fraction of that of Bitcoin.

You can compare different cryptocurrencies’ historical transaction fees at https://bitinfocharts.com/comparison/transactionfees-btc-xrp.html.

» Number of transactions per second: At any given second, you can make around four Bitcoin transactions. Enter Ripple and recent wonder-coin Solana, and raise the number to 1,500 and 29,000 respectively. Although some Bitcoin forks aim to resolve this issue, at the time of this writing, Ripple and Solana are well ahead of the game.

» Coin amount limits: Bitcoin and other mineable cryptocurrencies have finite numbers of coins, which come into the market only through mining. But XRP is limited to the 100 billion coins in circulation now, largely to appeal to Ripple’s (the company’s) biggest clients, which are large financial institutions.

Ripple characteristics

The following list gives you a summary of Ripple’s main features:

» Ripple’s token symbol for investors is XRP.

» Ripple’s XRP isn’t mineable. There are no miners whatsoever.

» Coin creation and algorithm processing happen through consensus, not PoW.

» Transaction time can be as little as four seconds.

» Transactions can be made anonymously.

» Ripple isn’t fully decentralized.

» Energy cost per transaction is minor.

Because these unique features are so different from Bitcoin’s, some people believe Ripple’s XRP isn’t truly a cryptocurrency. Ripple is actually a strange hybrid of a fiat currency (the traditional form of currency backed by a local government, such as the U.S. dollar) and a traditional cryptocurrency. This is because generally speaking, Ripple specializes in serving financial institutions like American Express more than focusing on the spread of Ripple’s XRP among everyday users.

Cardano

Cardano has been hovering around the top five-largest cryptocurrencies by market cap in 2021. As of September 2021, its market cap is around $67 billion, making it the fourth-largest cryptocurrency after Bitcoin, Ethereum, and Tether.

A little Cardano background

Ethereum co-founder Charles Hoskinson established Cardano in 2015, and successfully launched it in 2017. Hailed as a greener, environmentally friendly alternative to other computational-heavy coins, Cardano’s ADA coin has skyrocketed in popularity. Since its launch, an investment in Cardano has returned over 7,000 percent to its investors.

Fun fact: ADA, Cardano’s coin, is named after Countess Augusta “Ada” King, daughter of the poet Lord Byron. She worked on a theoretical computation engine in the 1840s, and is regarded by many to be the first computer programmer.

If you had invested $1,000 in Bitcoin on January 1, 2019, it would’ve grown 1,004 percent by the end of September 2021. But if you had invested $1,000 in Cardano, then it would’ve grown about 4,930 percent. Not too shabby.

Cardano versus Bitcoin

Cardano and Bitcoin are both decentralized, they both act as a medium of exchange, and they both have bright futures as absolute trust in fiat currencies is on the decline. Cardano is very different from Bitcoin in a few notable ways, however. Cardano is built from the ground up to serve as a smart contract platform. It also doesn’t have the extreme computer processing requirements that Bitcoin miners face every day. Here’s a basic list of how Cardano and Bitcoin compare to each other:

» Mining: One of the major differences between Cardano and Bitcoin has to do with mining. Mining Bitcoin is becoming more difficult and expensive as time goes by. To really make money mining Bitcoin, you need very powerful computers. Cardano, on the other hand, doesn’t require mining, and so there is no need for ultra-expensive, dedicated computer equipment and air-conditioned facilities.

Bitcoin mining uses a proof-of-work protocol, meaning that your specialized computer hardware churns through a mind-boggling number of computations per second. Cardano’s system requires a fraction of the computing power, as you swap, in a manner of speaking, the heavy computational load of Bitcoin mining for the staking of your own Cardano ADA coins. Staking means that you make a certain amount of your ADA coins temporarily un-spendable until a Cardano transaction has been verified as complete. This somewhat over-generalized explanation is called proof of stake (PoS).

» Total number of coins: Bitcoin has a finite number of 21 million coins. Cardano also has a finite, maximum supply of coins, totaling 45 billion.

» Transaction speed and fees: On Bitcoin’s network, transaction confirmation time averages around ten minutes and sometimes much longer. For Cardano, the speed can be as short as the generation of one block in 20 seconds. Cardano’s transaction fee is also considerably lower than Bitcoin’s, averaging less than $0.30 in mid-2021.

Cardano characteristics

Cardano’s main traits include the following:

» Cardano’s token symbol for investors is ADA.

» Cardano is not mineable.

» It uses a proof-of-stake (POS) protocol rather than proof of work (PoW).

» Transaction time for a new block is around 20 seconds.

» Transactions can sometimes be made anonymously using certain exchanges.

» Cardano is decentralized.

» Cardano’s energy cost per transaction is a fraction of Bitcoin’s.

Although team Bitcoin and team Cardano argue their respective cryptocurrencies are the best, each cryptocurrency has their own unique advantages and drawbacks. The best way to go about your investment strategy may be to diversify your assets not only between these options but also among the other categories of cryptocurrencies in this chapter. Find out more about diversification in Book 5, Chapter 5.

Other top ten major cryptos

The preceding sections introduce some of the most well-known cryptocurrencies that also have some of the largest market capitalization on average. But being famous doesn’t necessarily mean they’re better. In fact, many analysts and investors believe some of these celebrity cryptocurrencies may vanish within ten years (see Book 5, Chapter 2 for more). Also, having a bigger market cap doesn’t necessarily mean having a brighter future. Their current popularity may just be the proverbial 15 minutes of fame, and they may therefore have lower growth opportunities compared to those that are less known.

Chances are that if anything should happen to a core cryptocurrency, a hard fork may come along that saves it. As explained in Chapter 2 of this course, if you’ve already invested in a cryptocurrency when it forks, you get the same number of new coins anyway. That’s why I’ve recommended to my Premium Investing Group members to start their cryptocurrency portfolio by first diversifying among the top ten largest ones by market cap and then get into other, different categories. You can stay up to date with my most recent cryptocurrency investing strategies at https://learn.investdiva.com/join-group.

The remaining cryptocurrencies in the top ten keep bouncing on and off the list, but Table 4-1 shows some that were on the list more consistently in 2022.

Some Top Ten Cryptos In 2022

Top 100 major cryptos

You can dive into the top 100 major cryptocurrencies and still not find the one you want to have a long-term relationship with. At this point, selecting cryptocurrencies that match your portfolio really becomes like online dating. You’ve got to make some decisions based on first impressions and then go on dates (start making small investments and do more research) to discover whether a currency is worthy of a bigger chunk of your crypto portfolio. Table 4-2 lists some options.

Some Top 100 Cryptos as of 2022