From Bitcoin and Ethereum to Dogecoin and Tether, there are thousands of different cryptocurrencies, making it overwhelming for those first considering getting started in the high-risk world of crypto.
These are our pick of some of the top cryptocurrencies based on their market capitalization – the total value of all the 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 out there that represent the entire £917 billion crypto market.
1. Bitcoin (BTC)
- Market cap: £934 billion
Created in 2009 by Satoshi Nakamoto, Bitcoin (BTC) is the original cryptocurrency. As with most cryptocurrencies, BTC runs on a blockchain, or a ledger logging transactions distributed across a network of thousands of computers. Because additions to the distributed ledgers must be verified by solving a cryptographic puzzle, a process called proof of work, Bitcoin is intended to be kept secure and safe from fraudsters.
Bitcoin’s price has both skyrocketed and plummeted over its lifetime. In May 2016, the price of a single Bitcoin was worth about £370. In November 2021 one Bitcoin cost £48,005 while, as of 28 February 2024, the figure is around £47,516. This demonstrates its volatility.
2. Ethereum (ETH)
- Market cap: £316 billion
Both a cryptocurrency and a blockchain platform, Ethereum is a favorite of some programme developers because of its potential applications, like so-called smart contracts that automatically execute when conditions are met and non-fungible tokens (NFTs).
Ethereum’s price has also experienced tremendous fluctuations in value.
From April 2016 to the 28 February 2024, its price went from about £8 to around £2,628. At its peak in November 2021, its value was £3,400, which demonstrates its volatility.
3. Tether (USDT)
- Market cap: £77 billion
Unlike some other forms of cryptocurrency, Tether (USDT) is a stablecoin, meaning it’s pegged to fiat currencies like US dollars and the Euro and hypothetically keeps a value equal to one of those denominations.
In theory, this means Tether’s value is supposed to be more consistent than other cryptocurrencies, and it’s preferred by some investors who are wary of the extreme volatility of other coins. However, it has fallen below its $1 peg in the past.
4. Binance Coin (BNB)
- Market cap: £48 billion
Binance Coin is a form of cryptocurrency. At its launch in 2017 it was priced under 10p. It peaked at around £484 in July 2017 and, as of 28 February 2024, its value was at £325, which demonstrates its volatility.
5. Solana (SOL)
- Market cap: £38 billion
Developed to help power decentralised finance (DeFi) uses, decentralised apps (DApps) and smart contracts, Solana runs on a unique hybrid proof-of-stake and proof-of-history mechanisms intended to process transactions quickly and securely. SOL, Solana’s native token, powers the platform.
When it launched in 2020, SOL’s price started at £0.57. It peaked at the end of October 2021 at approximately £191. Then on 28 February 2024 its price was around £87, which demonstrates its volatility.
6. Ripple (XRP)
- Market cap: £25 billion
Created by some of the same founders as Ripple, a digital technology and payment processing company, XRP can be used on that network to facilitate exchanges of different currency types.
At the beginning of 2017, the price of XRP was £0.004. At the end of April 2021, the price had peaked at approximately £1.19 and, as of 28 February 2024, it value stood at £0.46, which demonstrates its volatility.
7. US Dollar Coin (USDC)
- Market cap: £22 billion
Like Tether, USD Coin (USDC) is a stablecoin, meaning it’s theoretically pegged to the currency of the US dollar and aims for a 1 USD to 1 USDC ratio. USDC is powered by Ethereum, and can be used to complete global transactions.
8. Cardano (ADA)
- Market cap: £17 billion
Somewhat later to the crypto scene, Cardano (ADA) is notable for its early embrace of proof-of-stake validation. This method is designed to expedite transaction time and decrease energy usage and environmental impact by aiming to remove the competitive, problem-solving aspect of transaction verification in platforms like Bitcoin.
Cardano also works like Ethereum to enable smart contracts and decentralised applications, which ADA, its native coin, powers.
In 2017, Cardano’s ADA token’s price was about £0.015. Cardano’s price peaked as of August 2021 at the approximate price of £2.06. As of 28 February 2024, its price was at £0.50, which demonstrates its volatility.
9. Avalanche (AVAX)
- Market cap: £11 billion
Avalanche (AVAX) is a relatively new cryptocurrency. Despite only having sprung up in 2020, it has gained tremendous popularity as an alternative for Ethereum developers. Avalanche has become one of the larger cryptocurrencies, with a market cap around £5.38 Billion.
AVAX has a market cap of £11 billion and currently trades at £31.10.
10. Dogecoin (DOGE)
- Market cap: £11 billion
Dogecoin was famously started as a joke in 2013 but rapidly evolved into a prominent cryptocurrency thanks to a dedicated community and creative memes. Unlike many other cryptos, there is no limit on the number of Dogecoins that can be created, which leaves the currency susceptible to devaluation as supply increases.
Dogecoin’s price in 2017 was £0.00016. It peaked in May 2021 at approximately £0.45. Then by February 2024 its price was at £0.07, which demonstrates its volatility.
*Market caps and pricing sourced from CoinMarketCap, current as of 28 February 2024.
Cryptocurrency is unregulated in the UK. The UK regulator, the Financial Conduct Authority, has repeatedly warned investors that they risk losing all their money if they buy cryptocurrency, with no possibility of compensation.
Frequently Asked Questions (FAQs)
What are cryptocurrencies?
Cryptocurrency is a form of currency that exists solely in digital form, and is a high risk investment. Cryptocurrency can be used to pay for some onine purchases, or it can be held as an investment.
How does trading cryptocurrencies differ from stocks?
While it’s possible to invest in cryptocurrencies, they differ a great deal from traditional investments, such as stocks and shares.
When an investor buys stock, they are buying a share of ownership of a company, which means they’re entitled to do things like vote on the direction of the company. If that company goes bankrupt, they may also receive some payment once its creditors have been paid from its liquidated assets.
Buying cryptocurrency doesn’t grant investors ownership over anything except the token itself; it’s more like exchanging one form of currency for another. If the crypto loses its value, the cryptocurrency’s owner suffers accordingly from the price drop.
There are several other key differences to keep in mind:
- Trading hours: Stocks are only traded during stock exchange hours. For example, trading hours for the London Stock Exchange run from 8:00am till 4:30pm, Monday to Friday. Cryptocurrency markets never close, so trading takes place 24 hours a day, seven days a week
- Regulation: Share trading is subject to regulation and the finances of listed companies are matters of public record. By contrast, cryptocurrencies are not regulated investment vehicles, so investors may not be aware of the inner dynamics of their crypto or the developers working on it
- Volatility: Investing in both stocks and cryptocurrency involve risk with the potential for both to lose, as well as make, money. However, stocks are directly linked to companies and generally rise and fall based on those companies’ performance. Cryptocurrency prices are more speculative – no one is quite sure of their value yet. That makes them much more volatile and affected by something as small as a celebrity tweet.
Is there tax to pay on cryptocurrency?
Tax treatment depends on individual circumstances and may be subject to future change.
The content of this article is provided for information purposes only and is not intended to be, nor does it constitute, any form of tax advice.
It’s important to pay attention to tax rules as they potentially apply to cryptocurrency.
Cryptocurrency is treated as a capital asset, like stocks, rather than cash. That means if cryptocurrency is sold at a profit, the profits are subject to capital gains taxes.
This is the case even if crypto is used to pay for a purchase. If investors receive a greater value for it than they paid, then they may owe taxes on the difference, subject to the usual tax allowances.
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 option of taking a diversified approach to investing in crypto to potentially minimize the risk of losing more money.
Cryptocurrency ETFs started to make an appearance at the end of 2021.