Cryptocurrencies have come into vogue in recent years, with many investors and traders attempting to win big on cryptocurrency markets. The Covid-19 pandemic moving most economic operations to online platforms has perhaps facilitated this sudden rise in popularity, especially with technology stocks also enjoying the spotlight as a result of the pandemic. But what is cryptocurrency, and what cryptocurrencies are worth keeping an eye on going into 2021? Read on to find out more.
What are cryptocurrencies?
A cryptocurrency is a digital asset, designed to work as a medium of exchange where coin ownership is stored in a computerised database that uses strong cryptography to secure transaction records. Cryptocurrencies work using blockchain, a decentralised technology spread that links records together using cryptography, ensuring data stored in them cannot be changed retroactively or hacked into.
Bitcoin is the first and by far the most popular cryptocurrency, first released in 2009. However, it is not the only cryptocurrency on the market, and there are a number of other options to consider when investing in cryptocurrency. Here are some of the major players in cryptocurrency to keep an eye on in 2021.
As mentioned above, bitcoin is the first and most popular cryptocurrency, and at the time of writing has the highest price at around $32,500. While it is the most high-profile cryptocurrency, to the extent that “bitcoin” is generally synonymous with “cryptocurrency” in regular conversation, it hasn’t always been smooth sailing for the first cryptocurrency, hitting lows of around $3,234 in 2018 after highs of $20,000 in 2017, and having something of a slow start before reaching those 2017 highs. Despite this, bitcoin has enjoyed something of a resurgence in recent years, enjoying highs of around $40,000 in early January 2021.
Bitcoin Cash (BCH)
Bitcoin Cash is, as the name suggests, a fork of the original Bitcoin, splitting off from the original cryptocurrency in 2017. It is currently priced at $446.32, and while it has been on a general downward trend since its absolute highs of $3,160 when it launched in December 2017, it has enjoyed some increases in recent years and offers some benefits over the original Bitcoin, including faster and more frequent transactions.
Litecoin was established in 2011 as “the silver to Bitcoin’s gold,” and offers faster transactions as well as an increased maximum number of coins compared to its predecessor. It is currently priced at $137.45, and while it has fallen considerably from its absolute high of $306.87 in December 2017, it appears to be enjoying some considerable increases in recent months, reaching close to the third-highest peaks in the cryptocurrency’s history.
Ethereum, released in 2015, is a decentralised open-source blockchain and cryptocurrency platform. The native cryptocurrency of this platform is Ether, which recently hit an all-time high of $1,440 and is currently the second-largest cryptocurrency by market capitalisation after Bitcoin with a total value of around $140 billion. The primary draw of ether is the Ethereum platform itself, which has become very popular as a platform for a number of other cryptocurrencies, as well as enabling “smart contracts” in the form of blockchain-enabled programs.
Binance Coin (BNB)
Binance is a cryptocurrency exchange founded in 2017, which uses Binance Coin as its native cryptocurrency- those who use Binance Coin as a means of payment for the Binance exchange can trade at a discount. Binance is a cryptocurrency exchange known for its fast processing speeds and ability to process around 1.4 million transactions each second, and Binance Coin has enjoyed some success in recent months, currently priced at $40.59 following an absolute high of $44.71 on January 17 2021.
Tron is a cryptocurrency exchange founded in 2017, which uses a cryptocurrency of the same name as its native cryptocurrency. The Tron exchange is best described as a decentralized platform focused on content sharing and entertainment, positioning itself as an environment where content creators can connect with their audiences directly. To this end, one of its biggest acquisitions was the file sharing service BitTorrent back in 2018. While Tron has not had the success of other cryptocurrency platforms, with all-time highs of $0.23 and current prices of around $0.029, Tron is a cryptocurrency to keep an eye on with the global pandemic making content sharing and entertainment more important than ever.
Chainlink is an Ethereum token that powers the Chainlink decentralised oracle network founded in 2017- an oracle network is a third-party service that provides smart contracts with external information, acting as a bridge between blockchains and the outside world. As blockchains do not have the ability to connect to outside applications securely, oracle networks such as Chainlink provide an essential service for the cryptocurrency ecosystem, and the Chainlink token has enjoyed some of its highest prices since its creation in 2017, with all-time highs of $23.47 on January 17 2021 and a current price of around £22.
Founded in 2017, Cardano is an “Ouroboros proof-of-stake” cryptocurrency- it is the first cryptocurrency to use the Ouroboros blockchain protocol, “the first provably secure proof-of-stake protocol, and the first blockchain protocol to be based on peer-reviewed research” according to Cardano’s website. Cardano is the first cryptocurrency to be founded on peer-reviewed research and developed through evidence-based methods, and due to this rigorous research has been enjoying some popularity, even being touted as a potential “Ethereum killer.” As a relatively new cryptocurrency still in its early stages Cardano has not enjoyed the highs of Ethereum, but is currently experiencing a peak in prices at around $0.36.
Founded in 2017, the Polkadot protocol is a “scalable heterogeneous multi-chain technology” that aims to connect “private and consortium chains, public and permissionless networks, oracles, and future technologies that are yet to be created” to enable a decentralised web. The core of this technology is Polkadot’s “relay chains,” allowing for interoperability of various networks. Polkadot’s native cryptocurrency is currently enjoying all-time high prices, trading at $18.36 at the time of writing.
Launched in 2015, the Stellar blockchain network is designed to connect financial institutions to facilitate large transactions, allowing financial institutions across the world to work on a single decentralised network. Stellar’s native cryptocurrency, the Stellar Lumen, has been in something of a slump following its all-time high of £0.69 in January 2018, but also seems to be on the up again since November 2021, currently trading at £0.27.