Classification of different objects and processes according to certain criteria is necessary, among other things, to simplify the search for what you need. While there were several dozen cryptocurrencies, there was no particular need for it, but now the count is tens of thousands of items.
There are many options for classifying digital assets. Each of them has the right to exist and is quite convenient for certain purposes. For investors, market capitalization is of great importance.
Capitalization in the crypto market is the total market value of a cryptocurrency. This indicator is calculated very simply by multiplying the total supply of coins by the current value of the coin. Capitalization of a cryptocurrency makes it possible to assess its investment potential and availability on the market. Large capitalization assets are quite stable and suitable for long-term investing. In addition, on many exchanges they are traded among themselves in trading pairs of the form Crypto/Crypto. For example, you can directly exchange ETH to BTC on any crypto platform. Coins with low capitalization have greater growth potential, but the risks of investing in them are many times higher.
Bitcoin is the first, most famous and most capitalized cryptocurrency. It is a decentralized digital currency using blockchain technology. Bitcoin allows users to conduct secure and anonymous financial transactions without intermediaries such as banks or governments. Its limited total supply of 21 million coins makes it a store of value and an investment. Bitcoin also serves as the basis for many other cryptocurrencies and has become a key element of modern financial technology and the blockchain ecosystem.
Ethereum is the second most popular and capitalized cryptocurrency after Bitcoin, but it is not only a digital currency, but also a platform for smart contracts and decentralized applications (DApps). The launch of the Ethereum platform in 2015 ushered in a new era in the economy - the era of decentralized finance. The ability to build applications on its blockchain has catalyzed the emergence of a wide variety of projects in the fields of finance, games, identification and many others. Its cryptocurrency, Ether (ETH), is used to pay for transactions and gas for executing smart contracts. This fall, Ethereum is also moving away from using the Proof of Stake (PoS) consensus mechanism to improve scalability and reduce energy costs.
The third line of the rating is occupied by Tether (USDT). It is a stable cryptocurrency linked to the US dollar in a 1:1 ratio. It is designed to store value and facilitate trading on cryptocurrency exchanges. USDT is backed by a reserve of real dollars in bank accounts, giving it stability. This allows traders to quickly switch between cryptocurrencies and avoid market volatility. It is often used as an alternative to fiat money on exchanges.
The fourth position is held by Binance Coin (BNB), the native token of the Binance ecosystem. It is used on the platform to reduce commissions for trading and other operations. BNB is also used in the Binance ecosystem to launch ICOs and pay for various services. This cryptocurrency is widely used within the exchange and is popular among traders and investors. It is also the basis for Binance Smart Chain (BSC), a blockchain that supports decentralized applications (DApps) and contracts.
Rounding out the top five market leaders is Ripple (XRP), a cryptocurrency and technology for fast international payments and transfers. It is designed to facilitate banking and financial transactions. Ripple uses a public ledger and a network of nodes to confirm and process transactions. It strives to reduce the time and costs of international transfers, making them more efficient and accessible. Ripple Labs, the company that created XRP, partners with many large banks and financial institutions.
From the top coins you can put together a well-balanced conservative investment portfolio. Of course, you will always have room for maneuver and it can be diversified with riskier assets that are available at https://letsexchange.io/. However, any investment decisions related to cryptocurrency should be made after your own market research.
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