Cryptocurrency has been on a tear as government spending and a recovering economy push money into the financial system. That’s helped boost popular digital currencies, including Bitcoin , Ethereum and (perhaps surprisingly) Dogecoin. But the move is also fueled by rising speculation that cryptocurrency is the “must catch” wave of the future.
While cryptocurrencies typically have a few things in common, what are the differences between these three popular cryptos? Quite a lot actually, and here are some of the biggest distinctions. What cryptocurrencies have in common
Cryptocurrencies are built using what’s called blockchain technology, which uses a distributed ledger to produce, track and manage a digital currency. Think of it like a running digital receipt of all the transactions in the currency, including a list of who owns which currency and how much.
This “receipt” is being constantly verified by a decentralized network of computers, helping to prevent fraud and ensuring the proper functioning and accounting of the currency.
Cryptocurrency is “mined” by powerful computers called miners that perform complex math calculations to create coins. They also earn coins by processing transactions of the currency.
Thousands of cryptocurrencies exist , and literally any number could be created using similar blockchain technology. Cryptocurrencies allow the user to move money semi-anonymously, though the FBI and IRS are getting better at tracking transactions and freezing accounts. Key differences among three popular cryptocurrencies
Cryptocurrencies can be created for many different purposes, and each may occupy different parts of the crypto universe. The table below sums up some key differences among Bitcoin, Ethereum and Dogecoin, each of which has a distinct purpose and maximum number of coins. Symbol BTC ETH DOGE Year developed 2009 2015 2013 Initial purpose Created to be used as a currency or store of value Created to sell processing power of the decentralized network Created as a joke spoof of Bitcoin and the doge meme Approximate market capitalization* $893 billion $451 billion $26 billion Number of coins* 18.90 million 118.72 million 132.49 billion Maximum number of coins 21 million Unlimited, but issuance is fixed Unlimited, but yearly issuance limited to 5 billion coins * Estimated value as of December 2021, according to data from CoinMarketCap. Purpose of the cryptocurrency
Each of these three cryptocurrencies was created for a different purpose. Notably, Dogecoin was a satire on the rising popularity of Bitcoin and the doge meme featuring a charismatic Shiba Inu . Meanwhile, Bitcoin and Ethereum were created for more serious purposes, including actually facilitating transactions or acting as a store of value. Market capitalization
The market capitalization of each consists of the total extant coins multiplied by the current trading price, and there’s a wide divergence. Bitcoin is the largest, with Ethereum trailing a distant second and Dogecoin among the top 10, according to CoinMarketCap. Traders cluster around the most popular cryptocurrencies and volume drops significantly below the top 20.
While these currencies may be among the most popular for traders, Bitcoin is the one that’s emerged among the mainstream. It’s becoming easier […]