Most popular cryptocurrencies

Digital currencies are becoming increasingly popular among users every year. However, there are special gems among them that have gained recognition from many crypto enthusiasts due to their unique characteristics and features.

In this article, we will discuss why cryptocurrencies have become so popular overall, as well as which digital coins are the most in-demand today and how you can profit from them. You will find information on both relatively new and long-established projects.

To learn more about how digital currencies came into being, how this field is developing, how new projects are created and launched, and what problems they solve, you can read the article "New Cryptocurrencies."

Fiat currency vs cryptocurrency

The popularity of cryptocurrencies is primarily due to the technology behind them. Therefore, before we discuss the most popular cryptocurrencies, let's take a closer look at the blockchain technology that enables their use and other features of crypto compared to regular money.

Digital currencies exist only in the virtual world. They have no physical embodiment, and cannot be touched, or held. However, this idea is not new – we have been using cards and cashless payments for many years. However, central banks of countries can regulate the amount of currency in circulation.

What underpins the value of a currency? First and foremost, it is the users' trust in it. This characteristic applies to both cryptocurrencies and fiat currencies, as even fiat money is not backed by gold or any other commodity these days. Moreover, its supply is not limited. Central banks can issue as much currency as needed.

There are known cases where national currencies have lost their value due to the loss of trust in them by citizens. When faith in the government or central bank is lost due to high inflation or ineffective monetary policy, the currency of such countries begins to plummet and depreciate.

When comparing money to other assets, it is also necessary to consider the concept of intrinsic value. For example, oil is a raw material from which something can be produced: energy, plastic, and other materials; stocks represent the right to receive a portion of the company's profit, and so on.

Thus, neither fiat nor digital currencies have intrinsic value. The value of the former is based on the authority of the governments that issue them, and the value of the latter is based on the trust that users place in them. Another common characteristic is their similar usage: as a means of exchange, gifting, storage, etc.

The table below provides a brief comparison of fiat money and digital currencies:

Key features of cryptocurrencies

Digital currencies have several key features that distinguish them from any other form of money. Their primary value and utility lie in enabling fast money transfers worldwide without intermediaries such as banks or other financial institutions.

All cryptocurrency transactions are encrypted in a special way using cryptography, making them impossible to counterfeit or duplicate. The encrypted data is then sent to blocks that are linked together in a single chain called a blockchain.

All operations in the blockchain are irreversible because each transaction is verified and added to blocks, with each block containing a reference to the previous one in the chain. Consequently, to change even one transaction, it would be necessary to alter the entire chain, which is virtually impossible.

Another important characteristic of digital currencies is their decentralization. They are not under the control of any single country or authority and are not controlled by them. The introduction of new digital coins into circulation is called mining and is carried out through mining or other special procedures.

Some cryptocurrencies have mechanisms for gradually burning part of the coins to regulate the balance of supply and demand. The supply of coins is limited; developers cannot "print" or issue more money than programmed at the launch of the currency under any circumstances.

Another important feature is the utility of a currency, which can be used for various purposes. Each blockchain project is created with a specific goal in mind. The more in-demand the project's ideas become, the more popular the currency used within it becomes.

Since all cryptocurrencies have different goals, characteristics, and purposes, their value and worth also vary. There are unique tokens that have no analogs (NFTs), each with its own price, governance tokens that allow holders to participate in platform management, and so on.

Why are cryptocurrencies so popular?

We have briefly reviewed the key characteristics of digital currencies and how they differ from fiat money. Let's consider why they have gained such immense popularity among people around the world and why many investors invest substantial capital in them despite the relative novelty of this instrument.

The most popular cryptocurrencies didn't become popular by accident; they allow ordinary users to take advantage of their benefits. Namely, to send them to other users around the world in a matter of seconds, without intermediaries and with low fees.

This has become particularly relevant recently as geopolitical changes, conflicts, and wars have made it more difficult to make international transfers using traditional methods. Banks in some countries are under sanctions and cannot send or receive funds from abroad.

In addition to the benefits for ordinary users, there are also significant advantages for investors. One of the most important is the high potential profitability of such investments. No other instrument can increase in value like digital currencies, often over a relatively short period of time.

Cryptocurrencies can increase in value by tens, hundreds, and even thousands of percent within a few months. However, investors need to be au fait with the market in order to select the right assets and to invest and withdraw capital in a timely manner. Many become disillusioned with crypto investing because they do not know these rules.

Another important characteristic of digital currencies for investors is security. No financial institution can secure invested funds as reliably as a blockchain. Any bank can be subject to criminal attacks, both real and virtual, resulting in the loss of depositors' funds.

This is because every transaction is verified and confirmed by all the nodes of the blockchain, which are geographically located in completely different, distant places. To carry out a hacking attack, it would be necessary to gain control over more than 51% of the devices, which is theoretically very difficult to imagine.

Applications of blockchain technology

As mentioned above, demand for cryptocurrencies is not solely based on their unique characteristics but also on the technology they are built on - blockchain. Even the most popular cryptocurrencies cannot exist and function without it.

We have briefly explained how data is recorded in the blockchain: it is encrypted and added to blocks, which are then linked together into a single chain. This method of recording data is very reliable because making changes "after the fact" becomes almost impossible.

As a result, the application of blockchain technology extends far beyond digital currencies and the financial sector as a whole. It is already being used in many other areas such as healthcare, commerce, legal services, banking, government administration, and many others.

Blockchain technology allows any business or record-keeping to be conducted with maximum transparency. As mentioned earlier, data recorded in the blockchain cannot be altered or deleted. At the same time, the entire history of operations related to a transaction can be tracked, including dates, amounts, participants, and other details.

Blockchain is the most advanced and functional system for collecting and storing data. In addition, this technology can be used to create software, decentralized applications, and contracts, known as smart contracts because they are executed automatically.

Therefore, even if we consider that cryptocurrencies themselves may be a temporary phenomenon that will not last as long as other types of money, blockchain technology has great potential for further development and implementation in various areas of public life and the global economy.

In retail, for example, this technology allows consumers to obtain information not only about the product and its use but also about the raw materials it is made from, working conditions at a factory, and its impact on the environment.

All this is possible thanks to smart labels that can be decoded using an NFC reader on a mobile phone. In logistics, this technology can be used as an electronic waybill to track the entire journey of a product from supplier to buyer. A notable example is Alibaba, which is linked to the AliExpress e-commerce retail platform.

Another promising direction is the detection of counterfeit products, which is particularly relevant for companies producing luxury goods. Product authentication using blockchain protects both the buyer and the manufacturer. The LVMH Group is already using this technology for many of its brands.

Factors that determine cryptocurrency popularity

Demand for a particular cryptocurrency is determined by various parameters. Therefore, identifying the most popular cryptocurrencies can be done in several ways. Each platform uses its own criteria, resulting in different rankings.

Some platforms consider several factors that reflect user interest and market activity when determining the most in-demand coins. These criteria include the trading volume of a particular currency, the number of users who own or trade the coin, and the frequency of visits to the currency's page.

Trading volume is an objective indicator that takes into account all the transactions of buying or selling the chosen asset over a specific period. Trading volume also helps confirm signals from technical analysis indicators about a change in the current market trend.

The higher the trading volume, the higher the liquidity of a particular coin. This is a significant advantage for investors, as it means they can later sell the cryptocurrency they bought at a more favorable price.

The same applies to the number of coin holders: a large number of buyers indicates a high level of trust in the currency. This in turn contributes to its growing popularity. Increased interest in a particular coin is also indicated by the frequency of visits to its page on a chosen platform.

Another way to determine the popularity of digital currencies is to use the Google Trends service. It allows you to find out how the number of search queries for a particular cryptocurrency has changed over time, in other words, to determine the level of "hype" around a particular crypto asset.

Most popular cryptocurrencies

The cryptocurrency market grows every year, making it increasingly difficult for users to choose. Popular digital currencies offer several advantages. As mentioned above, they have higher liquidity, meaning they can be easily bought and sold at any time due to their high demand.

In addition, these currencies often have a small spread between the bid and offer price. This makes transactions more predictable and helps reduce transaction costs.

So, which currencies can be considered popular? The first two digital coins, Bitcoin and Ethereum, which appeared over 10 years ago, remain relevant to this day. Bitcoin, not only the first cryptocurrency ever created, consistently holds the top spot in all currency rankings by market capitalization.

Bitcoin sets the tone for the entire cryptocurrency market. Investors look to it when trying to determine the market's direction. Changes in its value are used to calculate the Fear and Greed Index for digital currencies. It is the most reliable and sought-after crypto asset, albeit quite expensive.

The second most popular asset is Ethereum, which consistently ranks second in most cryptocurrency ratings. Unlike Bitcoin, which was created and is used as a means of payment, the Ethereum platform offers much broader capabilities, including launching smart contracts, developing dApps, and even launching new cryptocurrencies.

Another very popular digital currency is Tether, known by the ticker USDT. Its main feature is that its value is pegged to the US dollar, with a fluctuation of less than 1%. Investing in this coin helps avoid the high volatility typical of most crypto assets.

Other popular currencies

Continuing our discussion, here are examples of a few more coins that can confidently be classified as the most popular cryptocurrencies. In-demand currencies often have unique characteristics or functions within their ecosystem.

One such project is Solana, a relatively new third-generation currency that has great upside potential. Its key feature is the high transaction processing speed, over 50,000 transactions per second, unmatched by any other network. Thanks to these features, the platform's popularity is growing along with demand for its currency.

Polkadot is another relatively new network that addresses one of the main problems with blockchains - scalability. In most networks, the speed of the chain slows down as the number of users increases. By using parachains, multiple transactions can be processed simultaneously.

Ripple, a well-known and long-established project, also remains strong. This chain competes with the SWIFT interbank service and is already used by over 100 financial organizations worldwide. Its native currency is used for fast and inexpensive transactions.

Another interesting project is Chainlink, which allows smart contracts to interact with external data sources and ensures interoperability between different blockchains. Considering the technological features and goals of the project, the LINK currency has become a good investment object.

Cosmos is another cross-chain solution that connects different blockchains. This ecosystem is developing rapidly, with over 250 projects already created on its base, and the number is constantly growing. The platform is used to scale and improve other projects.

A unique category of digital currencies includes meme tokens, many of which have achieved immense popularity despite having no practical use. Some notable representatives of this category that consistently rank among the most popular cryptocurrencies are Dogecoin, Shiba Inu, Pepe, and others.

How to make money with popular cryptocurrencies

There are various ways to make money with digital currencies, with trading and investing being the most common. Let's discuss the income potential of the most popular cryptocurrencies and how to maximize profits from them.

As mentioned above, due to their high demand, popular cryptocurrencies are very easy and convenient to use for trading. Trading involves making short-term speculative transactions and earning income from fluctuations in the value of a crypto asset.

These transactions can last from a few minutes to several days or weeks. Their main advantage and difference from investing is that you can make money not only from a rise but also from a decline in the value of a coin. The key is to correctly determine the direction of the price change and open a buy (long) or sell (short) position accordingly. Trading requires a considerable amount of time as it is necessary to constantly monitor the market to take timely action when necessary. It also requires thorough preparation and analysis.

When it comes to investing, it is a completely different way of making money, where digital coins are purchased for a long period of time, expecting their value to increase over time. Users can hold currencies in their wallets for several years, during which they cannot use these funds for other purposes.

If the income from trading can be reinvested or used to generate additional profits, investing works differently: the funds are effectively "frozen" for a certain period. However, the stakes are higher because many cryptocurrencies have shown growth of hundreds or even thousands of percent over several years.

Another important point for investors to remember is the diversification of their portfolio. It is unwise to invest all of one's capital in a single crypto asset. Resources should be spread across multiple coins with varying levels of risk and potential return.

Conclusion

In this article, we have explored some of the most prominent representatives of the digital currency market, which can confidently be called the most popular cryptocurrencies. Some of them appeared relatively recently, while others have been around for over a decade. Nevertheless, all of them consistently rank among the top digital currencies.

The popularity of digital money is primarily driven by the ability to make fast and low-cost money transfers worldwide without intermediaries. This is possible thanks to blockchain technology, which is now being implemented in many areas beyond finance.

The most in-demand currencies are those that are most actively traded and used for investment. Therefore, the popularity of cryptocurrencies is determined by trading volumes and the number of holders of a particular coin. These coins have high liquidity and a small spread between the bid and ask price.

They also have massive potential for long-term upside, making them excellent investment vehicles. In a well-constructed investment portfolio, the most sought-after coins can yield a substantial profit.