Bitcoin outperformed market indexes in September. The tech-heavy Nasdaq composite fell 10.5% for the month while the S&P 500 dumped 9.3%. However, Bitcoin was off by just 1%.
The major indexes are down more than 20% for the year while Bitcoin has lost a staggering 54.7%. However September's relatively-strong performance may show the beginning of a reversal for cryptocurrencies.
There are several hundred digital coins on the market these days, making analysis a major chore.
So what are the five best coins to know about right now?
Top Coins Updated
Ethereum, Solano, Cardano, Doge Coin and Bitcoin are the top coins to know as we enter the fourth quarter.
Ethereum is a leading blockchain and the leader in decentralized finance, which allows people to complete transactions directly, without using a bank. Its native coin ether, or ETH, has a market cap of $161.5 billion, which is second to Bitcoin, according to Coinmarketcap. ETH trades on leading digital exchanges that include Coinbase, Binance, and Huobi.
ETHs are used to complete transactions on Ethereum.
Ethereum has also emerged as the leader in staking after it moved on Sept. 15 to a new way of completing blocks, called proof-of-stake. This allows validators to confirm transactions without spending more energy. Before and after the merge, staked ETHs have risen in volume and are now 11% of total ETHs. ETH deposits on the staking layer are $14 million.
Why is this important?
Staking is a way of participating in a blockchain that requires less energy and time while earning rewards. Participation has been holding at a very healthy rate above 95% after the move.
You can lock up the ETHs when you stake but there are ways around that. As an example, some staking pools issue liquid derivative tokens for trading and other uses.
Though a minimum of 32 ETHs is needed to participate in the network, you can stake fewer ETHs in staking pools. Stakers divide the rewards based on their contributions.
Solana's Lightning Speed
Solana is known as the Ethereum killer because of its faster speed and lower fees. It ranks 9th in market cap at $11.7 billion.
Unlike Ethereum, Solana uses a proof-of-stake validation that's more robust, applying a proof-of-history method that checks the time of each transaction. This makes transactions faster. Solana is able to push 250,000 transactions-per-second compared to Ethereum's 15 transactions-per-second. The transaction fee is also much lower and can sometimes be just a fraction of a penny.
Solana is vulnerable to outages, which adds risk. The most recent outage happened last week. The risk of outage is surprising since decentralized networks like Solana are supposed to be more resilient to this kind of failure.
Cardano is also a proof-of-stake network that supports decentralized applications. Transaction rewards depend on the number of native ADA coins that have been staked. It has a market cap of $14.5 billion, a little higher than Solana. It recently went through an upgrade that will improve speed and security.
Top Coin: Bitcoin's Meme
Meme coins were highly popular in 2021.
Dogecoin ranks 10th with a market cap of $7.9 billion. This Elon Musk favorite is used to tip users on Reddit and Twitter. Though it uses the expensive and time-consuming proof-of-work mechanism, it completes 30 transactions a second, much faster than the leading proof-of-work coin Bitcoin.
Miners can get DOGE mining rewards when mining for other coins. DOGE is set up to have unlimited supply that will always drive the price of the coin down.
Bitcoin, The Top Coin For Now
Bitcoin, the world's first cryptocurrency, has been termed digital gold and a store of value. It has a total supply cap of 21 million bitcoins, or BTC. 18.5 million have been mined so far.
Most coins are adopting proof-of-stake or other cheaper ways of earning rewards, leaving Bitcoin as the only leading proof-of-work coin.
However, the leading crypto commands a market cap of $373.9 billion. According to the latest report from the Bank of International Settlements, their exposure to crypto currencies is just 0.01%. However, there are now nearly 35,000 crypto ATMs in the US.
Bitcoin mining has increased recently, a bullish signal for the cryptocurrency. In international currency markets, it has risen against the British pound as the latter sank nearly to parity with the US dollar last week.
Finally, keep in mind that cryptocurrencies are volatile, emerging asset classes. It is important to be ready to cut losses when investing in these digital assets.
