Knowing whether the coin you’re looking at has a purpose can help you decide whether it is worth investing in—a cryptocurrency with a purpose is likely to be less risky than one that doesn’t have a use. There are over 2000 cryptocurrencies available to buy and sell, though most have little value. Of these, bitcoin, ether (the token of the Ethereum network), ripple, bitcoin cash (an offshoot of bitcoin) and litecoin are among the most valuable by market capitalisation. With IG, you can trade cryptocurrencies via a CFD account – derivative products that enable you speculate on whether your chosen cryptocurrency will rise or fall in value.
How does cryptocurrency work?
Ether is the fuel that is required to run transactions on the Ethereum blockchain. Although cryptocurrencies are considered money, the Internal Revenue Service (IRS) treats them like financial assets or property for tax purposes. And, as with most other investments, if you have capital gains from selling or trading crypto, the government wants a piece of the profits. How digital assets are taxed, either as capital gains or ordinary income, depends on how long you held them for and how you used them. Cryptocurrency trading involves speculating on price movements via a CFD trading account, or buying and selling the underlying coins via an exchange. Here you’ll find more information about cryptocurrency trading, how it works and what moves the markets.
Market Cap: $458 billion
When asked what cryptocurrencies they know, many people primarily point to Bitcoin (BTC), Ethereum (ETH) and Dogecoin (DOGE). It comes as a https://calvenridge-trust.com/ big surprise to them to learn that there are many more cryptocurrencies available in circulation. Even if you limit the list to those projects that have websites and recently someone actually wanted to trade them, it’s safe to point out at least a dozen thousand different cryptocurrencies. Of course, most of them don’t really have much value and people who are new to the digital asset market should focus on understanding the projects mentioned at the beginning. Cryptocurrencies traded in public markets suffer from price volatility, so investments require accurate price monitoring.
- This makes it both transparent and very difficult to alter, with no one weak point vulnerable to hacks, or human or software error.
- Instead, decentralized cryptocurrencies operate according to computer software that anyone with internet access can download and use to monitor and verify transactions.
- Due to the fact that BTC and ETH have been on the market for years and are increasingly popular with private and institutional investors, they can be considered a relatively safe investment.
- As exchanges may sometimes show abnormal prices, the crypto community relies on CoinGecko to track prices accurately.
- Through many of its unique properties, Bitcoin allows exciting uses that could not be covered by any previous payment system.
As an investment/store of value
XRP is decentralized and uses the Ripple protocol to prioritize speed and minimize costs. Many crypto analysts think cryptocurrencies are notable for 2 main reasons. First, they can typically be transferred without using a third party, such as a bank.
We provide unbiased cryptocurrency data for the community, whether to help you make an investment decision or check the value of your crypto assets. Crypto prices on an exchange are driven by market condition, influenced by factors like liquidity, trading pairs, offerings, and economic conditions. As exchanges may sometimes show abnormal prices, the crypto community relies on CoinGecko to track prices accurately.
It is also not insignificant that many cryptocurrencies have a limited supply. Thus, they cannot be added to, which could lead to a decline in value over time. Back when this cryptocurrency was introduced in 2009, it was determined that there would never be more than 21 million BTC. Cryptocurrencies are virtual currencies that most countries do not recognize as a means of payment for now. The exception is El Salvador, which recognized the most important cryptocurrency (Bitcoin) in 2021. However, this has not prevented the entire market for digital assets from growing rapidly.
In this system, centralized intermediaries, such as banks and monetary institutions, are not necessary to enforce trust and police transactions between two parties. Despite these risks, cryptocurrencies have experienced a significant price surge, with the total market capitalization rising to approximately $2.98 trillion as of December 15, 2025. Despite the asset’s speculative nature, some have created substantial fortunes by taking on the risk of investing in early-stage cryptocurrencies. Blockchain technology is central to Bitcoin and other cryptocurrencies’ appeal and functionality. A blockchain is essentially a set of connected blocks of information on an online ledger.