Bitcoin, the most popular digital currency, soared to a new all-time high of
nearly $70,000 per coin this week. It has climbed almost 125% this year, while
the good old
S&P 500 (SPX) is up less than 24%.
The
first Bitcoin ETF started trading last month, allowing investors to get in on the crypto craze without actually buying the currencies outright.
Clearly, the crypto craze
is here to stay. But there are
big questions about what kind of
regulation might be in the works for the asset class. And
even some of Wall Street’s biggest names, most notably
JPMorgan (JPM) CEO Jamie Dimon, remain skeptical of cryptos’ staying power.
For investors new to the space, the myriad of coins can be daunting. Here’s an overview of the five biggest cryptocurrencies.
Bitcoin
Bitcoin has always been the biggest player in the cryptoverse, and is now worth more than $1.2 trillion in market capitalization, according to
CoinMarketCap.
Its
new all-time high makes it more than 10 times more valuable per unit than the next biggest crypto.
Launched by an anonymous creator in 2009, the digital currency runs on blockchain technology — another crypto buzzword. Essentially, the blockchain is a decentralized ledger system where records of transactions are stored. That’s the key difference between bitcoin and traditional fiat currencies like the US dollar or the euro, which are controlled by central banks.
Many bitcoin bulls call it a “store of value”
— a label historically reserved for safe haven investments like gold — and argue that that the digital currency is a good tool to hedge against
inflation, something a lot of investors are worried about at the moment.
But it’s also prone to wild swings in value, including
flash crashes.Part of bitcoin’s value is determined by the finite number — 21 million — of coins that can be created. Not all of them are in circulation yet. Bitcoin “miners” use computers to solve complex puzzles to create a new block on the chain. That process is in turn rewarded…
