Written by Coursera Staff • Updated on
Today, many cryptocurrencies exist. In this article, learn about the different types of crypto, how to buy it, and more.
If you’ve heard of cryptocurrency, also known as crypto, you may have also heard of Bitcoin, one of the most popular crypto coins. However, besides Bitcoin, there are also thousands of additional cryptocurrencies circulating today. This cryptocurrency list rounds up other top options and tips to help you get involved in a cryptocurrency career.
What are cryptocurrencies?
A cryptocurrency is a digital currency that enables financial transactions without relying on banks or other credit institutions. Since no centralized authority controls the transactions, cryptocurrency is part of the decentralized financial market.
With cryptocurrency, anyone can send and receive funds in their digital wallet. The peer-to-peer transaction is recorded in a public ledger called a blockchain. The blockchain uses encryption to store and transmit data between wallets and coded ledgers so you can’t make changes. Any transaction adds a block of text to a permanent chain of data records, hence the name blockchain.
Increase of cryptocurrencies
Bitcoin, founded in 2009, was the first widely used cryptocurrency. However, today more than 20,000 different cryptocurrencies exist and are traded on over 500 exchanges [1]. In May 2013, CoinMarketCap listed only 14 cryptocurrencies, and just four years ago, the number edged over 2,000 [2, 3].
Important cryptocurrencies
Here’s a cryptocurrency list that shares popular options besides Bitcoin. To give a quantitative comparison, we’ve included each option's market capitalization (market cap) as of March 2023. This helps compare one cryptocurrency’s size to another by considering the total value of all available stocks.
| Cryptocurrency | Description |
|---|---|
| Ethereum (ETH) | Ethereum intends to innovate the decentralized financial market. Unlike Bitcoin, a payment network, Ethereum is programmable and lets anyone build blockchain apps on the platform. |
| Tether (USDT) | Tether is a stablecoin, which ties the value of its cryptocurrency to real dollar currencies to avoid the greater volatility of most digital currencies. Tether tokens can integrate with many different blockchains. |
| Binance Coin (BNB) | Tokenized initially on the Ethereum blockchain, Binance coins launched in 2017. This coin can be used to pay fees associated with trading on the Binance exchange, pay for goods and services, participate in exclusive token sales, and more. |
| Solana (SOL) | A competitor to Ethereum, Solana similarly supports decentralized applications. Solana performs more transactions per second and charges lower transaction fees than Ethereum. Speed is its big differentiator, with Solana boasting 400 millisecond block times. |
| XRP (XRP) | The token for XRP Ledger follows a consensus protocol. This means every participant has agreed to a set of rules so valid transactions can be processed without a central operator or a single point of failure. |
| Cardano (ADA) | A research-backed cryptocurrency, Cardano was co-founded by engineers, mathematicians, and cryptography experts, including an initial founding member of Ethereum. This blockchain platform, built on the Ouroboros proof-of-stake consensus protocol, pursues evidence-based development to ensure security and stability. |
| Terra (LUNA) | Used for governance and mining, Luna is the native staking token for the Terra platform. Terra employs proof-of-stake consensus to create a permissionless, borderless economy accessible to anyone with an internet connection. |
| Avalanche (AVAX) | With a focus on being eco-friendly, Avalanche aims to be a fast, affordable open, programmable smart contracts platform for decentralized applications. |
| Dogecoin (DOGE) | Created as a joke by two software engineers in 2013, this coin (which uses a Shiba Inu image as its avatar) is accepted as payment by some major companies. This open-source, peer-to-peer digital currency claims to be a crypto “that makes people smile.” |
| Polkadot (DOT) | Distinct in its focus on delivering interoperability among other blockchains, Polkadot is a crypto designed to allow systems to work together. This crypto is the work of a Swiss Foundation working to facilitate a fully functional and user-friendly decentralized web. |
Why are there many types of cryptocurrency?
People can make their own cryptocurrencies through mining, which contributes to why there are so many cryptos currently.
Blockchain technology is also open source. Any developer can use the original code and create something new. When crypto prices surged, more developers were trying to build another code to create new crypto.
What do miners do? Crypto miners use a great deal of computer power to solve complicated mathematical problems to validate a series of transactions called a block and add the block to the blockchain. Miners are paid in cryptocurrency for their work. But it’s done mainly by large enterprises, as massive data centers are generally needed to power their efforts.
How do you buy crypto?
If you’re interested in a cryptocurrency career, consider buying some coins or tokens to understand the crypto market. Here are the steps to buy crypto:
1. Choose a broker or crypto exchange.
You can buy crypto from a broker or on a cryptocurrency exchange. Think of the crypto exchange as an online version of a stock exchange. Well-known exchanges include Coinbase, Kraken, Gemini, and Binance.US.
Alternatively, you can have a broker that deals with the exchanges for you. If you have a stockbroker, you can instantly add crypto to your portfolio instead of buying your stocks directly. For example, SoFi and Robinhood are both cryptocurrency brokers too.
2. Create and verify your account.
You will need to set up an account to work with a broker or exchange. Typically, you need to provide personal identification for authentication. This can include your driver's license or Social Security numbers, proof of employment, and a funding source.
3. Fund your account.
You’ll need to put money in to buy cryptocurrency. Depending on the broker or exchange, you may be able to use a credit card. Keep in mind, some credit card companies won’t let you make crypto transactions either. Otherwise, you’ll have to connect your bank account or debit card directly to the exchange. Some platforms accept ACH and wire transfers.
4. Place your cryptocurrency order.
Once you have money in your account, you can purchase crypto. You’ll need to decide which currency you want to buy. Then, you’ll use its ticker symbol—for example, Bitcoin is BTC—to tell the broker or go into the exchange and place your order. Sometimes you can buy a fraction of a currency.
When placing your order, be sure also to consider possible fees. These will vary across brokers and exchanges and depend on your payment method.
5. Select a storage method.
Securely storing your crypto is important, especially as exchanges are not backed by the Federal Deposit Insurance Corp, as many bank transactions are. If you are working with a broker, the storage method may be decided for you. Otherwise, you have different storage methods to consider.
Leave the crypto on the exchange.
You can store your crypto in the wallet for your chosen exchange. But exchange wallets have different controls compared to a private key of the fund. If the exchange is hacked, your funds are compromised. So, some consider this a riskier storage method. You may want to transfer your crypto off the exchange to a hot or cold wallet for a small fee.
Use a hot wallet.
A hot wallet is a private user wallet connected to the internet. These can also be risky. If you don’t have enough encryption on the wallet, strong passwords, and two-factor authentication, your hot wallet could be hacked.
Use a cold wallet.
A cold wallet is not connected to the internet. That makes it harder to compromise. Also, many cold wallet providers come with software letting you look at your investment without putting your private key at risk.
You can choose from paper or hardware cold wallets. A paper wallet is created at a website that produces public and private keys for paper printing. People often laminate these wallets and store them in a safe or safe deposit box.
Hardware wallets refer to external hard drive wallets that secure private keys offline. You could lose your crypto if you lose the key to that encrypted external device. Or if the device breaks or fails, the currency will be gone.
Typically, hot wallets are free, while cold wallets will charge fees.
Other ways to buy cryptocurrency
Along with investing in crypto via a broker or exchange, you can indirectly take part in this market and obtain cryptocurrency in two ways:
Buy into crypto exchange-traded funds ETFs.
Just as you’d buy into a fund to access different stocks, you could limit your exposure by investing in hundreds of diverse, individual crypto investments. As of August 2022, the US Securities and Exchange Commission (SEC) has approved 22 blockchains and Bitcoin exchange-traded funds (ETFs).
ETFs, invest in hundreds of different companies, including those that own crypto, crypto exchanges, crypto miners, financial services firms, and blockchain-focused tech companies.
Invest in companies connected to cryptocurrency.
You might also invest in companies related to cryptocurrencies. You could buy stocks of common companies dealing in crypto, such as Nvidia (NVDA), PayPal (PYPL), Block (SQ), and Canaan (CAN). Or you could support the development of this marketplace by investing in a blockchain technology startup.
Where to buy cryptocurrency
Just as so many cryptocurrencies exist, you can buy them from many places. You can invest in crypto at different trading platforms. Some of these include:
Coinbase
Robinhood
Gemini
Binance
Webull
Do you need special skills to invest in cryptocurrencies?
Investing in cryptocurrency takes research, planning, and discipline. These currencies are volatile, so you’ll need to be able to manage risk and learn from mistakes.
Educational requirements for crypto investors
Cryptocurrencies were designed to decentralize financial transactions. You don’t need a particular educational background to succeed. Nevertheless, success in cryptocurrency requires knowledge about how you use your funds and where you place them.A bachelor’s degree in either business, finance or a field related to blockchain technology or cryptocurrency could help.
Learn more about cryptocurrency
If you'd like to pursue a career, hobby, or investment strategy in cryptocurrency, get the skills and specialization you need to make it in the market. Start by exploring courses on Coursera, such as Princeton’s Bitcoin and Cryptocurrency Technologies course, the University of Pennsylvania’s Introducing Digital Currencies, or Duke’s Decentralized Finance Specialization.
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