Training / Cryptocurrencies

1. Bitcoin (BTC)

Capitalisation: 371 billion $ Created in 2009 by Satoshi Nakamoto, Bitcoin (BTC) was the world’s first cryptocurrency. Like most other cryptos, BTC runs on a blockchain, which is a ledger for recording transactions distributed over a network of thousands of computers. To keep Bitcoin safe from fraudsters, the process of adding to the shared ledgers must be verified by solving a cryptographic puzzle, called proof-of-work. Bitcoin’s price has skyrocketed in step with its popularity. In early 2016, one could buy one for about 400 $. At its peak in 2021, a Bitcoin was worth as much as 67,000. By the end of June this year, the price had fallen to around 20,000 $, still an increase of 4,900%, but also a clear example of the volatility in cryptocurrency prices, a problem common to the entire industry and not exclusive to Bitcoin. As of 3 October 2022, the price of a Bitcoin is around 19,400 $.

2. Ethereum (ETH)

Capitalisation: 162 billion $ Ethereum, which is both a cryptocurrency and a blockchain platform, has several potential applications – such as so-called smart contracts, which are executed automatically when certain conditions are met, and NFTs (non-fungible tokens) – that make it a favourite among IT developers worldwide. Ethereum also grew spectacularly and then took a nosedive this year. From April 2016 to the beginning of October 2022, Ethereum’s price went from around 11 $ to 1,317 $, an increase of around 11.873%, after hitting an all-time high at over 4,700 $ in 2021.

3. Tether (USDT)

Capitalisation: 68 billion $ Unlike other forms of cryptocurrency, Tether is a stablecoin, which means it is backed by a fiat currency, in this case the US dollar, and hypothetically maintains a value equal to one dollar. In theory, this means that Tether’s value should be more linear than that of other cryptocurrencies, and thus it is often chosen by investors who are wary of the extreme volatility of other virtual currencies.

4. U.S. Dollar Coin (USDC)

Capitalisation: 47 billion $ Like Tether, USD Coin (USDC) is also a stablecoin, which means it is backed by the US dollar and aims for a ratio of 1 USD to 1 USDC. USDC is backed by Ethereum, and can be used to make transactions globally.

5. Binance Coin (BNB)

Capitalisation: 46 billion $ Binance Coin is a cryptocurrency that can be used to trade and pay commissions on Binance, one of the world’s leading cryptocurrency exchanges. Launched in 2017, Binance Coin has expanded to become much more than just a means to facilitate trading on Binance. It can now be used for trading, payment processing or even booking travel. It can also be traded with other cryptocurrencies such as Ethereum or Bitcoin. It can now be used for trading, payment processing or even booking travel. It can also be traded or exchanged for other forms of cryptocurrency such as Ethereum or Bitcoin. In 2017, a BNB was worth just 0.10 $. By early October 2022, its price had risen to around 287 $, a gain of 286,900%.

6. XRP (XRP)

Capitalisation: 22 billion $ Created by some of the founders of Ripple, a payment and funds transfer system, XRP can be used on that network to facilitate the exchange of different types of currencies, including fiat currencies and major cryptocurrencies. At the beginning of 2017, the price of XRP was 6 thousandths of a dollar. As of October 2022, its price reached 45 cents, representing an increase of 6.233%.

7. Binance USD (BUSD)

Capitalisation: 21 billion $ Binance USD (BUSD) is a stablecoin launched in 2019 by Binance and Paxos, a regulated financial institution specialising in blockchain, with the aim of creating a cryptocurrency pegged to the US dollar. To maintain this value, Paxos holds an amount of US dollars equal to BUSD’s total supply. Like other stablecoins, BUSD offers cryptocurrency traders and users the ability to transact with other crypto securities while minimising the risk of volatility.

8. Cardano (ADA)

Capitalisation: 14.5 billion $ Cardano is a blockchain platform known for embracing the validation process known as ‘proof-of-stake’ early on. This method speeds up transaction times and reduces energy consumption and environmental impact, removing the competitive aspect based on cryptography to verify transactions used instead by platforms such as Bitcoin. Cardano also works like Ethereum to enable the use of smart contracts and decentralised applications, both of which work thanks to ADA, its native currency. The ADA token has enjoyed relatively modest growth when compared to other major cryptocurrencies. In 2017, its price was 2 cents. In early October, it rose to 42 cents: an increase of 2.000%.

9. Solana (SOL)

Capitalisation: 11.7 billion $ Developed to support the use of decentralised finance (DeFi), decentralised applications (Dapp) and smart contracts, Solana works through a unique mechanism that combines proof-of-stake and proof-of-history to help process transactions quickly and securely. The platform is powered by SOL, Solana’s native token. When this cryptocurrency was launched in 2020, the starting price of SOL was around 7 cents. At the beginning of October 2022, its price was around 32 $, with a gain for investors of 4,500%.

10. Dogecoin (DOGE)

Capitalisation: 8 billion $ Dogecoin was launched as a joke in 2013, but has quickly become one of the most popular cryptocurrencies in the world thanks to a particularly dedicated community and creative memes. Unlike many other cryptocurrencies, there is no limit to the number of Dogecoin tokens that can be created, which is why it is susceptible to devaluation as the reserve grows. In 2017, the price of a DOGE was just $0.0002. By early October 2022, the price had risen to about 6 cents, a growth of 30.000%. Dogecoin hit its all-time high in 2021, when it touched 70 cents. *Market capitalisation and prices from Coinmarketcap, updated 3 October 2022.

What are cryptocurrencies?

Cryptocurrencies are a form of currency that exists solely in the digital world. They can be used to pay for online purchases without having to go through an intermediary, such as a bank, or they can be used as an investment.

How is cryptocurrency trading different from stock trading?

Nothing prevents you from investing in cryptocurrencies, but it is good to keep in mind that they are very different from traditional investments, such as shares. When you buy a share, you are buying an ownership stake in a company, which means that you generally have the right, for example, to vote on the direction the company should take. If the company goes bankrupt, there is the possibility of being repaid, after all creditors have been paid in the bankruptcy proceedings. Buying cryptocurrencies does not grant you ownership of anything apart from the token itself: roughly, it is like exchanging one currency for another. If the cryptocurrency loses value, you are not entitled to redemption. There are other important differences to keep in mind:

  • Trading hours shares are only traded during certain hours, usually from 9 a.m. to 5.30 p.m. from Monday to Friday on the Milan stock exchange. The cryptocurrency markets never close, so it is possible to trade them 24 hours a day, seven days a week.
  • Regulation equities are regulated financial products, which means that a supervisory body verifies their credentials, and the accounts of the companies that issue them are public knowledge. In contrast, cryptocurrencies are not regulated investment vehicles, and so it is possible to be unaware of the inner workings of the one we buy.
  • Volatility Both shares and cryptocurrencies carry risks: the money you invest can always lose value. However, shares are directly linked to issuing companies and generally gain and lose value according to the performance of those companies. Cryptocurrency prices are more speculative: no one is yet sure of their value. This makes them much more volatile and susceptible even to celebrity tweets.

Do you pay taxes on cryptocurrencies?

If you buy and sell coins, it is important to pay attention to the tax rules concerning cryptocurrencies. Cryptocurrencies are treated like shares, and not like simple cash. This means that if you make a profit from selling cryptocurrencies, you will have to pay capital gains tax.

Are there ETFs denominated in cryptocurrencies?

Given the thousands of cryptocurrencies that exist (and the high volatility that characterises most of them), it is understandable to want to diversify one’s approach and invest in cryptocurrencies in a way that minimises risk. Several companies have proposed cryptocurrency ETFs; these are investment funds (‘exchange-traded funds’) that allow one to invest in cryptocurrencies without actually owning any. However, for regulatory reasons, there are no crypto ETFs available in Italy at the moment for savers. There are ETFs that invest in the blockchain technology used by cryptocurrencies, but this is not the same as investing in cryptocurrencies proper.

How do you buy cryptocurrencies?

You can buy cryptocurrencies on exchanges, or cryptocurrency exchanges, such as Coinbase, Kraken or Gemini. Some brokers also allow you to buy cryptocurrencies.