CRYPTOCURRENCIES are poised for another record-breaking year as risk-taking investors seek high returns.

The following are the top cryptocurrencies in January 2021.

Last year, cryptocurrency valuations reached all-time highs, aided by high-profile support and mainstream interest from investment banks.

The sometimes-surprising returns they can provide buyers entice brave and bullish investors looking for higher returns than savings accounts and stock markets.

However, cryptocurrencies are extremely volatile when compared to more stable, lower-return investments.

And, while there have been some huge price increases in the last year or so, there have also been some cliff-edge collapses.

Valuations can fluctuate wildly depending on sentiment, celebrity endorsement, or regulatory crackdowns - and there are far fewer investment fundamentals than there are for banking stocks or funds.

Because cryptocurrencies are unregulated, there is a much higher risk of being scammed.

It's critical to do your homework so you know who is behind the coins and what they're for.

The Financial Conduct Authority, a City of London watchdog, has warned that this is a high-risk investment in which investors should be prepared to lose all of their money.

There are two key figures in cryptocurrency.

There is the value of a single coin as well as its market capitalisation.

The market capitalisation is calculated by multiplying the price or value of a single coin by the quantity of coins in circulation.

As of January 4, the following cryptos were ranked by market capitalisation.

Bitcoin

Bitcoin is the first and largest cryptocurrency, with a market capitalisation of $887 billion and a market share of nearly 40%.

The cryptocurrency was created in 2009 by a mysterious founder named Satoshi Nakamoto, who wished to create a peer-to-peer online currency that could be discovered or mined online and used without the supervision of banks.

Last year, the price of a single Bitcoin reached record highs as cryptos boomed, aided by Elon Musk's support, interest from major financial institutions, and support from major tech finance firms such as PayPal.

Its value peaked at more than $68k per coin in August, but has since dropped to under $47k due to bans in China and India.

Ethereum

Ethereum, the second largest cryptocurrency, was launched in 2014 to compete with Bitcoin by providing more user-friendly blockchain technology that other cryptocurrencies can use.

It has a $458 billion market capitalisation and a single Ether costs $3,859.

Ethereum also reached new highs last year, but there have been significant drops as a result of regulatory restrictions.

Nonetheless, some analysts believe Ethereum will one day overtake Bitcoin.

Binance Coin

Binance Coin was launched in 2017 by Binance, the world's largest cryptocurrency exchange.

It was initially created to provide discounted trading fees to Binance users.

However, it can now be used to pay transaction fees on Binance as well as to purchase items on websites such as Crypto.com.

A single Binance Coin is currently worth $517, with a market capitalisation of $86.2 billion.

Tether

Tether is a cryptocurrency that is distinct from Bitcoin and Ethereum.

It is referred to as a stablecoin because its value is linked to regular "fiat" currency, such as the US dollar.

Users are said to be able to store, send, and receive digital tokens backed by their preferred currency.

Tether claims to keep its values stable by storing currency reserves in a bank.

It has a market capitalisation of $78.2 billion, and a single Tether or USDT is worth $1.

Solana

Solana is a new cryptocurrency that was launched in March 2020.

It has sparked investor interest and excitement by claiming that its blockchain technology is faster and more efficient than Ethereum's.

The cryptocurrency is worth $172 and has a market capitalisation of $53 billion.

Cardano

Charles Hoskinson, one of the eight co-founders of Bitcoin rival Ethereum, founded Cardano in 2017.

It aims to be more transparent by allowing its investors to have a say in how the cryptocurrency is run.

Cardano, which has a market capitalisation of $44.9 billion, reached its all-time high on May 17 when its US dollar conversion reached $2.3091.

The increase followed reports that its parent company, Input Output, had partnered with World Mobile Group, a blockchain-based mobile network.

Cardano has also benefited from celebrity endorsements.

Gene Simmons of the rock band Kiss backed it in March, tweeting that he'd spent $300,000 (£216,223) on it.

A single Cardano or ADA coin costs $1.34 at the moment.

US Coin

The USD Coin (USDC) is yet another stablecoin whose value is tied to the value of the US dollar.

Every unit of USDC purchased is backed up by $1 in reserves, which can be cash or short-term Treasury bonds.

Circle, a fintech firm, and the Coinbase cryptocurrency exchange launched the digital currency in 2018.

It recently surpassed XRP to take seventh place in the cryptocurrency market capitalisation rankings.

Its $42.68 billion market cap and $1 price make it one of the few major cryptos to have increased in value in recent months.

XRP

XRP is a type of digital currency that can be used to send money between individuals or banks through the Ripple network.

For example, if you need to send euros to someone who only accepts dollars, the Ripple network will convert them into XRP to expedite and lower the cost of the transaction.

It was founded in 2012 and currently has a market capitalisation of $39.8 billion.

A single XRP is now worth $0.836, down from a high of $1.84 in April 2021.

Luna

Luna, another recent riser in the crypto top 10, has recently surpassed popular cryptos such as Dogecoin and Shiba Inu to enter the big leagues.

It is the primary token used on Terra's blockchain technology, which was launched in 2019 to compete with Ethereum by offering a payments system that links cryptos to fiat money to keep values stable.

A Luna currently costs $88.3 and has a market capitalisation of $31.8 billion.

Polkadot

Polkadot is yet another new cryptocurrency on the market.

It only debuted in May 2020 and supports asset and token transfers across multiple blockchains.

A single Poladot or Dot now costs $29.55, down from a high of $54 in 2020.

Its current market capitalisation is $29.2 billion.

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