Cryptocurrencies began with Bitcoin a decade ago, but in recent years this market has taken everything by storm. Who would have imagined 5 years ago that this unique and powerful digital asset using blockchain technology would have such a cosmic impact on the modern financial world? Since the first day Bitcoin started a few years back, it has grown exponentially in value and market share, despite the retreat in May, which won’t last too long.
While Bitcoin is the best-known cryptocurrency, it has taken a beating lately, just like the rest of the altcoins in the crypto space.
But that doesn’t mean that digital coins aren’t good investments. They all still have the potential to change the way industries and financial institutions operate. We are at the point where we need to identify those that have true real-world value and those that don’t.
Each cryptocurrency in the market touts unique value propositions and makes a strong case for investing in. But which of these, besides Ripple XRP which we have covered already, are among the best investments at the moment? Let’s separate the wheat from the chaff.
|Ethereum (ETH)||Second largest cryptocurrency by market cap Established Most popular network supporting DeFi,||dApps and NFTsHigh congestion as popularity grows Transaction fees soaring Potential issue with miners over upcoming upgrade|
|Litecoin (LTC)||One of the oldest, most established cryptocurrencies Faster transactions, Higher number of coins in supply than Bitcoin Adoption and interest from institutional investors||Uses energy intensive PoW consensus mechanism, dated technology Does not support DeFi or development of applications, useful only for transactional purposes Could face regulators’ ire as it is popular for transferring payments on Dark Web|
|Cardano (ADA)||Energy efficient POS consensus mechanism Faster, more scalable and cost effective than Ethereum Supports DeFi projects, NFTs Strong team working on developing the network, pushes out updates and new features regularly||Faces stiff competition from other new entrants as well as Ethereum Yet to receive significant interest from institutional investors Unclear whether team of developers can sustain the pace of rolling out new features in future|
|Polkadot (DOT)||Interesting concept aimed at interoperability among different kinds of blockchains – more versatile use cases Supports DeFi, NFTs Higher transaction processing power, scalability and security than Ethereum||Parachains could become too complex for investors and projects to comprehend Lack of regulations could hold back its adoption Yet to see clear success of upcoming parachain auctions and its benefits for projects|
|Binance Coin (BNB)||Native token of world’s most popular cryptocurrency exchange – sees significant traction Binance Smart Chain’s growing popularity could drive up value Supported by rising level of interest in cryptocurrencies by investors, both retail and institutional||Significant control over its value, use cases rests with centralized entity – Binance Value depends on transaction volume over Binance, very sensitive to downtrend in crypto investing activities Binance’s investigation by DOJ and IRS could weigh on its value|
|Internet Computer Protocol (ICP)||Backed by prominent companies Significant media coverage Rapid rise to top 15 crypto list||Use cases yet to gain traction, interest among projects Too soon to tell if popularity will sustain|
The world’s second most popularly traded cryptocurrency by market capitalization, Ethereum (ETH) catapulted into the limelight earlier this year as the interest in DeFi and NFT surged among both retail as well as institutional investors. The original blockchain network designed for more than just digital transactions of currency, Ethereum has a lot going on for it, making it one of the most promising cryptocurrencies to add to your portfolio.
One of the biggest advantages that the Ethereum network offers is its capability to enforce smart contracts – a key feature that opens up the possibility for running several different types of applications on its blockchain network. This feature allows companies and projects to create their own tokens on the network, raise funding, trade, offer loans, dole out returns, and do more, all powered by blockchain technology.
This feature also allows users to attach value to real-world assets on the blockchain network, driving the digitization of physical assets, such as real estate, art, commodities, and more – empowering and supporting the creation and trading of non-fungible tokens (NFTs).
The largest upgrade to the Ethereum network which was ETH 2.0 started in December 2020, right around the time the crypto bull run began, promising far more opportunities and use cases for the network, which will enable transformation from its current Proof of Work consensus to a far more energy efficient, faster and more scalable Proof of Stake consensus mechanism. The Berlin hard fork which came out in mid-April 2021 was a step towards this, optimising contracts to counter the problem of rising gas fees on the network – a key drawback that was driving users away from Ethereum and towards newer alternatives.
The next upgrade coming up in July, EIP-1559 will also work towards moving away from the current auction mechanism and burn the base fee which will help make Ethereum a deflationary asset and raise its value going forward.
The rise of the DeFi and NFT space has also driven higher interest in Ethereum among institutional investors, with several experts and companies terming it to have more potential that market leader Bitcoin owing to its versatility. This further supports the potential rise in value in ETH in the near future.
On the other hand, Ethereum faces stiff competition from newer entrants into this space that have stolen some of its attention as they offer a more scalable, secure and efficient support for running DeFi and dApps. The competitors are based on newer technology and support faster transactions, lower costs and higher energy efficiencies, making them more attractive alternatives.
Litecoin (LTC) is considered the silver to Bitcoin’s gold status within the digital currency space and is one of the oldest cryptocurrencies still featured within the top 10 list by market cap, alongside market leader Bitcoin and Ethereum, lending it considerable credibility as an established player in a market that is seeing a flood of new entrants on a constant basis.
It was launched in 2011 and is one of the best performing altcoins in the market, featuring a code very similar to that of Bitcoin, a limited supply of LTC tokens available and employing a POW consensus mechanism. However, unlike BTC, Litecoin’s blockchain network supports faster transactions and hosts four times higher supply of LTC tokens, making it a more attractive way to transact in cryptocurrencies in comparison with Bitcoin, which is generally regarded as a good option for storing of value.
While it is considered to be outdated in terms of technology, especially since it employs a more energy intensive POW method for consensus, the bull run of early 2021 in the overall crypto market has benefited Litecoin as well, sending its price back up. With growing interest and investor base, the likelihood of its price crashing like it did back in 2018 after hitting an ATH (all time high) has also reduced considerably, while its long run in the market offers it a better reward to risk ratio than several of its newer peers.
Litecoin (LTC) enjoys support from promising fundamentals, including PayPal’s decision to allow users to make payments using this digital currency, in addition to BTC and ETH. Litecoin’s mainstream acceptance also remains supported by its inclusion on Google Finance, where only a few prominent cryptocurrencies have made the list so far.
As a popular way to transfer payments on the Dark Web, Litecoin still retains its allure among users. In addition, almost all hardware wallets in the market support LTC tokens, a factor that gives a strong boost to its distribution and trading volume.
Where Litecoin falters is in its perception that as a first generation cryptocurrency, there are fewer use cases for its blockchain network beyond digital transactions in LTC tokens. Unlike newer, emerging blockchain networks that promise to support several applications and boost DeFi and dApps, Litecoin is held back by its limited capabilities.
LTC Live Chart
One of the promising new entrants into the crypto space that has been garnering significant attention through 2021, Cardano (ADA) is touted as an Ethereum killer. Its PoS model for mining eliminates most problems that users have with Ethereum’s blockchain network even as it offers smart contract capabilities, permitting the use of its network beyond mere support for transferring ADA tokens.
Cardano can be used to store and trade stocks, capital, NFTs and more, in an immutable and secure manner. With the recent surge in interest towards DeFi and NFTs, Cardano gained popularity earlier this year when the Ethereum network started struggling with problems related to congestion and high gas fees. The development made new DeFi projects look for alternatives and Cardano became one of the top contenders, weaning people off the Ether network.
What’s working in Cardano’s favor is that it is backed by a strong team of developers who are regularly working on pushing out improvements and adding new features. Its technology is also far more energy efficient when compared with the first generation cryptocurrencies, while the PoS consensus mechanism offers higher scalability. Cardano was created by a co-founder of Ethereum and attempts to be a do-over to get every wrong corrected.
As we mentioned before, the rising popularity of DeFi, NFTs as well as the uptick in interest in the crypto markets among both institutional investors as well as retail ones are expected to keep Cardano in the limelight and keep it going strong in the coming months. Leading crypto analysts worldwide are extremely hopeful of its success, forecasting a surge in the value of ADA in the long-term as well.
On the flip side, despite its numerous strengths, Cardano faces challenges in a highly competitive space where other companies are creating similar platforms that offer smart contract capabilities and are trying to win over DeFi projects and users. Still in its early days as far as development is concerned. Only time will tell if the company behind this network, IOHK, can keep up with their promises and stay on track with the rollout of more exciting features that can give them an edge over their competition going forward.
Polkadot (DOT) has had an interesting time so far this year, with prices soaring to new ATHs during the crypto bull run earlier in the year and reaching close to the $50 level before the crypto market crash in mid-May. The open-source multichain protocol is designed for interoperability between different kinds of blockchain networks and holds much promise as the number of applications for them continue to grow.
Designed with the intention to decentralize the web by enabling various blockchains to interact with each other, Polkadot has received considerable interest as the world of DeFi takes off. The decentralized model for Web 3 offers greater control over privacy and their data for users of the blockchain network. Its promising range of use cases have helped propel Polkadot to become the ninth largest cryptocurrency by market cap since the launch of its own token, DOT, in May 2020 – just about one year ago.
The underlying technology supports interconnected parachains – a concept that gives Polkadot significantly higher transaction processing power than Ethereum. Its popularity could soar further once it rolls out the parachain auctions, allowing dApps to bid for each slot or parachain operating on its network. The parachains offer dApps projects the ability to scale up significantly, enjoying cross-chain interoperability, in addition to Polkadot’s security and validation benefits.
As promising as this opportunity sounds for users, DeFi projects as well as the network itself, Polkadot could face challenges in case the overall sentiment against crypto markets sour, turning investors away from DeFi and dApps. The extremely volatile nature of investing in cryptocurrencies and digital assets has kept several governments and financial institutions wary, and this attitude weighs heavily on the future of Polkadot and the DOT token. Additionally, its greater strength can also turn out to be, potentially, its greatest challenge – that of interoperability. It could increase complexity which could work against it, sending users towards simpler and easier to understand alternatives.
DOT Live Chart
The native token in use across the world’s most popular cryptocurrency exchange, Binance Coin (BNB) has its own emerging appeal as a digital currency worth trading. As of May 2021, it comes in fourth among the top cryptocurrencies by market capitalization, gaining in popularity as more investors sign up to trade on the Binance exchange. Another key factor that has boosted its appeal was the creation of the Binance Smart Chain (BSC) – the crypto exchange’s very own blockchain network that offers smart contract capabilities and is becoming increasingly popular as a platform for DeFi projects.
It forms an integral part of several other projects launched by Binance and is expected to rise in popularity with the addition of more use cases and blockchain-powered applications rolled out by the exchange going forward. In addition, as a token in use within the Binance exchange, increased number of transactions or activity, raises the value of BNB tokens. This means that as long as the crypto market continues to grow and attract more investors, the likelihood of it powering growth in BNB remains very high. And with the rising levels of interest among both retail and institutional investors, this certainly seems to be the case for now.
However, a major drawback when it comes to investing in Binance Coin is that it is not a decentralized digital currency in the true sense, unlike its more established peers. The token’s creation, development and evolution is controlled by Binance – a cryptocurrency exchange, that regularly burns BNB tokens to inflate its value. Therefore, unlike most other tradable assets – especially in the crypto space, its value can be manipulated to a great extent by its creators itself. Another challenge that can potentially hold back a significant growth in the value of the BNB is the recent investigation launched by the IRS and the DOJ in the US into allegations of money laundering using Binance, especially since it is not registered with the CFTC.
Internet Computer Protocol (ICP)
One of the hottest new cryptocurrency launches of this year, Internet Computer Protocol (ICP) coin has had a stellar impact on the market, catapulting all the way to the top 15 digital currencies by market cap shortly after its release. Developed by the Dfinity Foundation, the ICP is aimed at reimagining the internet as we know it, ushering in a new wave of decentralization where users can develop software and publish apps that are completely secure and far more cost effective even as they support interoperability.
Especially after the recent crypto bull run and the rising interest among institutional investors, several new digital assets have hit the market lately, but none quite made the same impact as the ICP. The Internet Computer Protocol stands out from the noise in that it has secured the backing of several prominent companies, including Polychain and Andreessen Horowitz. In addition to supporting the ICP coin, the network is capable of running dApps and supporting DeFi projects with faster transaction speeds and scalability than the current favorite, Ethereum.
Shortly after its launch and just before the crypto market crash of mid-May, the ICP coin surged to an ATH of over $737 before collapsing all the way down below the $100 level when Bitcoin prices slumped and dragged the entire market down with it. Since then, we have seen a recovery in prices, and while it is too soon to tell if the concept behind ICP will gain traction, the idea does hold significant promise – which is why we’ve included it as a hot coin to watch.
There have been concerns about the ICP’s Network Nervous System, with some critics pointing out that it centralizes voting power and goes against the basic premise of blockchain technology’s consensus-driven, decentralized mechanism. In addition, the rise of the ICP will take considerable time and will depend on its adoption rate, so we’ll just have to wait and see how it fares in the crowded, highly competitive space of DeFi.
Just like ICP, there are several other new and emerging digital assets that hold considerable promise and could break out in the coming months. Some of the notable cryptocurrencies in this category include Polygon (MATIC), Chainlink (LINK), Stellar Lumens (XLM), Monero (XMR) and THORChain (RUNE). We’ll cover them in our next article, so keep watching this space for more!