What are the top cryptocurrencies for investors?
Since Bitcoin arrived on the scene
in 2009, cryptocurrencies have been gaining in popularity. While conceived of
as an alternative means of exchange—without the need for government-backed (or
“fiat”) money—today crypto is also seen as a potential investment.
Types
of Cryptocurrency
There are more than 9,500 cryptocurrencies
on the market today. But the best ones for investing are those that have a
large market capitalization. Just like when you’re looking at stocks, you can
use a market cap to consider the total value of an issued crypto coin.
The larger the market cap, the more
likely it is to be liquid. There’s also a better chance it will stand the test
of time. But unlike stocks, cryptocurrency issuers don’t publish financial
statements. Be sure you use the limited metrics that do exist.
There’s no guarantee that any
cryptocurrency, no matter how big or popular, won’t just disappear. These
assets have no regulated financial or governmental intermediary. When trying to
figure out which is the best cryptocurrency for you to invest in, check to see
if it’s available on an exchange.
Bitcoin
Bitcoin (BTC) kicked off the crypto
revolution when it was created in 2009. The original creator remains somewhat
of a mystery. But Bitcoin’s unconfirmed founder (or founders) is known as
Satoshi Nakamoto. As of May 4, 2021, Bitcoin's market cap is more than $1
trillion.
Bitcoin made it possible for people
around the world to send money to each other almost instantly.
There's no need to worry about
exchange rates or bank wire transfer fees.
Bitcoin is finding mainstream
acceptance as a method of payment. As an investment, though, its price has seen
wild fluctuations. In early 2017, its price crossed $1,000 for the first time,
skyrocketing to more than $19,000 toward the end of the year; it then crashed
to around $3,000 a year later. By April 2021, Bitcoin had gained momentum
again, crossing $64,000 before seeing some price correction.
Ethereum
While Ethereum (ETH) launched in
2015, it was first conceptualized in 2013 by Vitalik Buterin.6 Ethereum uses
blockchain technology, but it’s programmable. Ethereum is designed to be open
access and provide a variety of applications.
The way Ethereum works makes it
possible to do more than handle money. It’s one of the drivers behind “smart
contract” technology. This means that various agreements can be executed securely
directly between parties. For instance, a real estate purchase could be
completed using Ethereum without the need for an escrow account.
Bitcoin Cash
Introduced
in 2017, Bitcoin Cash is one of the most popular types of cryptocurrency on the
market. Its main difference with the original Bitcoin is its block size: 8MB.
Compare that to the original Bitcoin’s block size of just 1MB. What that means
for users—faster processing speeds.
Litecoin
Litecoin
is increasingly used in the same breath as Bitcoin, and it functions
practically the same way. It was created in 2011 by Charlie Lee, a former
employee of Google. He designed it to improve on Bitcoin technology, with
shorter transaction times, lower fees, more concentrated miners.
Ripple
Ripple is one type of cryptocurrency on the list, but it’s not Blockchain-based. It’s not meant so much for individual users as it is for larger companies and corporations, moving larger amounts of money (its coinage is known as XRP) across the globe.
It’s more well-known for its digital payment protocol more than for its XRP crypto. That’s because the system allows for the transfer of monies in any form, be it dollars or even Bitcoin (or others). It claims to be able to handle 1,500 transactions per second (tps). Compare this with Bitcoin, which can handle 3-6 tps (not including scaling layers). Ethereum can handle 15 tps.
While Bitcoin launched a new asset class little more than a decade ago, today there are many different cryptocurrencies for investors to learn about and invest in.
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