The cryptocurrency industry is changing the world as we know it. Over the last few years, the industry’s evolution has been quite tumultuous, but with Bitcoin slowly gaining unprecedented mainstream acceptance, digital assets have become the talk of the town across the globe in 2021.
The blockchain ecosystem came into being because of our inherent need for an improved financial system. The recent crypto bull run has put blockchain-based tokens on the map and is raising dust in institutional investment circles. And why wouldn’t it? Over the years, various digital currencies have posted gaudier returns than traditional investment products.
Factors to consider when choosing a cryptocurrency for investing
Cryptocurrencies are highly volatile in nature. Its prices can drop by thousands in the blink of an eye. Driven by decentralized ledger technology (DLT), investments into blockchain-based tokens possess risk factors that are similar to any other commodity.
To top it off, there are well over 9,000 different tokens in circulation, and understanding the difference between the tokens worth investing in and the ones that aren’t is crucial to long-term growth. There are a few factors to consider before parking your funds into any digital asset. Let’s delve deeper into some of the aspects that come into play when considering what cryptocurrency to invest in.
- Market capitalization: It is always advisable to invest in coins that have a high market cap. The higher the market cap, the more tokens there are taking part in active transactions. This could further depict interest among the investors of the coin.
- Project: The infrastructure and backing of certain projects can reveal a great deal about their legitimacy. It is of utmost importance that investors look into projects’ credibility by studying their progress through challenging market conditions.
- Liquidity: Greater liquidity essentially indicates that it’s more easily converted to cash or other tokens on an exchange. Given the fast-paced nature of the ecosystem, more liquidity indicates a greater number of buyers and sellers in the market, making it even more lucrative for investors.
From prominent to lesser-known digital currencies, let’s look at the top cryptocurrencies to invest in 2021:
A decade after its inception, Bitcoin continues to lead the pack even as innovators, imitators, and dysfunctional knockoffs emerge every so often. It boasts being the first and by far the most popular cryptocurrency for investment. Despite the short-term slump, it’s still up by nearly 400% year-to-date. More importantly, Bitcoin has found strong support from long-term and institutional investors over the last two years. It has proved, time and again, that its market is resilient to global events. Institutions are paying more attention now more than ever, with industry behemoths like MicroStrategy continuing to place bullish bets on the original cryptocurrency
Furthermore, the upcoming Taproot upgrade could potentially broaden its market, pushing its value even higher.
Ethereum has bested Bitcoin’s percentage growth by a great margin this year, thanks to its astronomical growth. The native cryptocurrency of the Ethereum blockchain was the most traded cryptocurrency after BTC this year, and it looks like it’ll maintain that position or maybe even beat it.
One of the main reasons for its recent surge was that it had successfully laid the groundwork for developing decentralized finance [DeFi] applications, which exploded onto the scene in mid-2020. In addition, several upgrades and EIPs have been introduced to keep a check on the network’s gas fees, which could be helpful for the overall ETH market in the long run.
The transition to Ethereum 2.0 is yet another reason for Ether to be on an investor’s list. Phase 0 was successfully completed towards the end of last year, and though it’s still uncertain when Phase 1 will come into play, it’s definitely a great year to be an ETH investor.
Created in 2012, XRP has a unique raison d’etre, and is one of the best cryptocurrencies to invest in this year. The idea behind its development was to tackle issues plaguing international transfers and cross-border remittances. Today, international money transfer is incredibly inefficient, sometimes requiring weeks of processing and high fees to conduct. With Ripple, international transactions can be executed within seconds.
Ripple has also been involved in onboarding some of the most prominent players in the financial services industry that have been leveraging their ecosystem for quite some time. As a result, XRP’s Price has seen a gradual rise and is best suited as a more long term investment.
Cardano is a blockchain platform that uses a Proof-of-Stake consensus mechanism, similar to Ethereum 2.0, aiming to bring power back to the people. Founded in 2017, the ADA token ensures owners are able to participate and contribute to the network’s governance systems.
ADA isn’t just a great investment: it also allows holders to vote on proposals and changes to the blockchain’s code. According to the team behind it, there are a number of compelling use-cases for the Cardano blockchain, which enables the modular development of DApps and other smart contract-based applications.
TON Crystal [TON]
Last but not least, we have a very special newcomer that we want to share: TON Crystal .
The TON Blockchain is a community-driven blockchain (Free TON) that is extremely fast, secure, and scalable: capable of handling millions of transactions per second. In addition, the blockchain brings some new and unique features to the blockchain world, such as the “self-healing” vertical blockchain mechanism and Instant Hypercube Routing.
But TON is not only a blockchain: it’s a digital wallet with staking capability, a browser, and an NFC smart card for safe data storage. Free TON was launched in mid-2020 and has a lot of potential for future development.
The native token of the TON blockchain is the TON Crystal .
Tips for profitable investing
There are a seemingly endless number of cryptocurrencies to invest in, but there are a few proven methods to help you decide what to invest in.
- Calculated risk: Understand the risk of trading cryptocurrencies, and only invest money you can afford to lose.
- Diversify: Don’t put all your eggs in one basket. Spread them out so if one crashes, the others protect your capital.
- DYOR: The crypto trading industry is filled with fear, uncertainty, doubt, and a fear of missing out. It’s essential to filter out the noise, follow proven strategies, eliminate emotional attachments to your investments, and most importantly, Do Your Own Research [DYOR].
It’s 2021, and there is no getting away from cryptocurrencies. The industry has witnessed all kinds of incredible applications for blockchain technology over the last decade, and things don’t seem to be slowing down any time soon. Even as regulation has been struggling to catch up in most parts of the world, if the industry’s progress over the last few years is anything to go by, blockchain technology is undoubtedly here to stay.