When people think of cryptocurrency to invest in, mostly the first thing that comes to mind is Bitcoin. Even though there are hundreds of digital currencies out there, Bitcoin is the most well-known.
Whether it’s from the news or a friend, you’ve probably heard of cryptocurrency. But what exactly is it? If you don’t know the basics, it can be difficult to understand cryptocurrencies.
Let’s take a look at the history of this relatively new technology, an overview of its inner workings, and a projection of where this industry may be heading in the future so you have a better understanding of what cryptocurrency to invest in and how it works. You will gain a better understanding of these topics once you have some background information.
What is cryptocurrency?
A cryptocurrency is a form of digital currency that makes use of cryptography for security. Most cryptocurrencies operate without relying on centralized authorities like banks or governments and instead utilize a distributed ledger to distribute power among their users. The monetary policy of a cryptocurrency is defined, such as whether it’s a set limit of tokens or whether the creation of new tokens is allowed based on predetermined criteria.
What is Blockchain?
In cryptocurrency transactions, a blockchain is the distributed ledger keeping track of the transaction. A blockchain is composed of blocks, which contain individual transaction details. In order for transactions to be verified by other chain stakeholders and keep their integrity, they are timestamped and posted to the ledger.
Each transaction on the blockchain involves users paying a small fee, which aids in maintaining the security of the network.
For instance, you might want to send a small amount of bitcoin to your friend. You create a transaction using your Bitcoin wallet and agree to pay a nominal fee along the way to send Bitcoin to your friend. Upon submitting a transaction request, you will be included in a block on the Bitcoin blockchain along with other transactions. Miners verify this block and add it to the blockchain, completing the transaction.
Sending cryptocurrency with low fees allows you to send it to anyone, anywhere in the world. Do you want to send your family in Kenya a $1 million dogecoin? Feel free! Using a traditional money transfer service would have cost you a considerable amount of money. With an online money transfer service, you can complete the transaction in a matter of seconds or minutes while only paying a fraction of the price.
What are the uses of cryptocurrency?
A primary reason for the early appeal of cryptocurrency was that it offered an anonymous and unhindered method of transferring large amounts of wealth. In these modern times, some cryptocurrency owners use it to pay bills and other routine matters. They may also use it as collateral for obtaining online loans.
Meanwhile, others invest in business start-ups with their digital currency. In addition to innovative technology ventures, cryptocurrency seems to be a logical combination.
Advantages of using Cryptocurrency
- Transactions are faster and cheaper – With a crypto exchange, instead of having to go through legal laws and unnecessary steps to send money, you can do it relatively quickly and cheaply. A fast, easy, and cheap transaction is made possible by eliminating the need for agents, brokerage fees, commissions, and extra fees.
- Security and confidentiality – All transactions with cryptocurrency are encrypted, safe, and mostly anonymous. There is no way anyone can monitor your financial activities or get access to your account history, such as the way banks do so. You are the only one who can view your recent transactions.
- Financial freedom for those without a bank account – The number of people without a bank account is over 5 billion around the world. That means they have no accounts with financial institutions or mobile money providers.
This might be due to the strict requirements and application process financial institutions require of their depositors, which can be a major obstacle. Since there is no such requirement with cryptocurrency, anyone can open an account immediately.
- Quick international trade – Crypto allows us to transfer information in a matter of seconds, rather than days or weeks. Since these are online transactions, the time it takes to transfer money around the world is reduced, regardless of where you are located.
- A growing investment opportunity – Over 20,000 markets are now served by over 5,000 different altcoins in circulation since Bitcoin arrived a few years ago.
With the post-modern population, this sector is only likely to grow in the future. Some of these coins are already in use and circulation today, and they will make for excellent investment opportunities for those wishing to invest in them.
Best Cryptocurrency to Invest in today
Now, let’s cover the best cryptocurrencies to invest in today. By the end of this article, you will have ideas on which crypto you wish to invest your money in. We cover only those cryptocurrencies with the highest market cap.
#1. Bitcoin (BTC)
- Over $1.17 trillion in market cap
- Best cryptocurrency to invest in
Bitcoin (BTC) is the original cryptocurrency, having been created in 2009 under the pseudonym Satoshi Nakamoto. BTC is a cryptocurrency that uses a blockchain or a digital ledger that logs transactions across an extensive network of computers. A cryptographic puzzle must be solved in order for additions to a distributed ledger to be verified. This process is known as proof of work. This keeps Bitcoin secure and safe from fraudsters.
With Bitcoin’s popularity skyrocketing, its price has risen exponentially. Bitcoins were priced around $500 five years ago. Approximately 62,000 bitcoins were being bought and sold on Nov. 29, 2021.
In the past few days, Bitcoin’s price has rocketed due to a number of catalysts, including the debut of the first Bitcoin-focused exchange-traded fund in the U.S. Bitcoin achieved its all-time high of $66,930 within a day of the Proshares Bitcoin Strategy ETF (BITO) debuting on Oct. 19.
A decentralized, blockchain-based currency not issued by any nation was made possible by bitcoin’s invention in 2009. The fact that Bitcoin was first to market, having a maximum circulation of 21 million BTC, and its potential to become a store of value on corporate balance sheets are all reasons for its success.
#2. Ethereum (ETH)
- Over $520 billion in market cap
- Second Best cryptocurrency to invest in
Ethereum is both a cryptocurrency and a blockchain platform, making it popular with programmers due to its many applications, such as smart contracts that run automatically when conditions are met, and non-fungible tokens (NFTs).
Ethereum has also grown tremendously. The price of this product grew by nearly 40,000% in just over five years, from $11 to over $4,400.
One of the few digital assets other than Bitcoin that is worthy of the title of blue-chip cryptocurrency is Ethereum. Over 43% of the market cap of the whole asset class is accounted for by Bitcoin, while over 19% is accounted for by Ethereum. There are no other coins with a market share of even 4%. ETH has begun the year with only a 10.8% market share in 2021, eroding BTC’s share of the market.
Ethereum’s popularity is mainly driven by its ability to facilitate decentralized finance, or DeFi, which is a key differentiator from Bitcoin. Ethereum is a platform where developers love to build decentralized applications, or DApps, because it’s the world’s most popular blockchain and is used by new technologies like nonfungible tokens, or NFTs. The price of Ethereum reached all-time highs on Oct. 29.
#3. Binance Coin (BNB)
- Over $88 billion in market cap
Mainstream investors may initially associate “cryptocurrency exchange” with Coinbase Global Inc. (COIN), the first company of that type to go public in the United States. The world’s largest crypto exchange is actually Binance, and BNB is its native token, which was issued on the Binance blockchain originally but will soon be on Ethereum.
One of the largest crypto exchanges in the world, Binance, offers the Binance Coin, which can be used to trade and pay for services.
Binary Coin has grown beyond facilitating trades on Binance’s exchange platform since its launch in 2017. Currently, consumers can use it to trade, make payments, or book travel arrangements. You can also trade or exchange it for other cryptocurrencies such as Ethereum or Bitcoin.
As of Oct. 29, 2021, its price was $530, a gain of over 530,000% from $0.10 in 2017.
#4. Tether (USDT)
- Approximately $70 billion market cap
The Tether stable coin, unlike some other cryptocurrencies, is backed by fiat currency, such as U.S. dollars or Euros, and as a result, keeps a value equivalent to one of those currencies. Tether’s value is therefore expected to be more stable than that of other cryptocurrencies, and many investors prefer it over other cryptocurrencies due to its lack of extreme volatility.
In an effort to attract users who may otherwise be wary due to the volatility of most digital currencies, stablecoins such as Tether and others attempt to smooth out price fluctuations. The price of Tether is tied directly to the value of the U.S. dollar. In comparison to converting to normal currency, the system makes it easier for users to transfer cryptocurrencies back to U.S. dollars quickly.
Tether, launched in 2014, aims to enable fiat currency to be used in a digital manner through a blockchain-based platform. In this way, individuals can utilize blockchain networks coupled with related technologies to conduct transactions in traditional currency while minimizing the volatility and complexity associated with digital currencies.
#5. Cardano (ADA)
- Market cap exceeds $66 billion
Cardano joined the crypto scene a little later than most, but it was one of the first to adopt proof-of-stake.
By doing away with the competitive, problem-solving nature of transaction verification present in platforms such as Bitcoin, this method expedites the transaction process and reduces energy usage and environmental impact. ADA, Cardano’s native coin, can also be used to power smart contracts and decentralized applications, like Ethereum does.
In comparison to other major crypto coins, Cardano’s ADA token has grown relatively slowly. When ADA was launched in 2017, its price was $0.02. The price has risen to $2.01 as of Oct. 29, 2021. This represents almost a 10,000% increase in price.
Research and experimentation go into the creation of Cardano’s blockchain. Over 90 research papers have been published on blockchain technology across a range of topics by the researchers behind the project. They form the basis for Cardano’s development.
The rigorous process that Cardano goes through makes it stand out among other major cryptocurrencies and other proof-of-stake peers. In addition to being called the “Ethereum killer,” Cardano is also said to be able to do more than Ethereum. Notably, Cardano is still in its infancy. Ethereum did beat it to the proof-of-stake consensus model, but in terms of decentralized financial applications, it still has a long way to go.
#6. Solana (SOL)
- The market cap is over $60 billion
Solana is a platform designed to enable decentralized finance (DeFi), decentralized applications (DApps), and smart contracts. It runs on a unique hybrid proof-of-stake and the proof-of-history mechanism that enables it to process transactions quickly and securely. The platform operates on the SOL token, Solana’s native token.
The launch price for SOL was $0.77 in 2020. Almost two decades later, its price had climbed to $201.91; an increase of more than 260%.
In 2021, the crypto token market took off to some degree, but Solana stands out as the year’s biggest underdog. From just 0.01% of the market at the beginning of the year, SOL shot up to enter the top 10 cryptocurrencies by September. SOL is ranked fifth among all cryptocurrencies, exclusive of stablecoins.
Designed to make the creation of DApps easier, the Solana protocol is actually faster than Ethereum, has fewer fees, and is more easily scalable than Ethereum rivals. As late October and early November approached, Solana reached record highs.
#7. Polkadot (DOT)
- Over $43 billion in market capitalization
In addition to aiming to deliver interoperability among other blockchains, Polkadot is a proof-of-stake cryptocurrency. It enables permissioned and permissionless blockchains to work together, as well as oracles, under a common protocol. One of Polkadot’s main components is its relay chain, which facilitates network interoperability across a variety of networks.
Additionally, it enables parallel blockchains carrying native tokens to address specific use cases.
In contrast to Ethereum, Polkadot allows developers to build decentralized applications while also creating and using their own blockchains, while still utilizing the security of Polkadot’s chain. In Ethereum, developers create their own blockchains, but they must secure them themselves, which leaves new and smaller projects vulnerable, as the larger a blockchain, the more secure it is. Polkadot refers to this concept as shared security.
Blockchains are used by a variety of cryptocurrencies; Polkadot and other crypto seek to combine them by creating a cryptocurrency network that enables them to work together. Polkadot has been experiencing impressive growth since it was launched in 2020, and this integration may change how cryptocurrencies are managed. From Sept. 20, 2020 through Oct. 29, 2021, its value increased by about 1,400%, from $2.93 to $44.19.
#8. XRP (XRP)
- Over $56 billion in market cap
It was founded by the same people who founded Ripple, digital technology and payment processing company. Using its network, XRP can facilitate the exchange of various currency types, including fiat currencies and other major cryptocurrencies.
XRP’s price was $0.006 at the start of 2017. It reached $1.08 on Oct. 29, 2021, an increase of 17,900%.
#9. Shiba Inu (SHIB)
- Over $41 billion in market capitalization
Amid the hype over meme coins, Shiba Inu was launched in mid-2020. Shiba Inu is an Ethereum-based coin. Although starting at a price just under a penny, SHIB has increased in value immensely to $0.00007567, a 5,400,000% increase.
#10. Dogecoin (DOGE)
- Over $38 billion in market cap
Celebrities and billionaires such as Elon Musk have been touting Dogecoin. Thanks to creative memes and a dedicated community, Dogecoin quickly became one of the best cryptocurrency to invest in. As a result, Dogecoins are susceptible to devaluation as the supply increases, unlike many other cryptos, such as Bitcoin.
In 2017, the price of Dogecoin was $0.0002. Its price was $0.29 on Oct. 29, 2021, an increase of almost 145,000%.
In 2021, the price of dogecoin skyrocketed, causing some to call it the original ‘memecoin’. A shiba inu image appears on the coin’s avatar and the currency is accepted by major corporations, including the Dallas Mavericks, Kronos, and, perhaps most importantly, SpaceX, an American aerospace manufacturer owned by Elon Musk.
These are the best cryptocurrency to invest in. Bitcoin, with its highest market cap, has become so damn expensive. But since there are hundreds of other cryptos out there that you can invest in, it is important to choose wisely. With market uncertainty and price fluctuation, cryptos are very volatile and that is why it is important to learn about cryptocurrency before you decide to invest your money in it.