Unlike the traditional banking system, a beautiful thing about the cryptocurrency market is the fact that it operates as a decentralized system. This decentralized system makes it possible for the price of digital currencies to be volatile hence, providing an explosive return on investments.
Also, the knowledge of how much flows into the cryptocurrency world is a tell tale sign of it’s profitability and a fact that the cryptocurrency world and the industry has come to stay and is capable of overtaking the current financial system trend in long term.
As it stands, the cumulative market capitalization of all cryptocurrencies sums up to about $561.68billion and surely, global trends tell us that the figure will keep growing.
Aside those, digital currencies offer other multiple advantages compared to traditional fiat money, such as lower fees, transparency, liquidity feature and transaction speed.
These are undeniably facts why one should consider investing into this moving industry. Below are the recommended cryptocurrencies according to experts, with a high potential that you could think of venturing into come 2021.
1. Bitcoin (BTC)
Bitcoin was created in 2009 by an individual under the supposed name Satoshi Nakamoto. It is the first and most widely used virtual currency with more expectations of growth.
The main goal of Bitcoin is to become global, peer-to-peer, digital cash, which is detached from any form of regulation and thus fully decentralized.
Its advantages include a high liquidity feature and trading volume in the market, generally accepted by all crypto exchanges, it’s investment returns are very high, its a side term thing that can be used to earn additional income. It serves as a store of value. Since it has a limited number in the market, there can’t be a cause for inflation.
However, its major problem is its high price.
Bitcoin is strongly advised for beginners because it still remains the largest cryptocurrency by market cap, in terms of value, and a key influencer in mass adoption of cryptocurrencies.
As at writing, it’s market capitalization is $355.72billion and trades volume at $ 20.22billion.
2. Ethereum (ETH)
Who ever mentions Bitcoin and doesn’t mention Ethereum next? Wonder why they sound like bread and butter and go hand in hand? This is it.
Ethereum, the five year old digital currency developed by Vitalik Buterin, has proven it has a very promising future in the long term of the cryptocurrency world.
As the first bitcoin alternative, it is a decentralized software platform that enables Smart Contracts and Decentralized Applications (DApps) to be built and run without any downtime, fraud, control, or interference from a third party. The applications on Ethereum are run on its platform-specific cryptographic token, ether.
ETH can be used to make payments, as a store of value, or as collateral. It allows one to choose both good long term and short term investment.
Moreso, the ETH 2.0 version has come to make investments in ETH in the long run more profitable. It is of a lesser price compared to Bitcoin and it is a very accessible investment for those starting out. However, it should be noted that this coin has high volatility.
There are about 100 million Ethereum in the market with a market capitalization of $64.32 billion and a trading volume of about $7.62billion.
3. Ripple (XRP)
Ripple, the next cryptocurrency with a large market capitalization after Bitcoin and Ethereum. It was born in 2012 by Chris Larsen.
It is built upon a distributed open source internet protocol and supports tokens representing fiat currency, cryptocurrency, commodities, or other units of value such as frequent flier miles or mobile minutes. The process of cross-border payments with its negligible transaction fees and super fast transaction times are eased out.
The unique feature of this coin is its consensus algorithm used which is called Byzantine fault tolerance based on the Byzantine general problem. It’s a method of eliminating faulty participators by bringing about a consensus through a majority poll.
Ripple according to experts might explode in the years to come because of its institutional support and safety from SEC regulation.
Also, a strong advantage to this coin is it’s flexibility. Ripple has some insane flexibility in terms of currency. You can pay in all sorts of cash currency and cryptocurrency including ether and bitcoin and there’s only a negligible internal commission for this.
Currently, it is being used in the real world by organizations like MoneyGram, European money transfer service, Azimo, and Union. It also has limited supply so inflation is unlikely and has great ability to convert to any currency or value (like gold) with a uniform minimum commission.
Meanwhile, this digital currency is highly centralized, and it being open-source means there’s a great likelihood of getting hacked.
It has a market capitalization of $22.68billion with a trading volume of $9.98 billion.
Tether was one of the first and most popular of a group called stablecoins, cryptocurrencies which aim to peg their market value to a currency or other external reference point so as to reduce volatility.
Because most digital currencies, even major ones like bitcoin, have experienced frequent periods of dynamic volatility, Tether and other stablecoins attempt to iron out price fluctuations in order to attract users who may otherwise be cautious.
Launched in 2014, Tether describes itself as “a blockchain-enabled platform designed to facilitate the use of fiat currencies in a digital manner.”
This cryptocurrency allows individuals to utilize a blockchain network and related technologies to transact in traditional currencies while minimizing the volatility and complexity often associated with digital currencies.
Tether has a market capitalization of $19.84 billion with a trading volume of $33.34 billion.
5. Litecoin (LTC)
The LTC and BTC currency share similar technicalities as it is similarly called “digital silver” compared to the BTC’s term being the “digital gold”.
Litecoin cryptocurrency was birthed by Charlie Lee in 2011 and ranks one of the coins with the lowest amount of time for mining while also giving a high block reward of 25 LTC.
Litecoin is one of the fastest and most affordable cryptocurrencies when it comes to payments and offers great investment return at a much more affordable price.The overall price is less volatile compared to other cryptocurrencies in the market and it has high liquidity and a large market cap.
Moreso, Litecoin was recently confirmed to be integrated into conventional ATMs in Korea through a partnership with MeconCash.
Meanwhile, it suffered credibility issues when Charlie Lee sold off his LTC stake in December, last year on a “conflict of interest. When placed side by side Bitcoin, it has very little creativity and new ideas.
Litecoin has a limit of 84 million coins with a market capitalization currently at $ 5.02 billion with a trading volume of $2.63 billion.
Conclusively, there is no cryptocurrency that can be said to be the best. In order to avoid bad investments it is advisable to engage in research and reach out to experts in the industry for qualitative advice and help. Just as a popular adage says; it is wise to look before leaping.
Duru Joselyn is a content creator, writer, self development coach and news analyst. She specifically enjoys writing on anything pertaining to cryptocurrency and the blockchain industry. Joselyn is a fun loving Nigerian who not only has a flair for giving information updates; she also enjoys a variety of outdoor activities especially traveling and photography.