Last Updated: September 9, 2021
Cryptocurrency is the future of money. Getting into it sooner than later can give you tremendous advantages.
Having a deeper understanding of this market can pay dividends once crypto finally becomes mainstream in the near future.
So, what’s the best cryptocurrency to invest in? Keep reading to find out.
What Is a Cryptocurrency?
Cryptocurrency is an umbrella term. It covers any financial technology that uses cryptography for privacy and blockchain for transparency and immutability of records.
Crypto promotes decentralization, eliminating the need to trust single entities. The best cryptocurrencies draw their power from networks of voluntary participants.
These independent parties – like Bitcoin miners or Ethereum validators – are not supposed to have a monopoly over their respective networks. Despite their tendency to join forces, no group has been able to do so successfully.
Not every popular cryptocurrency is necessarily currency in the way fiat money is. But cryptos plug the shortcomings of the legacy financial system. Or they play important roles on their native platforms.
What’s the Best Cryptocurrency To Invest In?
Cryptocurrencies as speculative assets. Many of them have intrinsic value, but their prices have been notoriously volatile. If you turn to crypto to park your cash, you could grow your money multiple times or lose half of what it’s worth overnight.
So, what are the best coin investments out there? As follows are the safest top cryptocurrency assets.
It’s not a coincidence that bitcoin is the most popular cryptocurrency in the world. In fact, 65 out of 100 crypto investors hold it.
By far, it’s never moved at the top of the cryptocurrency ranking list because of its first-mover advantages. Some of the best altcoins to buy have made headlines regularly. But nothing has been able to match the brand recognition of bitcoin yet.
Although anyone can copy Bitcoin’s code and replicate it in theory, nobody could clone its network at this point. Those who try will have to convince miners to invest billions of dollars in new infrastructure.
As the top cryptocurrency since day one, the lowest bitcoin’s market share has ever been was more or less 37%, recorded in January 2018. Since then, it has usually accounted for anywhere between 50% and 70% of the entire crypto market capitalization.
Despite being known for its wild price swings, bitcoin’s sheer size makes it arguably more stable than most crypto assets out there.
Will bitcoin still be the best cryptocurrency to buy and hold for years? Ethereum can realistically flip bitcoin at some point. But it’s unlikely to lose its appeal unless a better payment network comes along.
Bitcoin is special because it’s secure, immutable, open, uncensorable, and scarce.
The Bitcoin protocol uses the Proof-of-Work (PoW) algorithm. It requires miners to deposit enormous amounts of electricity and invest in sophisticated hardware to solve complex mathematical problems.
Then, the winning miner gets to earn the reward in BTC. Consequently, new bitcoin enters circulation.
Considering the significant cost of participation, compromising Bitcoin’s integrity can be pointlessly expensive. Besides, the best crypto hasn’t stayed relevant for this long without resisting existential threats.
The PoW algorithm encourages the formation of mining pools, which can expose Bitcoin to 51% attacks. But rewriting the transactional history in its blockchain has little economic incentive.
Taxation and propaganda have been much less expensive and more effective tools to prevent or slow down bitcoin adoption.
Some governments have occasionally threatened their citizens from using it to no avail. No country (not even the US or China) has been able to cancel crypto completely.
As a globally decentralized tech, the Bitcoin network is borderless and neutral. Its community is made up of users and investors from different jurisdictions.
Bitcoin is limited to 21 million only. Over 18.7 million of which have already been in circulation.
From here on out, the remaining supply only gets harder to mine. And about 5 million bitcoin may have been lost forever. So, bitcoin investments might be more promising in reality than on paper.
For this reason, the crypto community has hailed bitcoin as “digital gold.” When its market cap equals or eclipses gold’s at $11 trillion, bitcoin’s days of eye-watering volatility would be over. And then, bitcoin could finally live up to its title as a store of value.
Despite its amazing merits, it isn’t without naysayers. The most common criticism about it is its inefficiency as a medium of exchange. It’s a proper observation, but upcoming layer-2 solutions, like the Lightning Network, should increase the utility of bitcoin in the future.
Also, it isn’t that fungible; not all of its units (satoshis) have the same value.
To some investors, the best bitcoin is one that comes directly from miners. They’re willing to pay above the market price for it. By default, the satoshis that have entered cryptocurrency exchanges are relatively less valuable.
Decreased fungibility is the price this currency has to pay for being completely transparent. Nevertheless, lending itself to transactional surveillance is a feature, not a bug.
Actually, this perceived weakness can refute any claim that bitcoin is empowering criminals. Quite the contrary – law enforcement agencies can eventually identify and catch outlaws via it.
In fact, bitcoin’s distributed ledger is so transparent that everyone in the network can monitor the wallets where all of the stolen private keys have gone.
Bitcoin’s valuation has reached $1 trillion in just 12 years. It has outperformed Apple, Amazon, Microsoft, and Google. In 2020, it ended at nearly $29,000. By mid-May 2021, its all-time-high (ATH) had been around $64,000.
There’s no telling when it could achieve a new price milestone. But it’s in the process of unseating the US dollar as a 21st-century reserve asset. For that reason, making a bitcoin purchase now is a safe bet.
Is Ethereum a good investment? It could be, but you can’t buy a share of it. You can, however, use trusted cryptocurrency exchanges to own some ether – the Ethereum digital currency.
The gap between the market shares of bitcoin and ether narrows (40.2% vs. 19.9%, as of mid-May 2021). This could be the year when Ethereum finally overtakes Bitcoin, at least for a brief period.
Why is ether head and shoulders above thousands of other altcoins? It’s because ETH is the native digital currency of the blockchain network that plans to decentralize the internet.
Based on the ideal Ethereum model, no individual entity should be in charge of storing and protecting personal data.
Instead, a vast network of nodes owned by volunteer operators should handle it. This arrangement can dramatically lower the success of cyberattacks.
Bitcoin is legendary in its own right. But Ethereum, which was co-founded by Cardano and Polkadot creators, could be a bigger groundbreaker.
This open-source public blockchain supports smart contracts. It has facilitated initial coin offerings, helping speed up the funding process for crypto projects. That’s why many of the top 50 cryptocurrencies are built on Ethereum.
Furthermore, it has spawned decentralized apps (dapps) and non-fungible tokens (NFTs). It has been the chosen settlement network of widely used stablecoins too.
With a valuation of more than $400 billion, ether has had a banner 2021. But the price of the Ethereum crypto may still have plenty of room to grow.
The demand for ether has never been higher. Ethereum couldn’t even scale fast enough to accommodate the increased activity on it.
Major upgrades are in the pipeline. One of them is the adoption of Proof-of-Stake (PoS).
PoS is a consensus mechanism that uses validators in lieu of miners. Validators get to verify transactions and attest blocks. They do so by staking their own funds instead of spending electricity like miners do.
Also, this blockchain’s developers also intend to burn base fees. This would turn Ethereum crypto into a deflationary asset.
The amount of ether on cryptocurrency exchanges has been on a downward trend, while many funds are being locked in smart contracts. In other words, the circulating supply of the Ethereum cryptocurrency is bound to shrink in the foreseeable future.
Of all crypto networks, Cardano perhaps has the most exciting future. It’s the most notable example of a third-generation blockchain. It has scalability, governance, and compliance in its DNA.
The Cardano network divides its blockchain into two: the Cardano Settlement Layer (CSL) and the Cardano Computing Layer (CCL). This way, it could process millions of transactions every second.
The CSL hosts ADA, the platform’s native digital currency, along with the ledger where the validation of transactions happens. The CCL handles the computations for apps running on Cardano.
Cardano developers envision this open-source, public blockchain to be the greenest. It uses a PoS system to avoid consuming considerable amounts of energy.
Tokens, like stablecoins or NFTs, built on Cardano, need no smart contracts. Rather, they share the same architecture as ADA. In theory, such a design can make native Cardano tokens highly secure and less expensive to use.
Cardano is still under development; it’s just partially operational. Despite being far from completion, ADA is already an altcoin heavyweight. Valued at over $70 billion, ADA has barged into the top 5 cryptocurrency rankings since mid-January 2021.
What’s more, it has proven its might as a hedge against market-wide price volatility.
At one point, ADA’s rise in price didn’t lose steam even when almost all of the top cryptocurrencies were in sustained decline. It might be evidence that ADA’s price wasn’t closely correlated with bitcoin, ether, and other large-cap altcoins.
The problem with ADA is that its demand won’t exceed ETH’s any time soon. Cardano isn’t ready for prime time yet. It probably won’t outshine Ethereum for the time being.
DOT has been the fastest growing cryptocurrency worth investing in 2021. The crazy thing is that the native digital coin of the Polkadot network doesn’t seem to be overvalued.
Holding DOT doesn’t only give you the chance to grow your money. It can also help you play an active role in the development of Polkadot.
Why would you want this privilege, anyway? It’s because Polkadot is leading the way in facilitating interoperability between blockchain networks.
Launched in 2020, Polkadot has come with novel features. One of which is dual-blockchain infrastructure.
Its main network permanently records transactions. Its secondary one enables users to create and customize their own networks for specific use cases.
The upsurge in DOT’s market cap began in December 2020. After reaching $40 billion five months later, there’s little doubt that it’s the best new cryptocurrency.
Like Cardano, Polkadot is still at an early stage of its development. It’s commendable that some of its utility is very similar to Ethereum 2.0’s – a testament to the elegance of its design.
The more you realize how Polkadot works, the more DOT appears to be the best cryptocurrency to buy. But many retail and institutional investors aren’t likely to divert their ether allocations for it for now.
Chainlink is a decentralized oracle network. It aims to bridge crypto blockchains and the real world. It acts as middleware between smart contracts and external application programming interfaces.
Before it went live on Ethereum in March 2019, there was a missing link in the smart contract infrastructure. Chainlink addresses the limitation of siloed blockchains without sacrificing security and decentralization.
Chainlink has two components: off-chain and on-chain.
The former consists of a network of oracle nodes run by trusted entities that supply information to Chainlink’s various data feeds. The other one enables developers of decentralized apps to request essential data for smart contract execution.
Oracle nodes get paid in LINK, Chainlink’s own coin. Likewise, it’s used for staking that should incentivize oracle nodes to provide quality data consistently. That’s why it’s a future top 5 cryptocurrency.
Chainlink is the first mover in its niche. Like Bitcoin and Ethereum, it does enjoy distinct advantages over its competition. Currently, LINK is worth $18.7 billion in capitalization, which is good enough to hold the 13th spot in CoinMarketCap’s top crypto rankings.
LINK’s valuation has grown considerably since the beginning of 2021, with many dips along the way. The interest in other promising crypto assets could have influenced its rather volatile price action.
Chainlink does have a bright future. It’s one of the vital players in making decentralized finance a household word. It’s an exciting project in itself, and being associated with the World Economic Forum helps legitimize it.
Like Bitcoin, Monero is a decentralized payment network that uses the PoW algorithm for validating transactions and achieving consensus.
XMR, Monero’s native coin and one of the early alternative bitcoin investments, is also limited to 21 million. After the circulating supply touches 18 million, the miner reward goes down to 0.3 XMR.
Although both are permissionless blockchains, Monero allows users to send XMR to others incognito. Bitcoin supports anonymity, but Monero is on the extreme end of the privacy spectrum.
The Monero blockchain is opaque by design. It completely obscures transaction details and hides the identity of participants. Monero can pull this off by using ring signatures and stealth addresses.
Monero’s non-traceability makes XMR completely fungible, a quality absent in some satoshis. Its software’s code is open-source, though, so its developers can’t conceal anything.
XMR has achieved its highest rank by market cap at #5. But it has been out of the list of top 10 cryptocurrencies. At the time of writing, XMR occupies the 26th spot and has a valuation of $7.4 billion.
Can Monero recapture its place in the top 10 cryptocurrency list? As long as no other crypto network can facilitate anonymous transactions better, yes.
XMR is available for purchase on crypto automated teller machines. It’s also one of the best coins to mine with ordinary computers. Mining it yourself can be a rewarding way to earn and hold it, but be careful of cryptojacking malware.
The biggest drawback to Monero is limited hardware cryptocurrency wallet support. Also, XMR has been a popular cryptocurrency in the darknet market.
So, is XMR the best cryptocurrency to invest in as a bitcoin alternative? It is if you believe in its utility and what it represents.
When To Buy and Sell Crypto?
Making an educated guess about the optimum moment to buy or sell different crypto assets is a full-time job.
You have to pay attention to macroeconomic factors and trends, such as inflation, central bank interest rate, and regulatory policy by country. They can directly impact crypto investor sentiment.
Media- and influencer-generated hype can drive up or down the prices of different types of cryptocurrency too.
Having a healthy understanding of tokenomics can help you cash out or convert your holdings into new investments in a timely manner. Performing proper technical analysis is just as important when figuring out which is the best cryptocurrency to buy.
If you want to invest in cryptocurrency with little stress, do dollar-cost averaging. It is about making the same amount of altcoin or bitcoin purchases on a regular basis, with no consideration of the price.
Over time, it can gradually increase your holdings, neutralize the effects of volatility and render your emotions a non-factor.
Dollar-cost averaging is suitable if you prefer investing in cryptocurrency and holding to actively trading crypto assets.
Not thinking about your crypto investments may be good for your peace of mind. But strongly consider taking some profits along the way. This way, you can protect your gains from price swings and have cash on hand to buy the dip.
Crypto investing isn’t for the faint of heart. There’s never a dull day in the crypto market.
There’s nothing wrong with trying your luck in crypto assets to make bank. But don’t just speculate on the best coins to invest in. Buy into the notion that cryptocurrency is more than a seasonal mania for investment.
Crypto is the future of the internet, not only money. Be ahead of the curve!
Yes, it is.
Cryptocurrency is going to be part of the future of the internet, not just finance. But you have to do intensive research to know which ones are which.
Ethereum and Bitcoin are engineered to solve completely different problems.
Ethereum wants to decentralize the internet. The goal is to replace third-party custodians with a global computer network of independent nodes.
Bitcoin wants to establish a peer-to-peer cash system not based on central banking. It uses cryptography, blockchain, etc. to promote security, transparency, privacy, and immutability of records.
Likewise, it combats censorship and currency manipulation and enables fast, cheap, and cross-border transactions.
The Ethereum and Bitcoin networks can coexist and complement one another.
The best investable crypto assets have sound fundamentals that can justify high prices.
The safest options are still bitcoin and ether, the Ethereum digital currency. Cardano’s ADA, Polkadot’s DOT, and Chainlink’s LINK will likely have sizable valuations over the long term.
Monero’s XMR is a more private and fungible version of bitcoin. So, it’s one of the best alternatives to the top cryptocurrency as ecash.
Unfortunately, some of the top 50 cryptocurrencies have questionable value.
Relatively unknown altcoins that suddenly shoot up in price with no rhyme or reason are probably hyped by scammers. Be wary of these assets because they can widely drop in price after you buy them.
To learn more about the best cryptocurrency to invest in, check out the above interesting piece.