You can exchange bitcoins for cash or assets like gold easily, instantly, and with incredibly low fees. The high liquidity associated with Bitcoin makes it a great investment if you are looking for short-term profits. Digital currencies can also be a long-term investment due to the high market demand.
Popularity of bitcoin
Why do many investors start investing in cryptocurrency with Bitcoin?
With its pioneer advantage, bitcoin not only gained early acceptance but also became the cryptocurrency for main investors.
The world’s #1 coin accounts for nearly two-thirds of the total cryptocurrency market, providing liquidity between smaller altcoins. Its size also makes it resilient to 51% attacks when large cryptocurrency miners try to use computing power to try to manipulate the blockchain.
However, Bitcoin has several disadvantages. The bitcoin ledger, one of the earliest blockchains, is large and unwieldy. It can cost 12 dollars to complete a transaction and take more than 15 minutes to process. This doesn’t interfere with Bitcoin being used as “digital gold” (to preserve monetary assets) but won’t allow BTC to be used as a day-to-day currency.
Bitcoin is also extremely sensitive to macroeconomic movements — the currency lost half of its value during the last downturn in the US stock market. And if 2021 shows a weak economic recovery or there is a mutated strain of the coronavirus, Bitcoin could easily lose 50–80% of its value.
However, for many cryptocurrency investors, Bitcoin remains the most liquid option. It is an important coin to watch as it evolves. Many experts are giving it top marks in 2021.
Which cryptocurrencies deserve attention?
Speaking about investments in cryptocurrencies, it is worth paying attention to the technologies used in cryptocurrencies and how these technologies solve various problems.
TOP-10 cryptocurrencies with technologies that deserve attention from potential investors:
- Ethereum (ETH)
- Bitcoin (BTC)
- XRP (XRP)
- Stellar (XLM)
- Cardano (ADA)
- Dogecoin (DOGE)
- Polkadot (DOT)
- Neo (NEO)
- Celsius (CEL)
- Nano (NANO)
Ethereum (ETH) is a relative newcomer that has climbed the rankings due to its superior technology and ability to create smart contracts. Estimated Market Cap: 100 billion dollars.
Instead of positioning itself as “digital gold,” Ethereum uses a series of contracts. This makes it more like Google Wallet or Apple Pay — a system that can approve or delay transactions based on real-life events. For example, online buyers and sellers can set up deals that only close when the postal service independently verifies the delivery of the goods.
Ethereum is also incredibly fast compared to Bitcoin, with transactions taking only 15 seconds instead of 15 minutes. While trading costs are still high, its speed makes Ethereum great for real-time use, not just as a store of value.
Bitcoin (BTC) is the most widely used cryptocurrency, although not the most technologically advanced. Its approximate market capitalization is 600 billion dollars. We have dedicated a separate sub-chapter to Bitcoin above.
XRP (XRP) is a centralized cryptocurrency designed to reduce the high costs of interbank transfers. XRP has tremendous potential. The currency is used by financial institutions as an alternative to the SWIFT network, which makes it applicable in real life. And the low price per coin makes it a tempting target for gamblers — it’s easier to see XRP rise 1,000% to 3,5 dollars than BTC to 454 000 dollars.
Stellar (XLM), a contender for XRP’s place, offers low-cost cross-border transactions. In January, the Office of the Comptroller of the Currency (OCC) allowed banks to start using independent node verification networks. And the same week, the Ukrainian government announced a partnership with Stellar Development to create a national digital currency. All this provides the ideal conditions for investing in Stellar, the leading cryptocurrency for 2021.
Cardano (ADA) is the largest third-generation cryptocurrency and has much more growth potential in 2021. Cardano gained some momentum — it took the currency only three years to reach a market cap of 10 billion dollars. It is three times less than it took Bitcoin to get to the same place. It also costs only 0.30 dollars per coin, making it an attractive target for gamblers. Finally, it can process transactions and smart contracts, which makes it a “third-generation” coin.
Dogecoin (DOGE) is a cryptocurrency that surprised many people. An internet meme turned into a cryptocurrency and now teaches the world to make money. Elon Musk made Dogecoin go up by 200% in a week just by tweeting about it. In 2021, the coin has every chance to rise to speculative heights. Dogecoin has its merits: its high speed of creating new blocks allows better payment processing than Bitcoin.
Polkadot (DOT) is another promising third-generation cryptocurrency alongside Cardano that is worth considering. From a technological point of view, Polkadot’s key differentiator is its use of parachains — multiple blockchains that can run simultaneously. This solves a major problem for Bitcoin, which has a single growing blockchain that all miners (and transaction participants) need to keep. The developers have also added scalability, smart contracts, and security.
Neo (NEO) — aka “the Chinese Ethereum” — has all that it takes to become popular if the Chinese Communist Party allows it. Estimated Market Cap: 1 billion dollars.
The coin’s value plummeted in 2018 when the Chinese government took harsh measures against cryptocurrency exchanges. But in 2021, the value of the coin began to rise rapidly thanks to a review of its position on cryptocurrencies by the Chinese Communist Party.
Celsius (CEL) is a cryptocurrency that can become a bank. The sharp rise in Celsius in 2020 makes this currency worthy of attention. In 2018, Celsius raised 20 million dollars to create a cryptocurrency lending platform. The network expected to give out loans worth 6.2 billion dollars, which made it look more like a bank than a currency.
However, there are many risks behind Celsius. As companies from Bear Stearns to Lehman Brothers have discovered, bad loans can quickly sink your warship. And Celsius itself could explode if loans are not carefully checked. Until then, investors can make big returns.
Nano (NANO) offers users the ability to have their own blockchain. Nano provides each user with a personal ledger. Market capitalization is over 700 million dollars. Like many cryptocurrencies, Nano guarantees high transaction speed. According to the creators, Nano transactions are completely free.