- Difficult market adoption
- Probable regulation
- Neglected coins
- Difference in volatility
- Impossibility to recover keys
- Liquidity risk
- Outside risk
- Market capitalization
- Adoption Rate
- Contribution in industry development
- Implemented technologies
- When is the best time to invest in cryptocurrency?
- How to choose cryptocurrency?
- Should you invest in cryptocurrency now?
- Where can I trade Bitcoin?
The development of the cryptocurrency market is a process tough to be followed, as there are thousands of currencies involved in it. Some of them promise a long-term benefit, while others are more profitable short-term investments. We have collected data about the market capitalization, price predictions, leading developers, and current position of different cryptocurrencies in 2021 and summarized information for you in our article.
Reading this review, you will be able to compare coins in terms of the benefits they can bring you and choose cryptocurrencies to invest in.
The most popular and the first invented cryptocurrency is Bitcoin. Satoshi Nakamoto introduced Bitcoin to the market in 2009 and made it an original cryptocurrency. His personality is still hidden, but the contribution he made helped to develop the market of digital currencies.
Nowadays, cryptocurrencies are used as an additional way to exchange money, transfer them, and invest. Before the foundation of Bitcoin, all these processes seemed impossible to do with digital currencies. Usage of cryptocurrencies became a replacement of traditional financial operations with banks and other organizations.
Any cryptocurrency is an alternative option to fiat currencies and is perceived as a safer one. There were many examples when fiat currencies were seized by the government, and it caused a high level of inflation. For instance, in Greece, an extremely big number of governmental debts led to financial crises, and the government started to seize more than 1,000 bank accounts every day. Another case is the high inflation rate in Venezuela that left families on the brink of survival.
These situations showed that people need more reliable ways to store their funds and exchange them. Cryptocurrency space became this beneficial alternative for people that protects their funds from seizure.
Let's discuss cryptocurrencies in more detail and try to figure out their profitability for you. In addition to the already described advantages of Bitcoin and other cryptocurrencies, more factors make people invest in the digital market.
When you use cryptos and make some operations with your funds online, all information is recorded in the blockchain network. So, exchanges that you apply for transfers of cryptocurrencies send data about your wallet and all related processes to nodes. These nodes are synchronized with each other and contain copies of transactions. It means that no one organization keeps your money, but there exist lots of different data storage spaces.
A decentralized finance structure protects funds from seizures or local scams. Moreover, there is no chance that funds or data about them can be completely destroyed. Information about your budget is always safely recorded not in the central authority database but in the network sprouted around the whole world.
The huge difference in privacy between bank transactions and operations made with bitcoin is anonymity. When you exchange crypto, other people cannot identify you as your name is not attached to a transaction. The same privacy is possible with the exchange of cash.
Besides, the transparency of all transactions for some cryptos increases the safety of funds, as users can track the status of their operations. It is possible because of the basis of cryptocurrencies — blockchain technology and chain interoperability. On the other hand, Monero is an example of the opposite case because it is an untraceable currency that protects funds from hacks. This feature allows to make criminal operations as well, and it has impacted the reputation of this coin.
However, if the transaction is connected to your exchange account or IP address, other participants of the chain will be able to learn your name. That is why the exchange of popular cryptos such as Ethereum and Bitcoin are called pseudo-anonymous.
There is a limitation in the supply of every cryptocurrency, and it is guaranteed by the code. For example, nowadays, there are only 17 million bitcoins on the market, and one day, the amount is likely to increase to 21 million. No one can change this algorithm of supply, and it supports the per token value of the currency.
In contrast, fiat currencies such as the dollar or euro are easy to add when all available funds are in circulation. The scarcity of cryptocurrencies is a similar feature of this money to gold or other precious metals. It protects the currency from devaluation and provides buying power.
The transferring costs for cryptocurrencies differ between exchanges and depend on the urgency of the situation. For instance, if you need to make a bitcoin transaction fast, you have to pay extra fees for the transaction speed. When people make usual transfers, the price is affordable, which makes bitcoin more available for the population.
As regards other cryptos, Litecoin is always cheap to transfer. That is why a lot of financial organizations use this currency based on the Ripple system.
There are lots of services and financial products available for people that are related to cryptocurrencies. Some operations are similar to ones supported with fiat currencies, while others are unique. One of the examples is the Ethereum network and its smart contracts — it supports many operations that are regulated by blockchain. The fact that all operations are made through blockchain protects people from funds lost and secures them.
The increasing interest in the crypto market among the population makes trading more complicated. Along with high protection and profit from cryptocurrency trading, some risks are difficult to predict. Even though the risks are high for some types of coins, some offers are still more beneficial than usual investments, such as the purchase of real estate. Here are negative considerations about cryptocurrencies that can influence your choice of the coin.
Not all the introduced cryptocurrencies are successful on the market. More than 1,000 coins have already disappeared from the market because of the low market capitalization. Usually, the market cap and technological advancement of the currency are the main things to take into account if you want to predict its success. Also, pay attention to the user base of the appearing currency to estimate its chances.
Bitcoin remains the most common cryptocurrency used in the world. It creates complications for other cryptocurrencies to enter the market. Even though some companies started to accept crypto as a payment method, the list of coins you can use is limited. Only several cryptocurrencies attract enough attention to the development, and they are Bitcoin, Monero, Litecoin, Ethereum. Other currencies are still hidden behind the shadow of those coins.
Nowadays, there are no state laws in the USA that regulate cryptos trading on the digital market. However, some states introduce some limitations on bitcoin and other cryptos transactions. New regulations can appear in the future, but now no one can predict it. It means that there is a risk that some new laws and regulations made by the Securities and Exchange Commission can influence your benefits and decrease the level of demand for cryptocurrencies.
Competition between different coins on the market is still rather intense. The major share of the value of cryptos on the market is related to a small number of coins. A lot of cryptocurrencies disappeared from the market because of the competition. In this case, most investors who bought these abandoned cryptocurrencies lost their funds because of the drop in the value of coins. There is always a risk that this can happen to new cryptocurrencies.
Some stable cryptocurrencies like Bitcoin or Ethereum have lower volatility than appearing coins. Probably, the cryptocurrency market has the highest level of volatility in comparison to other financial classes. So, when you work in a high volatility market, there is a huge risk that you can lose all your funds in one second.
As you are connected to a huge network when buying cryptocurrencies and there is no central office that regulates it, only you are responsible for the safety of your wallet keys. In contrast to usual financial institutions, no one can help you to restore access to your wallet with your funds if you forget keys. That is why there is the risk of losing money because of a small mistake.
The cryptocurrency market is hard to exit when the value of a digital token is decreasing, and there is no demand for it. It creates the liquidity risk of trading with cryptos.
Even though the cryptocurrency market is one of the safest ones, there were cases when people lost all their funds because of the invasion of third parties. For instance, the Japanese exchange Mt. Gox crashed in 2014 because of the hackers' attack. All people who kept their money on this platform just missed the coins.
Overall, to become a part of the cryptocurrency industry, you have to estimate all the risks and benefits of the trading. There is a high probability of earning a lot of money with cryptocurrencies and losing your last funds with these investments.
You should understand the difference between the properties of altcoins and bitcoin when entering the market. Bitcoin is a cryptocurrency with high market capitalization and a low level of volatility. In contrast to altcoins, they do not lose their value significantly on the bear market.
Altcoins are all other cryptocurrencies that bring more risks to investors and, at the same time, increase the probable profit from trading. They are especially profitable to invest in the bull market because of the high volatility of coins.
Below we will describe several cryptocurrencies that are attractive investments today. We will try to explain the influence of different factors on the value of digital money and estimate the chance of building wealth with them.
It is crucial to understand that today cryptocurrencies help people not only to earn additional money but to support huge projects. Some companies base all their funding on the cryptocurrencies that make the coins valuable. For instance, such famous entrepreneurs as Andreessen Horowitz and Mark Cuban invest in cryptocurrencies and especially altcoins that are decentralized financial products. The position of these coins is supported by the venture capital of their organizations.
Let's have a look at the coins that are promising to bring huge funds and find the best cryptocurrencies to invest in this year.
Bitcoin's position on the market has remained strong since its inception, and that is why it can be profitable for you to invest in it. The market cap of bitcoin is the largest among all cryptocurrencies, which makes it liquid for traders. Moreover, different financial institutions started to introduce bitcoin to their systems as payment currency. Bitcoin became a part of corporate finance in the world. It all makes bitcoin the most influential cryptocurrency network on the digital market.
Bitcoin affects other altcoins because of the largest share it takes in the crypto world. Thus, if bitcoin starts to devalue one day, the value of other altcoins will follow this trend too. Also, the per token value of bitcoin is rising nowadays, so you can benefit from buying this crypto in the future.
One more important thing is that there is a limited amount of bitcoin. Even though it will increase to 21 million soon, there are still a lot of users who are interested in this coin. That is why its price will remain high for a long time. By the way, the inflation rate of bitcoin will decrease in time, and now it is equal to 1.7%. Therefore, it is one of the most profitable currencies on the crypto market today.
By the way, Bitcoin created other projects of cryptocurrencies such as Bitcoin Cash and Bitcoin's Gold. While Bitcoin is more used for investments, Bitcoin Cash is more applicable in real life for different kinds of payments.
Ethereum blockchain has shown significant development since its foundation in the crypto market, especially because of the creation of decentralized applications and smart contracts. It was the first cryptocurrency that became popular after Bitcoin and took a huge share of the market. Its market capitalization value now takes the second position in the industry.
Because of the huge investments in the development of Ethereum from famous companies, this crypto will be active for a long time and will create more decentralized apps and other projects. The process of its improvement and promotion presents that there are more options to make the market value of this decentralized software platform stronger. For instance, Microsoft, Chase, Intel provide software for the improvement of Ethereum. It means that Ethereum has not run its course, and you should pay attention to this crypto.
There are many exchanges where you can buy Ethereum; for example, Coinbase or Voyager offer such service to users.
Sushi or SushiSwap was the main competitor of Uniswap when it appeared. It was founded as a decentralized suite for exchange, and now it provides much more services to users. The main feature of a SushiSwap is that users can receive dividends for having tokens of this crypto. So, it allows users of Sushi to earn 0.05% share from the trades on the platform if they store tokens there.
As regards other functions developed by the Sushi platform, users can request loans, use leverage trading, and participate in the launch of tokens. In addition, the company plans to construct a platform for NFT exchange, Shoyu, that can become an alternative to one of the most popular NFT platforms now, OpenSea.
The sellers of NFT on Shoyu will need to pay a fee that is equal to 2.5%. The platform will distribute this money among token holders as dividends payment.
Chainlink is a token based on the platform that gives access to smart contracts of Ethereum. It is a decentralized oracle network that provides additional security to smart contracts, especially in terms of connection to API and external payment platforms.
The platform was called SmartContract.com when it was created in 2014, but after this, it changed its name to ChainLink. One of the biggest contributions to the development of Chainlink was its partnership with Google. This agreement between ChainLink and Google allows users to get access to Google's services under the smart contracts strategy. This step increased the market value of the token according to investors' opinions expressed.
You can invest in tokens of this decentralized oracle network with such exchange platforms as Gemini or Coinbase.
Polygon is one of the Ethereum projects, and it decreases the fees for users as it is a helpful sidechain for Ethereum transactions. The introduction of this consensus algorithm increases DeFi at a fast rate to make operations more rapid for investors. The decision to create a sidechain was caused by high costs for gas that stopped Ethereum from faster work. The co-founder of Ethereum expressed an idea to create the second layer Eth2 to make transactions through it and facilitate the work of blockchain. Thus, now users can make more transactions faster and cheaper than it was before.
Moreover, the creation of Polygon as a sidechain helped Ethereum to scale. However, switching between chains is costly, and that is why some investors prefer to use Polygon as the main platform for crypto exchange. That is why its predicted value can increase in time when Polygon attracts more users.
One of the founders of Ethereum, Charles Hoskinson, is the author of the Cardano project. It makes Cardano a strong competitor for Ethereum, and there are reasons for this. For instance, Cardano implemented a more advanced system to the work of blockchain, which is still not accessible for Ethereum users. At the same time, Cardano has all positive features of trading, such as legal contract tracing, delivering the interoperability, voter fraud, and others. Their proof-of-stake algorithm helps to process transactions faster and makes them more friendly for the environment.
This strategy is supposed to provide conditions for this crypto to take a position in the world's financial operating system.
In contrast, Cardano has a less powerful DeFi system than Ethereum. Also, smart contracts are not released in the Cardano network. However, Cardano announced that smart contracts would be available at the end of 2021. The advantage of Ethereum in terms of decentralized applications makes it harder for Cardano to compete. Even though Cardano has a lower market cap than Ethereum, it is developing crypto that has a good predicted way for improvements.
Stellar is a network that was created for institutional transactions between banks and other financial organizations. Because of the big sum of transacted money, it took a lot of time for institutions to transfer funds. This open blockchain network became a helpful instrument for such operations. The technologies of the system provide enterprise solutions and increase the speed of transactions.
Moreover, this open-source cryptocurrency is available for all users, even if they are not members of big companies. With Stellar, you can perform cross-border transactions not paying extra fees for this. The main token of the Stellar is Lumens (XLM), and its capitalization is one of the biggest ones in the industry.
We described cryptos that are the most profitable to invest in this year, but there are more altcoins on the market. If you want to explore more cryptocurrencies, you should understand how you can estimate them. Here we will explain the basic factors that can influence your profit in the future when investing in any crypto.
Market cap can determine the success of crypto in the industry as it is highly connected with liquidity. It is important to understand the chances for a new cryptocurrency to become stable, and market capitalization is the best indicator for this.
The coins differ by the system that they are used in. Some systems provide higher security for funds and the personal data of users. For instance, smart contracts implemented by Ethereum control the process of transactions and better protect money from external hacks. Another example is Monero, as it hides personal information about parties included in the trading process more than other digital systems.
The choice of cryptocurrency based on its adoption rate depends on the investor. Some investors are searching for the highest profit, which is typical for new cryptos on the market. Others are more focused on long-term investments, and it means that the adoption rate of the coin should be high.
The utility of such cryptos as Ethereum and its sidechain Polygon is high in comparison to other cryptocurrencies. These coins allow you to make more transactions and use the funds for a bigger number of purposes than only exchange. Ethereum became a unique decentralized software problem that is adopted by many financial organizations nowadays. Polygon allowed Ethereum to extend its impact as the second layer for all operations.
This factor is related to the previous one, and it means that the digital currency has to be promising for the market. One of the things that predict the success of the currency is the system it is based on. For example, Ethereum could take the second position in the cryptocurrency world only because of new technologies such as smart contracts and others.
The selection of the exchange platform depends on your goals as the scope of offered functions differs between exchanges. However, you should always pay attention to the privacy settings of the service as the most important purpose of any investment is earning money and building wealth.
Mostly all exchanges worry about the security of their systems, but scams and hacks often happen as well. That is why you should find a reliable and already trusted company to invest money in crypto. Mostly all high-quality exchanges require users to use two-factor authentication and offer to store funds in a cold way. This approach is one of the safest ones.
The leading exchanges on the market of digital money are Gemini, Binance, Coinbase, and Webull. Binance is one of the most popular platforms for exchange, and it even has its currency — the Binance coin. It connects varying networks and implements all related technologies.
Coinbase is easy to use for beginners as it has a user-friendly interface and special offers for people who want to gain knowledge in the crypto sphere. Thus, you can become a user of Coinbase Learn and start building wealth with crypto just for exploring blockchain networks.
As regards Gemini, it is one of the most profitable systems for crypto investors and traders as it pays interest to people who have some assets in the system. So, you can earn money independently of the value of crypto just for keeping your funds in the blockchain platform of this exchange.
All in all, the variety of crypto exchanges is huge nowadays, but you should be careful and trust only verified services. Choose exchange software, taking into consideration provided services and the availability of not only popular cryptocurrencies there.
Now is the best moment to start investing in cryptocurrencies if you have not started it yet. Decentralized financial products and digital currencies are developing fast, but there is time until the complete formation of coins in the market. To avoid any losses, it is better to start by investing your free money in popular cryptocurrencies with a high market cap. It will save you from risks that can appear because of the liquidity and volatility of new currencies.
Explore the factors we described in this article to know the state and value of cryptocurrency and be sure that investments will help you in building wealth. Pay attention to the market capitalization indicator, the base of users, and the adoption rate to choose the best cryptocurrencies to invest in.
The most common cryptocurrency for beginners is Bitcoin, as it is the most stable one. However, you can try to buy other digital currencies to get a profit faster.
The best moment to start investing in crypto is today. There is a high probability that the per token value for Bitcoin and some big market capitalization coins will increase. That is why you can invest money in these cryptocurrencies now, even if the coin's value is high. Choose cryptocurrencies to invest in and spend your free money on profit gaining with technologies of a blockchain network.
You should explore the basic characteristics of several coins and choose cryptocurrencies to invest in. This list of crypto features consists of market cap, the community of users, technologies implemented in the system, history of prices, and supply conditions. All these factors can influence the size of your profit and the period needed for gaining it.
Crypto investment is a highly profitable operation, but it creates a lot of risks. So, if you are ready to spend a significant sum of money on this, it is better to invest now than later. The Crypto market changes every day, and it will be profitable for much longer. However, it cannot be your only source of income if you are a beginner. Estimate possible risks and benefits and start investing in the most suitable crypto for you now.
As Bitcoin is one of the most popular cryptocurrencies, almost all exchange platforms support this coin. The systems are different in terms of provided operations and the size of fees for transactions. The most common ones are Binance, Coinbase, Gemini, Bittrex. Also, some exchanges expand the set of possible functions by connecting financial institutions to blockchain technology. Investigate this topic more and choose an exchange according to your needs.