Rapid digitalization of the world has led to the persistent prevalence of cashless transactions. The world is now witnessing another upward trend known as Cryptocurrencies. This was started by Satoshi Nakamoto, a mysterious person or group of people who introduced Bitcoin, the first and biggest cryptocurrency. Noticing the hyped response from people, the market was flooded with other varieties of cryptocurrency. This has left the Wall Street analysts in a huge dilemma as they are having a hard time guessing which type to invest in. The profit potential from cryptocurrency is huge, but one must also not look past the risks involved. The biggest concern of investors regarding cryptocurrency to date has been the lack of their intrinsic value. Though this trendsetter has received an overwhelming response from people, its unpredictable nature is making it vulnerable. To know more about Cryptocurrency, read our article Cryptocurrency, A New Era In World Economics.
If you have decided to give in to the temptation of Cryptocurrency then you are in the right place. We will try to help with your dilemma of which Cryptocurrency to invest in this year.
4 Cryptocurrencies That You Should Consider to Invest in 2021
The first cryptocurrency in the world and starter of the trend, Bitcoin is the most popular type of Cryptocurrency in the market. It is the first successful digital currency and continues to be the dominant cryptocurrency with the largest market cap. It is ideal to invest in Bitcoins, not only because it makes up two-thirds of the entire cryptocurrency market but also is resistant to 51 attacks due to its size. Dubbed digital gold by its fans, Bitcoin can churn out great profits for its buyers.
Unfortunately, there are quite a few downsides to this as well. Firstly, their blockchain ledger is cumbersome. Transactions take up to 15 minutes to be cleared and can cost up to $12. The currency losing its value in recent times proves that it is sensitive to macroeconomic factors. Bitcoin is backed by major institutions and individuals, and is one of the best liquid options for you to invest in 2021.
This newcomer is taking the world by storm. Ethereum decentralized, open-source blockchain with smart contract functionality, and the second largest cryptocurrency in the world. Its release date was 30th July 2015 and is holding the name of “digital gold” and is a great alternative to bitcoin. It has risen to fame soon after its launch due to its superior technology and the “smart contracts” that it uses. The “contracts” that Ethereum uses are giving it the status of Google Wallet or Apple Pay. These smart contracts aim to replace the need for third-party apps and protect financial data of users. The market cap of Ethereum has been recorded at $138.3 billion as of January 2021. The superior technology that Ethereum uses and the relative safety that it offers has led to the widespread usage of them and thus has great investment potential.
3. RIPPLE (XRP)
A centralized cryptocurrency, XRP is mined, managed, and administered by Ripple Labs. This variety of Cryptocurrency has great potential and is predicted for major growth in 2021. XRP is cheaper and faster to use and mine than bitcoin, which has made its use popular among financial institutions. XRP is known as the “king of banking infrastructure” and is used as an alternative to the SWIFT network in financial institutions, to accelerate and reduce the transfer cost in transactions. It has great potential as a long term investment.
4. CARDANO (ADA)
Cardano, the largest third-generation cryptocurrency, is an “Ouroboros proof-of-stake” cryptocurrency. The first peer-reviewed cryptocurrency, Cardano was created with a research-based approach by engineers, mathematicians, and cryptography experts, and is one of the most technologically exciting cryptocurrencies to date. Though it is still in its early stage, it already has the name of “Ethereum-Killer” and is a great potential investment.
Cardano is a big hit and has taken only 3 years to reach the $10 billion market cap. It aims to be the biggest financial operating system of the world. It is $0.30 per coin and has a market capitalization of $9.8 billion as of January 2021, and is attracting many new investors.
A point to note is that Investing in cryptocurrencies is a great way to earn a fortune but these currencies carry high risks as well. Paying attention only to the current price of the cryptocurrencies isn’t sufficient. It is also wise to keep a regular check of their market capitalization and liquidity level before investing in them. However, we cannot neglect the possibility of the great success of cryptocurrencies in the future. Hope you found this article helpful and let us know your views on this in the comments.