Are you looking forward to investing in cryptocurrency? This article provides you all you need to know about the BEST CRYPTOCURRENCY TO INVEST 2021.
Before getting into the article about the BEST CRYPTOCURRENCY TO INVEST 2021 there is a need to understand What is Cryptocurrency?
⦁ The word “cryptocurrency” is derived from the encryption techniques which are used for securing the network.
⦁ A cryptocurrency is a form of digital asset based on a network that is distributed across a large number of computers being protected by the art of cryptography.
⦁ Cryptography is the process of converting a simple text into unintelligible texts and vice versa. Through this technology, data can be protected and can be stored only for people who intend to read and process it.
However, cryptocurrencies face criticism for several reasons such as
⦁ Use for illegal activities
⦁ Exchange Rate volatility
⦁ Vulnerability of the infrastructure underlying them
But also has been praised for their flexibility, divisibility, inflation resistance, and transparency.
Before moving forward to analyze the best cryptocurrency to invest in in 2021, there is a need to look into the factors that will help you to make a smart choice.
Before investing in any cryptocurrency try to dig out answers to these questions
How long cryptocurrency has been around?
Knowledge about the historical facts helps you to determine the longevity
How many people are investing in the cryptocurrency that you’re considering investing in?
If there is a high level of adoption that means that the cryptocurrency has better liquidity which makes trading, selling, or spending easier in the future.
How does the platform in comparison to others in terms of usability and security?
The network should be able to handle the traffic with utmost ease.
How has the company performed during the past years in business?
If prices are stable it’s a good sign and if the cryptocurrency is gaining attention and becoming more worthwhile, it’s even better.
Now let’s move on to see the best cryptocurrency to invest in in 2021.
BEST CRYPTOCURRENCY TO INVEST IN 2021
Prices as of 06 May 2021
⦁ BITCOIN (BTC)
Bitcoin has been around for the longest time and is the first and the fastest cryptocurrency to reach a market cap of 1 trillion. Even with the thousands of other cryptocurrencies in the market, Bitcoin represents 40% of the cryptocurrency market cap.
Many businesses already have incorporated Bitcoin in their payment system which now makes it a smart investment
Risks of investing in Bitcoin
However, investing in Bitcoin comes with risks as well, as it tends to fluctuate a lot, if seeing wild fluctuations makes you skittish, you may want to avoid investing in Bitcoin. Another reason to add to it is its price. Even a small single share costs about $50,000 so most people cannot afford to buy it.
⦁ ETHEREUM (ETH)
Ethereum is the second-largest cryptocurrency after bitcoin. However, it is not only a cryptocurrency but also is a decentralized, open-source blockchain with smart contract functionality and gives cutthroat competition to other players in the market.
Risks of Investing in Ethereum
The technological risk for Ethereum is much greater than that of Bitcoin because of Ethereum blockchain’s ambitious upgrade to a proof-of-stake (PoS) consensus protocol and as Ethereum utilizes the blockchain technology, it can lead to transactions taking longer to process when the network is overloaded.
Litecoin was launched in 2011 by former Google engineer Charlie Lee, announcing it as the “lite version of Bitcoin” and it is like the bitcoin in many ways but has a faster block generation rate and hence offers faster transaction confirmation time.
Risks of investing in Litecoin
Litecoin is tied closely to Bitcoin, hence, it will generally fluctuate with the bitcoin, although at a much lesser rate. Bitcoin’s Lightning Network has started to gain recognition and its Transaction fees have started to drop, Litecoin’s place in the cryptocurrency becomes less clear now.
⦁ BINANCE COIN
Launched in 2017, the Binance Coin is the third-largest cryptocurrency and aims to become the primary infrastructure service provider for the blockchain system and because of its performance, it has proven to be one of the most stable investment options that pose very few risks.
Binance Coin is used for
⦁ Transaction fees on the Binance exchange
⦁ Credit card payments
⦁ Booking travel arrangements
⦁ Loans and transfers
Risks of investing in Binance Coin
Unlike its competitors, Binance coin was created by a company instead of tech developers but its commitment to maintaining a strong blockchain has won over many skeptics, however, some investors remain apprehensive of this cryptocurrency and its potential security issues.
⦁ TETHER (USDT)
Being launched in 2014, Tether describes itself as a “blockchain-enabled platform which is created to facilitate the use of fiat currencies digitally” and it was one of the most popular and stable cryptocurrencies of all times. This cryptocurrency allows individuals to effectively utilize a blockchain network and related technologies to transact in traditional currencies along with minimizing the instability and intricacy often associated with digital currencies. Tether was also regarded as the third-largest cryptocurrency by market capitalization as of January 2021 with a total market capitalization of $24.4 billion and a per token value of $1.00.
Risks of investing in Tether
The investors have raised some serious questions over the actual reserve stock and whether there is truly a U.S. dollar in the reserve bank for every Tether unit. If this gets disapproved, the value of Tether’s stock could drop rapidly.
⦁ CARDANO (ADA)
Cardano is a cryptocurrency that was created with a research-based approach by mathematicians, engineers, and cryptography experts and aims to be the financial operating system of the world by establishing decentralized financial products. The team behind Cardano created the blockchain through extensive experimentation and detailed research and due to this meticulous process, Cardano seems to outshine large cryptocurrency networks.
Risks of investing in Cardano
This platform has bigger plans for the future, but Cardano may not be able to compete with larger cryptocurrencies because of fewer adopters which ultimately means fewer developers and this might not be appealing to most investors who expect a high adoption rate in the future.
⦁ POLKADOT (DOT)
Polkadot was created by Gavin Wood, another member of the core founders of the Ethereum project which was designed to reward genuine investors and to set apart people who are just trading on the stock market to make money fast.
Polkadot is aimed at delivering interoperability between other blockchains and its core component is its relay chain that allows for parallel blockchains with their native tokens for specific use cases
Risks of investing in Polkadot
Polkadot was first introduced as a whitepaper in 2016 and at the end of 2020 it began trading on the stock market and with such a short history, it doesn’t have a track record to facilitate comparison, making it a precarious investment for potential investors.
⦁ STELLAR (XLM)
Stellar also known as XLM was initially founded by Jed Mc Caleb in July 2014, a founding member of Ripple Labs and developer of the ripple protocol. Being a decentralized network, Stellar can easily convert any currency and trade across channels and is known as the PayPal of cryptocurrency networks, bridging the gap between banks and blockchain networks.
Risks of investing in Stellar
As Stellar caters to the needs of a niche market, it can experience tough competition from other companies which will eventually lead to diverting its traffic and affecting its stock value.
⦁ RIPPLE (XRP)
Ripple was originally founded as a peer-to-peer trust network that used social media to its maximum benefits and describes itself as a global payments network and counts major bank and financial services among its customers. Ripple also has contacts with big banks globally and the more contacts it, has the more handy is the Ripple cryptocurrency is to its adopters.
Risks of investing in Ripple
Ripple has shown tremendous growth of 36,000% in 2017 but the stock value is only $2.40 which is unappealing. Therefore, one should not be distracted by high percentages but actually, be aware of what growth means.
Chainlink was developed by Sergey Nazarov along with Steve Ellis in September 2014 and is a decentralized network that allows smart contracts to communicate with outside data. Its shares are also affordable to buy and this seems to attract investors. An additional factor to add to its growth is that it is available for trading on one of the world’s largest cryptocurrency trading apps “Coinbase”
Risks of investing in Chainlink
Although chainlink gives a neck-to-neck competition to many other cryptocurrencies, it has a lower stock volume and market capitalization and ranks low on the list.
This was all about the best cryptocurrency to invest 2021 but before investing one has to be mindful about the speed of the transactions, the fees for transacting along with the ability to make regular use of cryptocurrency and one should consider investing in the long term for reaping the maximum benefits.
We hope that this article serves its purpose and helps you make the right choice. Reach out to us in the comment section or mail for any queries and feedbacks.