People invest in cryptocurrencies for different reasons. Some believe that they are the future. Others see cryptocurrencies as an opportunity to make high profits in a relatively short time.
Cryptocurrencies are a relatively new asset, and their growth potential remains unclear. But compared to traditional currencies, they have several advantages: decentralization, security, and limited supply.
There are more than 19,000 cryptocurrencies in the world today. What do investors invest their capital in?
The most frequently invested cryptocurrencies
Let’s start a useful list with the first cryptocurrency that sets the rhythm for all the others.
Bitcoin
BTC is often called “digital gold”. The coin has been the most popular and widespread cryptocurrency for almost 15 years. The share of Bitcoin in the total market capitalization of cryptocurrencies is just under 50%. Any long-term cryptocurrency portfolio must include BTC in its arsenal. If we compare the first cryptocurrency with stocks, we get an association with the “blue chip”. BTC is valued for its decentralized nature, security, and limited supply (21 million coins). It can be used for a variety of purposes, including payments, investments, store of value, etc.
Ethereum
ETH is the second most popular cryptocurrency after Bitcoin. Ethereum was the first platform to introduce smart contracts. These autonomous programs on the blockchain fulfill the terms of the contract without the participation of intermediaries. Ethereum has played an important role in the development of DApps applications. Also, thanks to Vitalik Buterin’s brainchild, the world saw NFTs (those pictures that cost a lot of money, but no one understands why). We should not forget about the ERC-20 standard, which simplifies the creation and standardization of tokens on the platform. Developers can now create their own Ethereum-based tokens, which contributes to the diversity of blockchain projects and ICOs.
Cardano
Cardano is a cryptocurrency launched in 2017. The head of its development team is Charles Hoskinson. Before launching Cardano, the experienced developer managed to work in Ethereum and BitShares. ADA is the first cryptocurrency to use academically open-source code that is peer-reviewed, which makes the project unique. Cardano is often praised for its high level of security and fast transactions. And although the project is inferior to Ethereum in almost all respects, it is also a worthy candidate for investment.
Solana
Solana is a first-tier blockchain that offers users high speed and affordable cost. It supports smart contracts and facilitates the creation of decentralized applications (DApps). Projects built on Solana include various DeFi platforms as well as NFT marketplaces where users can buy NFTs. Solana (popularly called “hodgepodge”) is criticized for frequent failures and is called “broken-broken”, but the network has been operating without any errors or failures for more than 9 months. The amount of SOL on the balance sheets of the bankrupt FTX exchange also raises concerns. If these coins are “poured” into the market to pay off debt obligations, the exchange rate may drop significantly. But this does not negate that Solana is one of the most popular projects for investors.
Polkadot
Polkadot is an innovative blockchain platform designed to provide interoperability between different blockchains. This project was developed and launched by a team that included Gavin Wood (one of the founders of Ethereum).
The main goal of Polkadot is to create an ecosystem that allows different blockchains to interact with each other and share data and functionality. Not long ago, a report was presented: Polkadot’s staking activity in Q3 was positive. The total volume of staked DOTs increased from 578 million to 663 million DOTs compared to the previous quarter. And the number of unique addresses is about 4.3 million, and this number has been growing every month since January. Now the figure is up 10% for the quarter and 16% since the beginning of the year. Developer activity is also high: for the second quarter in a row, Polkadot’s GitHub repositories have recorded more than 49,000 commits. Experienced fundamental analysts have a lot of room to roam when analyzing Polkadot.
These projects are included in the elite list of Fundamental Coins. Most of them have lost about 90% in value, but this is normal for the cryptocurrency market. And now is the best time to accumulate.
How do you choose a crypto asset for investment?
When choosing a crypto asset for investment, you should pay attention to:
- The development team.
- Whitepaper.
- Technology and innovation assessment.
- Project tokenization.
- Security.
- Scalability.
- Transparency, etc.
Conclusion
The cryptocurrency market has more than 19,000 thousand different assets, but the most invested are the above-mentioned ones. When choosing which cryptocurrencies to invest in, consider your financial goals, risk level, and understanding of the market. Cryptocurrencies are highly volatile, so investing in them requires a cautious approach and careful research.
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