Which Cryptocurrency Should You Pick?

If you are an investor, you have most certainly heard of cryptocurrency repeatedly in the news and on social media. Blockchain technology has defied all the restrictions that apply to traditional financial institutions. 

No wonder cryptocurrency has caught everyone’s attention. Before proceeding to the different cryptocurrencies on the market, you need to make sure that you have put a lot of thought into your decision to invest. Let’s look at some of the cryptocurrencies on the market and their figures.

See Also: What Crypto Currency To Invest In?

Cryptocurrency options on the market

There is not one but several cryptocurrencies on the market. They have different features and goals. Bitcoin is the first cryptocurrency to be invented. It was launched in 2009, and since then, several more have emerged as modifications or improvisations over Bitcoin. These other coins are referred to as altcoins.

Before investing, it is important to do some research about the coin in terms of its white paper, investors, and nature of ownership. You might have a preference for one feature over another, like stability or innovation. Let’s look at some of the top cryptocurrencies on the market and their features. 

Bitcoin:

Bitcoin has a market cap of 1 trillion dollars and sells for 55,000 dollars per coin. The supply of Bitcoin has a cap of 21 million coins, of which 18.9 are currently in circulation. Bitcoin was invented by Satoshi Nakamoto in 2009. 

Being the pioneer of cryptocurrency and the blockchain, Bitcoin is so popular that sometimes it is used synonymously with the word ‘cryptocurrency.’ People have gone to the extent of calling it digital gold. No doubt, bitcoin makes it to the top of the cryptocurrency list. 

Litecoin

The market cap value of Litecoin is about 13 billion dollars, and it sells at a price of about 200 dollars per coin. The supply of Litecoin is limited to 84 billion coins, of which 66 billion coins are currently in circulation. 

Launched two years after Bitcoin in 2011, Litecoin was created as an improvisation over Bitcoin. What sets them apart is the speed of processing transactions. While the Bitcoin blockchain updates transactions every 10 minutes, Litecoin does it every 2.5 minutes. It is also known for having a high trading volume. Sometimes Litecoin is referred to as ‘the next best thing’ or ‘digital silver.

Ethereum

Ethereum has a market cap of 460 billion dollars, and it sells for 4000 dollars per coin. The supply of Ether is limitless, and currently, there are 115 million coins in circulation. While Ethereum was meant to complement Bitcoin, today, they compete as rivals. Ethereum is planning to make the process of mining Ether less energy-consuming and more environment-friendly. Their website says that they are going to shift to a proof of stake model.

Polkadot

Launched recently in 2020, Polkadot aims to create a global network of computers on which users can launch and operate their own blockchains. These blockchains are referred to as parachains, and the one holding them together is the relay chain or the main blockchain.

The parachains can connect to external networks like Bitcoin and Ethereum. However, it has a history of being attacked by hackers. Polkadot currently has a market cap of 19 billion dollars, and it sells for around $17 per coin. The supply of Polkadot is unlimited, and currently, there are about 900 million coins in circulation. 

Cardano

Cardano blockchain was started in 2017. The coin they supply is called ADA. It has a market cap of 55 billion dollars and sells at the price of 1.75 dollars per coin. The supply of ADA has a limit of 45 billion coins, out of which 31.9 billion are in circulation currently.

Cardano is already using a proof of stake system as opposed to the proof of work system used by Bitcoin for mining coins. Proof of work involves miners competing to solve computational puzzles for rewards in bitcoins. 

In a proof of stake system, however, the reward goes to a person picked by chance and the more ADA you have, the greater chance you stand of winning. This is more effective for incentivizing users to stay on the blockchain, keeps them happy with small rewards and also saves electricity. 

Another interesting feature of Cardano is its ambition to become the internet of blockchains. They want to link blockchains to each other so that we can exchange all kinds of cryptocurrencies on one platform.

Ripple

Ripple is a blockchain-based digital payment network. Their main service is the transfer of money between different cryptocurrencies. In 2012, they launched XRP tokens as a medium for these transfers. 

Normally, this settlement is done using US dollars, takes more time and charges fees. Using Ripple, you first convert the cryptocurrency into its equivalent value in XRP and then from XRP to the other cryptocurrency. 

Unlike Bitcoin and Ethereum, which are mined by crypto-miners, XRP is pre-mined, which means all the coins were already mined when Ripple was launched. The supply limit of XRP is 50 million tokens, of which around 45,000 billion are currently in circulation. The market cap is around 51 billion, and one token costs $1.12.

Is cryptocurrency a good investment?

Cryptocurrency differs from other forms of investments like stocks and bonds. The value of cryptocurrency is not tethered to factors like imports and exports, foreign exchange reserves, employment, inflation, etc. The price of cryptocurrency only depends on supply or demand, which is sensitive to speculation, news reports, comments and even small changes in public opinion. 

Unlike stocks and bonds, there is no anchor or systematic way of predicting the price of the cryptocurrency. So it is important to understand that investing in cryptocurrency is essentially a gamble. But it is also true that people have benefited from short-term gains. 

So you may consider investing in cryptocurrency if you have some extra funds that you wouldn’t mind losing. Most people put only a tiny portion of their money into cryptocurrency, like a side investment, for the sake of exploring their options. So it is important to measure up the risks against your financial position before investing.