Originally there was only Bitcoin – a cryptocurrency that used blockchain technology as a digital ledger and ushered in a new era of currency. But over time, people started to realize that Bitcoin was problematic: it was slow to trade with, and the more people used it, the slower it got.
This prompted developers to look for solutions to Bitcoin’s problems, which led to the birth of Altcoins – all cryptocurrencies except Bitcoin. When it comes to investing in altcoins, this can be a minefield – here are our top 5 most promising altcoins to check out.
Altcoin Choice: What Factors To Consider?
There are several things to keep in mind when considering investing in altcoins.
A good basic metric is market capitalization. In general, a good coin has a decent market cap. However, picking an altcoin to invest in is not a foolproof method as many coins have high market cap but are overpriced. A good example of this is Ethereum Classic (ETC).
On which exchange is the altcoin listed?
Here, too, caution is advised. Many reputable exchanges list coins that aren’t great projects, often because they’re popular, like Dogecoin. But in general, finding reputable exchanges that will support your altcoin is a great way to gauge whether the project is reputable.
Technology is more important than hype
As you will see from the list below, there are tokens with great technology and functionality. A good investment is a project that brings long-term returns. So try to judge if the project is good based on the actual technology it is based on. It cannot be said enough that before investing, you should read the project whitepaper carefully to see if the project is valuable or not.
Right now Cardano is doing very well and with the introduction of smart contracts, many are convinced that it is an Ethereum killer. The truth is not that rosy, however, and the amount of third-party development on Cardano is frankly tiny compared to its rival Ethereum.
Against this background, the crypto market is moving with emotion, and Cardano has been promising great things for many years. This means that Cardano will still be seen by many as a viable investment, even if it won’t quite hit the heights it is aiming for. In contrast to Ethereum, Cardano is already a proof-of-stake (PoS) blockchain, which can be seen as its only main advantage over Ethereum until it is fully switched to PoS with Ethereum 2.0.
Enjin is a token based on the Ethereum network. The project works primarily as a gaming blockchain, allowing users to buy, sell, and create gaming NFTs using the specialized Ethereum token. It has done consistently well over the years, partnering with big companies like Microsoft, Samsung, and most recently Blockster.
The price has also always been okay. Despite its niche market, Enjin has exceeded expectations and currently holds a market cap of over $ 1 billion. In addition, the development team is constantly on the lookout for new partnerships and features to grow the brand.
Chain link (LINK)
Chainlink is a crypto network that aims to link blockchains together and give developers the ability to trade with one another across multiple blockchains in a secure and decentralized manner. It has been relatively successful so far and often does well in bear markets. This makes it a good backup coin for a portfolio.
As a cryptocurrency, it is still in the growth phase and has not been around as long as others on this list. That makes it a valid speculative option.
Like other coins, it is sometimes referred to as the Ethereum killer. However, the truth is that Chainlink has a unique functionality that is very different from Ethereum, and the two can very happily coexist.
Polkadot is transitioning from one Ethereum killer to another (a trend seems to be emerging here), Polkadot is another cryptocurrency that promises intelligent contract features with specific tools and functions to help developers build their own blockchains on the Polkadot network. Like Cardano, Polkadot is the brainchild of an original Ethereum founder (Gavin Wood created Polkadot, and Cardano is Charles Hoskinson’s project).
Interestingly, Polkadot currently offers more developer functionality than Cardano. It also has some of the Chainlink functionality (cross-chain support), making it a promising project and an attractive speculative investment.
Ethereum has been around for a long time, and during that time it has rolled out many successful upgrades and helped tens of thousands of developers create their own blockchains through ERC20 tokens (see Enjin above).
Some of these tokens are worth a tremendous amount of money and there are some incredible projects going on on the Ethereum network. Ethereum is considered the home of DeFi and NFTs. It has also successfully implemented a hard fork on the blockchain that allows ETH to burn, which will cause it to become a deflationary coin in the future.
Things are not going perfectly with Ethereum, however, and the transaction fees of the current proof-of-work system are sometimes staggering. This is often seen as a major barrier to entry by new investors. Ethereum is a victim of its own success – as adoption and usage increase, the demand for the blockchain increases and fees increase accordingly.
To combat this, Ethereum is switching to PoS consensus, which allows the network to better control fees and align the fee structure with other PoS blockchains. This transition is complex and although users can currently stake out their ETH, the network itself will not switch to PoS until the end of this year at the earliest.
If the transition to Ethereum 2.0 goes smoothly and the new functionality is actually as attractive as promised, Ethereum could simply kill all “Ethereum killers”.
However, this does not mean that investing in all other altcoins is not profitable. Ethereum isn’t the only crypto that’s evolving and growing. Who knows, maybe Cardano or Polkadot will bring out an update that will change the market landscape and form a new crypto governance body. Remember to keep a close eye on the crypto news.
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