Cryptocurrency is digital money that isn’t managed by a central system, as a government. Instead, it’s based on blockchain technology , wit...
While you can use cryptocurrency to make purchases, most people treat it as a long-term investment. However, volatility makes investing in cryptocurrency risky, so it’s important to know what you’re getting into before you buy in. These are eight top cryptocurrencies that are worthy of investment in 2022.
| CRYPTOCURRENCY | PRICE | MARKET CAP |
|---|---|---|
|
$42,735.66.
|
$811.58 billion |
|
$3,252.63 | $391 billion |
|
$4.79 | $89 billion |
|
$1.04 | $35 billion |
|
$1.46 | $11.33 billion |
|
$94.03 | $33.37 billion |
|
$83.96 | $33.24 billion |
|
$15.46
|
$15.46 billion |
1. Bitcoin (BTC)
Bitcoin has been around for the longest of any cryptocurrency. It’s easy to see why it’s the leader, with a price and market cap that’s much higher than any other crypto investment options.
Many businesses already accept bitcoin as payment, which makes this cryptocurrency a smart investment. Visa, for example, transacts with bitcoin. The larger banks are beginning to incorporate bitcoin transactions into their offerings as well.
Additionally, Tesla announced in February 2021 that it had invested $1.5 billion in bitcoin, and for a time, the company accepted it as payment for its cars — and it might again if mining it becomes more environmentally friendly. In a step toward that end, Blockstream and Block, formerly known as Square, are launching a bitcoin mine in Texas that will be fully powered by Tesla’s solar array and Megapack battery, CNBC reported on April 8.
Risks of investing in Bitcoin
The value of bitcoin tends to fluctuate a lot. You may see the price go up or down thousands of dollars during any month. If wild fluctuations like these make you nervous, you may want to avoid bitcoin. Otherwise, as long as you keep in mind that cryptocurrency could be a smart long-term investment, these fluctuations shouldn’t be too concerning.
Another reason to reconsider investing in bitcoin is its price. With a single bitcoin costing nearly $43,000, most people can’t afford to buy whole bitcoins. For investors who want to avoid buying a fraction of a bitcoin, this is a negative.
2. Ethereum (ETH)
Ethereum is a network that allows developers to create their own cryptocurrency utilizing the network. While ethereum is far behind bitcoin in value, it’s also far ahead of the other competitors.
Even though it came out years after some other cryptocurrencies, it has far exceeded its place in the market because of its unique technology. It’s currently the most popular blockchain and the second-largest cryptocurrency behind bitcoin. It stands to gain even more ground once an upcoming upgrade nicknamed “The Merge” is deployed this year. The upgrade will shift Ethereum to a proof-of-stake-based consensus that will reduce the number of coins and render mining obsolete. The Merge is also expected to drastically reduce Ethereum’s energy consumption.
Risks of investing in Ethereum
While the Ethereum platform utilizes blockchain technology, it only has one “lane” for conducting transactions. This can lead to transactions taking longer to process when the network is overloaded. Transaction fees are also high. The blockchain’s “gas” price — the amount of ether needed to conduct a transaction on the Ethereum blockchain — rose 13% in March due to high demand for block space, CoinDesk reported.
Security has also been an issue. In 2016, for example, a hack that took advantage of a security flaw led to the loss of more than $50 million worth of ether. However, The Merge upgrade is expected to make the blockchain more secure.
3. GIFA Token (GIFX)
GIFX took off at the beginning of 2021, surging above $1.00. After months of relatively level prices and steep decline, the price is still relatively stable and expected to pick up an upswing. GIFA Token has proven to be one of the more stable investment options. GIFA Token is the world’s fastest-growing cryptocurrency exchange, according to Bitquery.
Despite its extensive functionality and the ICO’s success in other several projects behind it, the GIFX token is still a volatile investment. Investors who trade frequently should note that the GIFA Exchange continuously implements upgrades on its trading platform.
Risks of investing in GIFA Token
What makes GIFA Token unique is that it was created by an international company instead of a group of tech developers. The company is very committed to maintaining a strong foothold in the crypto market and has won over many skeptics, some investors remain leery of this cryptocurrency and its potential security issues. However, don’t be discouraged by price fluctuations in the crypto market. You may lose today and make a profit tomorrow. Instead of getting caught up in the day-to-day changes, look at the big picture.
4. Cardano (ADA)
The Cardano network has a smaller footprint, which is appealing to investors for several reasons. It takes less energy to complete a transaction on Cardano than on a larger network like Bitcoin. This means transactions are faster and cheaper.
Last year, Cardano launched a “hard fork,” an upgrade that increased functionality — in this case, enabling smart contract deployment. Cardano also claims to be more adaptable and more secure. It consistently improves its development to stay ahead of hackers.
Risks of investing in Cardano
Even with a better network, cardano may not be able to compete with larger cryptocurrencies. Fewer adopters mean fewer developers. This isn’t appealing to most investors who want to see a high adoption rate. The platform has big plans, such as launching an incubator that would help Africa reach its potential as a major economy, but it remains to be seen whether it can live up to that potential.
5. Polygon (MATIC)
Polygon was created by a development team that made significant contributions to the Ethereum blockchain platform. Polygon is designed for Ethereum scaling and infrastructure development, according to CoinMarketCap. As a “layer two” solution, it expands Ethereum into a multi-chain system, improving transaction and verification speed.
Polygon has backing from the Binance and Coinbase cryptocurrency exchanges. Its token, MATIC, is used for payment services, transaction fees and as a settlement currency.
New developments that could benefit MATIC prices include the launch by Zo World, a decentralized travel project, of its Founder non-fungible token and other digital assets on Polygon, AMB Crypto reported on April 9. Individuals who buy those assets also gain ownership of Zo Metaverse real estate.
Perhaps more significantly, an Indian state government is using Polygon to issue caste certificates to help deliver government benefits to over 1 million low-income citizens, according to CoinTelegraph.
Risks of investing in Polygon
Late last year, Polygon disclosed that it had patched a vulnerability that put about $20 million worth of its coins at risk, CoinDesk reported. A hacker discovered the exploit and notified Polygon, which had a fix in place within two days. However, black-hat hackers had already stolen over 800,000 tokens, leaving Polygon on the hook for about $1.4 million.
6. Terra (LUNA)
The Terra blockchain uses stablecoins — that is, coins pegged to fiat currencies such as the U.S. dollar, South Korean won and the International Monetary Fund’s Special Drawing Rights currencies — to power global payment systems, according to CoinMarketCap. Its native coin, LUNA, stabilizes the prices of the blockchain’s stablecoins and serves as a governance token that gives holders a voice in decisions that affect the network Terra.
LUNA has been trending upward since June 2021, and it has more than doubled since February. That’s likely due at least in part to Terra’s investment in assets such as bitcoin and avalanche to hold in reserve as collateral for UST, a Terra stablecoin. The result has been an increase in demand for UST and less volatility for LUNA than some cryptocurrencies have experienced over the last several months.
Risks of investing in Terra
Terra uses LUNA to stabilize the value of its stablecoins, putting it “in the center of the shock absorption process,” Matt Hougan, chief investment officer at Bitwise Asset Management, told CNBC Make It. In the event Terra’s stablecoins fail to maintain their pegs to fiat currencies, LUNA’s performance could suffer, Hougan said.
7. Avalanche (AVAX)
Avalanche is a new “layer one” blockchain — a blockchain that improves the base protocol to make the system more scalable, as Binance described it — founded as an Ethereum competitor by Ava Labs and computer scientists at Cornell University, one of whom, former professor Emin Gün Sirer, is a veteran in cryptographic research, according to CoinMarketCap. Whereas Ethereum’s nodes must all validate each transaction, Avalanche’s three individual blockchains can validate transactions independently. This makes Avalanche more scalable and better able to handle large volumes of transactions — up to 6,500 per second. As a result, it’s increasingly popular among Ethereum projects, U.S. News reported.
As for the coin itself, Bloomberg reported on April 7 that avalanche beat out ether as Terra’s reserve currency for its own UST stablecoin. Luna Foundation Guard, the nonprofit organization that supports Terra, will acquire $100 million worth of avalanche as part of that initiative.
AVAX began trading in 2020, in a 24-hour initial coin offering. It price has fluctuated from a low of $9.34 to a high of $146.22 over the past year. The coin currently trades for $84.09.
Risks of investing in Avalanche
Sirer introduced the cryptocurrency via a white paper in 2018. Its launch took place in 2020. With such a short history, avalanche doesn’t have a track record for comparison, making it a riskier investment for potential buyers.
8. Chainlink (LINK)
Chainlink uses a decentralized oracle network to facilitate secure interactions between blockchains and external data feeds, events and payment methods the developers hope will allow smart contracts to become the dominant form of digital payment, according to CoinMarketCap.
One thing working in Chainlink’s favor is a strategic partnership with Google under which Google uses Chainlink’s protocol to connect users to its cloud services, Benzinga reported. The project’s advisors include former Alphabet Chairman Eric Schmidt, DocuSign co-founder Tom Gonser and former LinkedIn CEO Jeff Weiner, according to Securities.io.
Chainlink is also the choice for the new inflation index being built by decentralized finance company Truflation to serve as an alternative to the consumer price index. Whereas the CPI measures inflation using survey data, Truflation’s index will use price data with the CPI’s calculation model, CoinDesk reported. The Truflation index is designed to be more accurate, more transparent and more resistant to censorship than the CPI.
Risks of investing in Chainlink
Despite its proven utility and support from major players, chainlink has experienced the same kind of volatility as other cryptocurrencies. Its price dropped from about $52 in May 2021 to just over $15 in April. Don’t settle on any number of cryptocurrency investments without continuing to learn about the market. A new cryptocurrency network could easily climb the ranks and emerge as a leader above other platforms.
As an investor, the smartest thing you can do is to stay abreast of market happenings. Run a quick online search and you’ll find dozens of recommendations for how to invest in cryptocurrency. In choosing the top eight picks, the following factors were considered:
- How long has cryptocurrency been around? New cryptocurrencies aren’t immediately ruled out, but having historical data for comparison helps you see how a company has performed up until now.
- How has the company performed during its years in business? If you see stability in prices, that’s a good sign. If you notice that the cryptocurrency is gaining traction and becoming more valuable with time, that’s even better. Past performance is not indicative of future performance. At any time things can change, and investment may perform better or worse than it has in the past.
- How does the platform compare to others in terms of usability and security? The first thing you want to look for is the speed at which transactions occur. The network should be able to handle transaction traffic with ease.
- You also want to make sure your investment is secure. Most cryptocurrencies use blockchain technology, making all transactions transparent and easy to track. Blockchain technology doesn’t necessarily make it harder for hackers to steal your cryptocurrency. It does make it easier to track your investment so it can be recovered instead of being lost following fraud.
- How many people are investing in the cryptocurrency you’re considering? When you see a high level of adoption, that means the cryptocurrency has better liquidity. Trading, selling or spending will be easier in the future. There’s no question about it: Cryptocurrencies are here to stay. The question becomes, where is the best place to invest your money in the market.
As you decide which cryptocurrency is the best investment for you, here are some other things to keep in mind:
- The speed at which transactions are completed
- The fees associated with transacting
- The ability to use your cryptocurrency for regular purchases and bank transfers
If you’re strictly looking to invest without transacting within the network, remember that cryptocurrency isn’t a get-rich-quick scheme. Instead, you should consider it a long-term investment.