Since 2009 when the Bitcoin protocol was created in response to the economic calamities inflicted by the financial crisis in the 2008 stock market crash, the world now had a novel asset class, not just a new digital currency. A dozen years later, there are thousands, in fact, more than 9500 cryptocurrencies, with varying specialties and differing degrees of utility, adoption, and promises, and some shit and scam coins. In such a broad market, which now accounts for about $2 trillion, how can investors decipher the best cryptocurrencies to invest in? Here's a look at five of the best cryptocurrencies to buy in 2021 and the bull case for each. Just as in the stock market, investors should wager only with money they're willing to lose, as even the most blue-chip cryptos can be wildly volatile.
Bitcoin (BTC)
Theories on Bitcoin's utility differ, but there's no denying that it's been the dominant player in its field since its creation. Bitcoin's growing adoption is its saving grace; both retail and institutional investors are primed to dip their toes into cryptocurrencies with Bitcoin first. Bitcoin is the king of the crypto market. Plus, some of today's smartest business minds are increasingly gravitating toward the "digital gold." Twitter Inc. and Square Inc.CEO Jack Dorsey has said he doesn't think there's anything more important in his life to working on, seeing it as a way for developing countries to guard against currency depreciation and for faster, cheaper funds transfers across borders. And although Bitcoin's price lost more than half within two months of hitting all-time highs of about $65,000, Tesla Inc.'s decision to put Bitcoin on its balance sheet earlier this year could serve to usher in more corporate treasury inflows over time.
Ethereum (ETH)
The Service coin of cryptocurrency, Ethereum, has been capably playing second fiddle to Bitcoin for years now. With a market capitalization of about $375 billion at the time of writing, Ethereum's share of the overall crypto market is more than 18% – a far cry from the 47% commanded by Bitcoin but more than four times the next-closest token. The native currency on the platform is technically called ether but is colloquially referred to as Ethereum. The leading platform for decentralized finance, or Defi, Ethereum allows users to create smart contracts that automatically execute when certain conditions are met. The potential to cut out third parties such as banks, brokerages and clearinghouses make Ethereum an exciting, money-saving platform. The rising tide of Defi should continue resulting in higher usage of this platform, which can be used to issue new cryptocurrencies or create and exchange nonfungible tokens, known as NFTs, among other things.
Cardano (ADA)
Cardano, which is the third-most valuable cryptocurrency, is transitioning toward enabling smart contracts that will be fully operational by fall 2021. Like Ethereum, Cardano is a decentralized blockchain platform that uses a native cryptocurrency, in this case, Ada, to enable secure peer-to-peer transactions. It was founded in 2015 by Ethereum co-founder Charles Hoskinson, who left what is now the leading platform for decentralized finance to found Cardano, which is designed to use a fraction of the energy demanded by Bitcoin and Ethereum. Cardano does this by using a "proof-of-stake" protocol that doesn't incentivize high energy usage and is an increasingly popular way for blockchains to validate transactions for security reasons.
Binance Coin (BNB)
One of Binance Coin's chief advantages is that, like Bitcoin, it has a strict limit on the number of tokens in circulation. The limit is 200 million, and it's a big reason BNB has soared to become the fourth-most valuable cryptocurrency in the world. The native currency of the popular Binance exchange, the coin, is up more than 700% in 2021 alone. It has a different model than many of the other cryptocurrencies in the market, destroying or "burning" much of its currency every quarter, using one-fifth of its profits to do so. With a market capitalization of more than $50 billion, Binance Coin is no longer the instrument of pure speculation that it once was. As long as the wildly popular Binance platform continues to grow, the BNB crypto has a bullish outlook.
Polkadot (DOT)
Unlike stocks, cryptocurrencies have debatable and subjective measures of "fundamentals." Because of that, other credentials are important to consider with crypto, with one of those being who began the project in the first place. Enter Gavin Wood, whose credibility as a co-founder of Ethereum helped drive DOT to one of the top 10 most valuable cryptocurrencies. One advantage of DOT is that it can be used as a bridge between networks, meaning applications can be built on Polkadot that work on both the Ethereum and Bitcoin networks. As one of the cryptocurrencies built after the pioneers in the industry, its features make it both more scalable and faster than its predecessors.
All cryptocurrencies are subject to higher market risk. Please take your proper risk management before investing.
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