Investment in cryptocurrencies can bring high returns: Bitcoin has brought more than 9,000% of return on investment for its first investors, while Ethereum has more than 10,000%.
But where potential returns are high, the risk of losing investment funds is also high. The choice of cryptocurrency depends on many different factors. Some cryptocurrencies are still relevant in the future, but some of them can replace more promising digital assets.
In this article, we will discuss the top cryptocurrencies worth investing in and the things you need to pay attention to when choosing crypto assets.
How to choose the best cryptocurrencies for investment?
Many projects aim to replicate the success of BTC and ETH. Thoughtful marketing plays its role: Investors are ready to invest the last sum of money in new projects, expecting large amounts of gold, regardless of the consequences of their decisions.
The following are the considerations when choosing a cryptocurrency for investment:
Just creating another digital asset is not enough. There are many clones of Bitcoin, which hardly bring any new things or improve the system. The same is true for Ethereum: it is not the only cryptocurrency that uses smart contracts. But can you list many similar projects?
Some encryption projects may become obsolete, and they will be replaced by new, more advanced blockchain platforms with better bandwidth, scalability, and almost zero transaction fees.
3. Developer activity:
Blockchain creators must support the project and commit to improvement, otherwise, over time, they may expose vulnerabilities that lead to the collapse of the ecosystem. Even some of the cryptocurrencies that took the lead from 2017 to 2018 are now little known. Lisk (LSK) and Dash are examples of this.
External events, such as messages from developers, can increase the hype surrounding blockchain projects and encourage investors to become active, leading to an upward trend.
These are just some of the factors that need to be paid attention to. The main thing here is to grasp the nature of the ups and downs that affect the exchange rate of cryptocurrencies to obtain a return on investment. But for a deeper analysis, you need to learn how to invest in cryptocurrencies.
Let us now talk about which cryptocurrencies you can invest in.
1. Bitcoin (BTC)
Bitcoin is the undisputed leader on our list. It is a cryptocurrency and should be in the portfolio of every crypto investor. Bitcoin is a cryptocurrency market indicator. There is even a BTC dominance index, according to which some traders can determine the trend of the crypto market and trade based on changes in this index.
Generally, when the dominance index starts to grow, Bitcoin’s growth is more positive than other cryptocurrencies.
From a technical point of view, Bitcoin seems to be outdated, but its contribution to the development of a new decentralized financial system is difficult to estimate: it was started with Bitcoin to rethink the shortcomings of the existing global economy.
2. Ethereum (ETH)
Ethereum became the first cryptocurrency to make an equally important contribution to the development of decentralized markets.
It is in the Ethereum blockchain that smart contracts first realize Turing completeness. It allows the financial system to become fully autonomous and not dependent on centralized intermediaries such as cryptocurrency exchanges, banks, and other financial institutions. Today, leading Defi platforms such as Uniswap, Maker, and Aave are using smart contracts based on Ethereum.
These platforms build it simple for customer to access the products of digital financial. On Uniswap, you can exchange encrypted assets, but the funds are stored securely in your wallet. On the Aave platform, you can borrow and provide flash loans at low-interest rates without bank assistance. All of this is managed by smart contracts.
The main disadvantages of Ethereum are low bandwidth and high transaction costs. But already in December 2020, we are preparing to release a large-scale Eth 2.0 update, which will eliminate these problems and take the crypto market to a new level.
3. Bitcoin Cash (BCH)
Bitcoin Cash is a Bitcoin hard fork created in 2017 and is the little brother of Bitcoin. The developers increased the block size by a factor of 4 to allow it to accommodate more transactions than Bitcoin. It allows us to increase network bandwidth.
Although increasing the block size is the only improvement, Bitcoin Cash is very popular among cryptocurrency investors and some cryptocurrency enthusiasts call it “real Bitcoin”.
Due to frequent hard forks on its network, Bitcoin Cash is worth holding. If you hold a certain amount of cryptocurrency at the time of the blockchain snapshot, you can get the same amount of new currency, which may grow in the future and bring additional profits.
Not to mention the fact that Bitcoin Cash started to rise in price often after news about new hard forks were released.
4. Binance Coin (BNB)
BNB is a token issued by Binance, the largest and most popular cryptocurrency exchange. Initially, the token was created on the Ethereum blockchain but later migrated to its own Binance Chain blockchain.
Despite being a centralized market, Binance is actively developing decentralized products: Binance Finance, Binance DEX, Launchpad, and Binance Smart Chain (BSC).
Binance is not just a cryptocurrency exchange, but a complete ecosystem that provides users with access to a wide range of financial products: mortgages, deposits, Defi, mining, lending, and P2P exchanges.
Binance Coin is a functional token. BNB is used to pay transaction commissions, conduct transactions on its blockchain, and participate in launch boards and launch pools, allowing holders to earn additional cryptocurrency.
You need to understand and choose the right cryptocurrency to get a return on your investment. Trading skills training will do a good job in this regard.
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