Investing in Cryptocurrency: Bitcoin and Ether Alternatives
On Feb 23, 2022
Bitcoin and ether are the two most popular cryptocurrencies on the market, but there are plenty more viable options worth investigating. If you’re new to cryptocurrency investing, it’s tempting to believe that bitcoin and ether – Ethereum’s native cryptocurrency – are the only stable, secure investment alternatives available. While many maximalists may agree with you, other cryptocurrencies (also known as altcoins) are obviously on the increase.
According to the most recent estimates, bitcoin’s market capitalization has plummeted from 69 percent to 42 percent of the overall crypto market value over the previous year, while altcoins have climbed from 11 percent to 21 percent.
Non-fungible tokens (NFTs) and DeFi-related protocols are two possible drivers of this shift, as an increasing number of holders diversify into tokens attached to quickly developing ecosystems. Diversification is essential for portfolio management and growth, especially if you’re new to investing. “Diversification is insurance against stupidity,” stated US billionaire Warren Buffett. Isolating your investment to two currencies out of over 17,000+ viable possibilities not only increases your risk but also reduces your potential returns.
As a result, it is prudent to look beyond bitcoin and ether and consider investing a portion of your portfolio to other potential crypto assets.
What to look for when selecting an alternative cryptocurrency
When looking for alternative investment alternatives in the crypto market, it’s critical to assess the possibilities you’re considering in order to identify which ones best match your investing plan. Among the factors to consider are:
Availability refers to the number of exchanges or platforms that list a specific crypto asset. Is it simple to acquire and sell huge quantities at any given time? Is the token compatible with several blockchains?
Developments on the Roadmap
When investing for the long run, you should ensure that the underlying cryptocurrency project has a solid future growth strategy, which includes the inclusion of new features, collaborations, and upgrades. These should serve to boost the price of the corresponding token over time and attract new investors to the business.
It is vital to assess the viability of the digital assets in which you intend to invest. You do not want to invest in a cryptocurrency whose value may collapse before the end of your investing time horizon. As a result, you must assess the token’s use, how it compares to other competing initiatives, and the strength of the community behind it.
When selecting a currency to add to your portfolio, it is critical to avoid investing in a cluster of currencies that tend to move in lockstep. Prices of digital assets dealing with comparable businesses or crypto sectors frequently increase and decrease at the same time in the crypto market.
Having too many DeFi tokens, for example, would definitely expose you to excessive dangers, especially during periods when the DeFi market is experiencing a dip. To avoid this, diversify your portfolio among several crypto sectors, including as NFTs, DeFi, layer 2 crypto exchanges, and the metaverse. Here are a few digital assets to keep an eye out for
Platform tokens for decentralised apps
Solana is a new blockchain ecosystem that is vying to replace Ethereum as the leading hub for decentralized applications (DApps). Solana’s objective, like Binance Smart Chain’s, is to develop a more inexpensive and faster way of accessing and transacting on blockchain apps.
It focuses on improving decentralized finance (DeFi) so that DeFi apps may become more widely available. Furthermore, it has begun to make movements in the NFT market, giving consumers more reasons to interact with its network. As a result, SOL, Solana’s native digital asset, has grown in popularity among investors and DApp users alike, with its price soaring by over 10,000% in 2021.
Furthermore, the network supports a thriving staking industry, with over 74% of the entire supply of SOL already staked. For those who are unfamiliar with the word staking, it is the act of depositing or locking away a certain quantity of tokens on a blockchain in order to become eligible to serve as a validator.
Cardano has constructed a very complex architecture aimed to overcome some of the weaknesses of major crypto networks, similar to how Solana and Binance Smart Chain are attempting to dethrone Ethereum.
While Cardano work began in 2017, it wasn’t until 2021 that the team released an update that enabled the blockchain to support smart contracts. This enabled Cardano to host and ease the development of native decentralized apps that run on smart contracts. Because of this progress in infrastructure and other causes, ADA, Cardano’s native coin, increased by 650 percent in 2021.
Utility tokens on the cryptocurrency exchange
Binance is a cryptocurrency (BNB)
Binance coin (BNB) is the Binance ecosystem’s utility token, which includes an exchange service, a staking solution, a payment service, blockchain application networks, and a crypto loan product. Simply explained, BNB is the Binance Smart Chain’s equivalent of ether on the Ethereum blockchain.
For the most of 2021, BNB was among the top five cryptocurrencies by market cap, outperforming bitcoin and ether. In 2021, BNB increased by 1,344 percent, while bitcoin increased by 73% and ether increased by 455 percent.
This was mostly due to the increasing popularity of the Binance Smart Chain (BSC) among DeFi and NFT users and developers. Those who are unfamiliar with Binance Smart Chain should read on.
The Crypto.com coin (CRO)
Crypto.com, a Singapore-based corporation that just purchased the naming rights to the Staples Center in Los Angeles, provides a crypto exchange, a payment system, and a blockchain application network. At the heart of it all is the Cyrpto.com coin (CRO), which acts as a utility token that users may get as a reward or use to settle costs. More crucially, CRO is the native currency of Crypto.com‘s two blockchains: the Crypto.com chain and the Cronos chain, which is Ethereum Virtual Machine (EVM) compatible. CRO’s on-chain usefulness includes anchoring the staking economies of the Cronos and Crypto.com chains.
CRO is one of the potential crypto exchange utility tokens available, thanks to the expanding affluence of Crypto.com and the fact that users have access to a plethora of apps. Notably, the digital asset value increased by 850 percent between 2017 and 2021.