Best Crypto Coins: Where To Invest Your Money?

Investing in cryptocurrencies is risky due to the volatility of the market, the lack of regulation, and the potential for fraud. However, with thousands of different cryptocurrencies to choose from, it can be overwhelming to know where to start.

Bitcoin is the original cryptocurrency and still the most well-known, but there are many other options that could be worth investing in. Ethereum, for example, is the second-largest cryptocurrency and has experienced tremendous growth. Other options include Tether, Binance Coin, Cardano, and Dogecoin.

When choosing which cryptocurrency to invest in, it is important to consider the market capitalization, the level of adoption, the speed of transactions, and the fees associated with transacting.

Bitcoin

The upside of buying Bitcoin is clear, but with volatility comes big downsides, too. For example, someone who bought Bitcoin in 2013 would have seen their investment tumble 80% and it wouldn't be above water for another three years. A decline in 2018 lasted about a year, and there were drops of 50% or more in 2021 and 2022.

Ethereum

The potential applications of the Ethereum virtual machine are wide-ranging, using its native cryptographic token, Ether. Ethereum is being developed to decentralise the web. While how we interact with the web may not change much, the aim is to remove centralised entities using applications developed on Ethereum and blockchains like it.

Ether has four main purposes: it is traded as a digital currency on exchanges, held as an investment, used to purchase goods and services, and used on the Ethereum network to pay transaction fees.

The Ethereum ecosystem is growing rapidly, thanks to the surging popularity of its dApps in areas such as decentralised finance (DeFi), arts and collectibles (non-fungible tokens, or NFTs), gaming, and technology.

Stablecoins

There are several types of stablecoins, each with its own advantages and disadvantages. Here are some of the most popular stablecoins to consider:

Tether (USDT)

Tether is one of the first stablecoins ever created, launching in 2014. It is currently the leading stablecoin in terms of market cap and is pegged to the US dollar in a 1:1 ratio. Tether has faced some controversies and legal issues, but it remains one of the most popular stablecoins with a large market cap.

USD Coin (USDC)

USD Coin is another popular stablecoin, currently ranked within the top 5 cryptos by market cap. It is pegged 1:1 to the US dollar and is backed by fiat money reserves and US treasuries. USDC is the backbone of Circle's global payments service, and it offers high interest rates of up to 15% APY on specific platforms.

Binance USD (BUSD)

Binance USD is a stablecoin offered by the largest crypto exchange, Binance. It is approved by the New York State Department of Financial Services (NYDFS) and is pegged 1:1 to the US dollar. BUSD has a relatively small market cap compared to USDT and USDC but is still within the top 10 cryptocurrencies by market cap.

True USD (TUSD)

True USD is a fiat-backed stablecoin that was introduced in 2018. It is pegged 1:1 to the US dollar, with its collateral distributed across multiple bank accounts owned by trust companies. TUSD has maintained this ratio successfully and is ranked within the top 50 cryptocurrencies by market cap.

Dai (DAI)

Dai is a stablecoin that is backed by both crypto and fiat currency. It is pegged to the US dollar and Ethereum tokens, with 4.9% of its collateral in USD and 68% in Ethereum derivatives. Dai is over-collateralized by 213%, making it easier to maintain stability, and it is controlled by decentralized stakeholders.

Pax Gold (PAXG)

Pax Gold is a stablecoin backed by physical gold reserves. Each token of PAXG is pegged to one troy ounce of gold, which is kept in protected vaults and approved by the NYDFS. The price of PAXG correlates directly with the market value of gold, making it a stable option during turbulent economic conditions.

DeFi

Decentralized Finance (DeFi) coins are cryptocurrencies designed to facilitate decentralized finance activities. They are typically used to pay transaction fees, stake in protocols, and provide liquidity to DeFi markets. DeFi coins have the potential to offer greater returns than traditional investments and provide greater access to the DeFi ecosystem.

Ethereum (ETH):

Ethereum is the main blockchain for DeFi, and it provides the infrastructure for many DeFi platforms and decentralized applications (dApps). No DeFi portfolio would be complete without Ether (ETH), the native token of the Ethereum blockchain.

Uniswap (UNI):

Uniswap is the largest decentralized crypto exchange (DEX) protocol, providing liquidity to hundreds of different cryptocurrencies. It has a $6.44 billion market cap and is currently the 7th largest DeFi protocol by total value locked (TVL).

Lido (LIDO):

Lido is a leading crypto-staking dApp and one of the most popular protocols. It allows users to stake crypto by investing in staking pools, with the flexibility to unstake their coins at any time. Lido has a TVL of over $32 billion.

Aave (AAVE):

Aave is a decentralized lending and borrowing platform. It is the fourth-largest DeFi protocol in the world and the largest dApp in the lending/borrowing space. Users can earn interest by depositing cryptocurrencies into Aave liquidity pools and borrow at generous rates.

Curve Finance (CRV):

Curve Finance is the second-largest DEX protocol, providing liquidity to hundreds of crypto pairs, particularly stablecoins. It is interoperable with around 12 different blockchain networks. Curve has a market cap of $367 million and a TVL of $2.23 billion.

Compound (COMP):

Compound is another popular lending and borrowing platform. It offers tons of liquidity and is often on the radar for yield farming. COMP is both the utility and governance token of the Compound platform.

MakerDAO (MKR):

MakerDAO is one of the largest protocols in the DeFi scene and acts as the backbone of the DAI stablecoin. MKR token holders play a crucial role in maintaining the stability of the DAI stablecoin.

Decentraland (MANA):

Decentraland is a popular decentralized platform and Metaverse ecosystem. Users can create avatars, communicate, and invest in virtual land within the Metaverse. MANA is the native DeFi token of the Decentraland platform.

Wrapped Bitcoin (WBTC):

Wrapped Bitcoin allows users to utilize Bitcoin directly on the Ethereum-backed DeFi system. Users can earn interest on the amount of BTC they lend out through various lending platforms.

Tether (USDT):

Tether is a stablecoin, a type of crypto asset pegged to a non-crypto asset, usually a fiat currency. It is one of the top DeFi tokens, pegged to the US Dollar at a 1-to-1 ratio.

It is important to note that investing in DeFi coins carries risks, and it is essential to conduct thorough research and due diligence before investing.

Altcoins

Ethereum

Ethereum is the second name you’re most likely to recognize in the crypto space. The system allows you to use ether (the currency) to perform a number of functions, but the smart contract aspect of Ethereum helps make it a popular currency. Ethereum is far behind Bitcoin in value but its unique technology places it far ahead of the other competitors.

Tether

Tether is a stablecoin, meaning it’s backed by fiat currencies like U.S. dollars and the Euro and hypothetically keeps a value equal to one of those denominations. In theory, this means Tether’s value is supposed to be more consistent than other cryptocurrencies, and it’s favored by investors who are wary of the extreme volatility of other coins.

Binance Coin

Binance Coin (BNB) is a form of cryptocurrency that you can use to trade and pay fees on Binance, one of the largest crypto exchanges in the world. Since its launch in 2017, Binance Coin has expanded past merely facilitating trades on Binance’s exchange platform. Now, it can be used for trading, payment processing or even booking travel arrangements. It can also be traded or exchanged for other forms of cryptocurrency, such as Ethereum or bitcoin.

Cardano

Cardano is the cryptocurrency platform behind ada, the name of the currency. It takes less energy to complete a transaction on Cardano than on a larger network like Bitcoin. This means transactions are faster and cheaper. Cardano recently launched a test version of a platform called AdaSwap, where developers can build decentralized finance apps. AdaSwap could elevate Cardano’s status as a Web3 network and drive up the price of its coin.

Polygon

Polygon is designed for Ethereum scaling and infrastructure development. 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.

Avalanche

Avalanche is a relatively new “layer one” foundational blockchain that can execute smart contracts. It was 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. Avalanche’s individual blockchains can validate transactions independently, making it scalable and able to handle large volumes of transactions — up to 6,500 per second.

Chainlink

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. Chainlink is also the choice for the new inflation index from decentralized finance company Truflation. It’s built to serve as an alternative to the consumer price index.

Solana

Solana is one of the first blockchains to partner with a major financial institution to process payments — in this case, the partner is Visa. Meta, Stripe, Shopify and Google also have projects on Solana. Solana is one of several Ethereum-based networks that improve on Ethereum’s cost and efficiency. Its fast speed and comparatively low costs are the result of a proof-of-history consensus, which creates a clock that synchronizes computers on Solana’s network.

Frequently asked questions