Best Cryptocurrencies To Invest: Top Picks For 2023

Cryptocurrencies are incredibly volatile and not for all investors. If you're thinking about investing in cryptocurrency, you should first decide whether it fits your risk tolerance.

Bitcoin and Ether are the two best cryptocurrencies to buy. Bitcoin is the first cryptocurrency and the largest by market capitalization, with a valuation of about $1.3 trillion, or roughly 53% of the overall market. Ether, meanwhile, is the native token on the widely used Ethereum blockchain.

Other cryptocurrencies worth considering include:

- Solana (SOL)

- Avalanche (AVAX)

- Polygon (MATIC)

- Cardano (ADA)

- Binance Coin (BNB)

- Tether (USDT)

- Dogecoin (DOGE)

- Toncoin (TON)

- Tron (TRX)

Bitcoin: the original cryptocurrency, with the largest market cap and the most mainstream acceptance

Bitcoin is the original cryptocurrency, created in 2009 by an anonymous computer programmer or group of programmers under the pseudonym "Satoshi Nakamoto." It is a peer-to-peer electronic payment system that uses a cryptocurrency to transfer value over the internet or act as a store of value. Bitcoin is decentralised, with no central authority or banks managing transactions and the issuing of bitcoins. Instead, the network is open-source, and these tasks are carried out collectively by the network.

Bitcoin has the largest market capitalisation of any cryptocurrency, valued at about $1.3 trillion in June 2024, or roughly 53% of the overall market. It also has the most mainstream acceptance of any cryptocurrency. This was evidenced by the January debut of 11 new Bitcoin exchange-traded funds (ETFs). The approval of these funds, which allow mainstream investors to track Bitcoin's performance without directly owning it, has been a catalyst for Bitcoin's price, which has fiercely rallied in the first half of 2024.

Bitcoin's price is renowned for being highly volatile. In February 2011, BTC’s price reached parity with the U.S dollar for the first time. Over the next four months, its price in USD continued to rise – peaking at over $30. By early 2013, the leading cryptocurrency had risen above $1,000, but due to various situations, it took another four years for the BTC price to return to this level. Once that level was passed, however, bitcoin’s price continued to surge dramatically throughout 2017 until BTC peaked at its previous all-time high of $19,850.

Over 2018, the entire crypto market plunged into what is now known as the “crypto winter” – a yearlong bear market. It wasn’t until December 2020 that bitcoin returned to test the previous all-time high, eventually surpassing that historical level and rising a further 239% over the next 119 days to a new all-time high of $64,799. As of September 2024, a single bitcoin’s price was around $56,902. That’s a growth of 11,280% since May 2016.

Ethereum: a smart contract capable blockchain with its own native token

Ethereum is a blockchain with its own native token, ether (ETH). It is the second-largest cryptocurrency by market cap and was created in 2013. Ethereum is a favourite of program developers because of its potential applications, like smart contracts and non-fungible tokens (NFTs).

Smart Contracts

Smart contracts are programs that can automatically execute transactions if certain conditions are met, without the need for an intermediary. They are often associated with Ethereum, which was designed to accommodate them. However, the idea isn't restricted to any particular platform or network.

Intermediaries

Intermediaries are pervasive in our digital lives. Even sharing a photo online requires the services of an intermediary like Facebook or Twitter. These intermediaries manage the network and set the rules. Smart contracts make it possible to automate these tasks without needing a centralised entity to manage and approve the transaction.

Conventional Contracts

A conventional contract is a document outlining the terms of a relationship between two parties, which is enforceable by law. If one party violates the terms, the other can take them to court. A smart contract fortifies such agreements in code so the rules are automatically enforced without courts (or any third party) getting involved.

Ethereum's Smart Contracts

The world's first cryptocurrency, Bitcoin, was the first to support basic smart contracts, although they are extremely limited in comparison with Ethereum. Each transaction is a smart contract because the network will only approve if certain conditions are met – that the user provides a digital signature proving ownership.

Ethereum replaces Bitcoin’s more restrictive language with a Turing-complete language, meaning it supports a broader set of computational instructions. This allows developers to use the blockchain to process more than just cryptocurrency transactions.

Vulnerabilities

Because novel smart contracts are less tested, there is a higher chance of vulnerabilities. Ethereum has already seen millions of dollars of losses from exploited vulnerabilities in smart contracts.

Uses of Smart Contracts

Some common ways of using smart contracts are:

• Multisignature accounts: Funds can only be spent when a required percentage of people agree.
• Encoding financial agreements: Manage agreements between users, e.g. insurance.
• Agreements based on the outside world: Pull in data from the outside world with the help of oracles.
• Third-party provision: Similar to how a software library works, smart contracts can work with other smart contracts in a chain.
• Storage: Store information about an application, such as domain registration information or membership records.

Smart Contracts and the Future

Smart contracts form the building blocks for decentralised applications and even whole companies, dubbed decentralised autonomous companies, which are controlled by smart contracts rather than human executives.

Using Smart Contracts

Anyone can use smart contracts if they have Ethereum's native token, ether, which can be bought on cryptocurrency exchanges. Ethereum apps will usually provide instructions for how to use their specific app and underlying smart contracts.

Smart Contract Costs

Getting thousands of computers across the world to validate smart contracts often isn't cheap. The user must pay a fee, typically in ether, to keep the network up and running. Fees go up when the network grows more congested.

Binance Coin: the native coin of the Binance exchange, with a high market cap and low trading fees

Binance Coin (BNB) is a cryptocurrency that powers the Binance ecosystem, one of the largest crypto exchanges in the world. BNB was launched in 2017 and has evolved from a simple token to the backbone of the BNB Chain ecosystem. It offers high speed and low cost compared to other blockchains, such as Ethereum.

One of the key advantages of BNB is the benefits it provides to users of the Binance exchange platform. These include lower fees, exclusive access to initial coin offerings, and cashback rewards. BNB can also be used for trading, payment processing, and booking travel arrangements, both within and outside the Binance ecosystem. It can be traded or exchanged for other major cryptocurrencies like Ethereum and Bitcoin.

In terms of market performance, BNB has had an impressive growth trajectory. Since its launch in 2017, when its price was just $0.10, BNB's price had risen to around $520 by late September 2024, representing a gain of over 500,000%. This makes it one of the best-performing cryptocurrencies in recent years.

However, it is important to note that BNB is a highly centralized token, as it is controlled and managed by Binance. This means that its success is closely tied to the performance and regulatory status of the Binance exchange.

Overall, Binance Coin (BNB) is a strong contender for investors looking to enter the cryptocurrency market due to its high market cap, low fees, and strong performance. Its position as the native coin of the Binance exchange, the largest crypto exchange by trade volume, makes it a compelling choice for those seeking exposure to the crypto market.

Solana: a blockchain with its own native token, known for its speed and low fees

Solana is a decentralised blockchain platform that aims to improve blockchain scalability by facilitating the creation of decentralised applications (DApps) and supporting crypto-currency transactions. It is one of the fastest-growing projects in the Decentralised Finance (DeFi) space and is often referred to as an "Ethereum-killer".

Solana's primary use case is to facilitate the creation of DApps, with a particular focus on decentralised finance solutions. It is designed to serve both small-time users and enterprise customers, aiming to make decentralised finance accessible on a larger scale.

Solana operates using a combination of proof-of-history (PoH) and proof-of-stake (PoS) consensus mechanisms. The PoH component is responsible for the majority of transaction processing, recording successful operations and the time elapsed between them, while the PoS mechanism acts as a monitoring tool, validating each sequence of blocks produced.

Solana is known for its speed and low fees. It claims to be able to support 50,000 transactions per second, with fees remaining under $0.0025. This is achieved through its unique PoH mechanism, which allows nodes to process transactions without needing to communicate with one another, significantly speeding up transaction processing times.

History of Solana

The idea and initial work on Solana began in 2017, but it was officially launched in March 2020 by the Solana Foundation, headquartered in Geneva, Switzerland. Anatoly Yakovenko, the co-founder and CEO of Solana Labs, is the most important person behind the project.

Investing in Solana

Solana's SOL token is available to buy and sell via exchanges like Coinbase. It is important to note that cryptocurrencies are incredibly volatile and not suitable for all investors. Investors should carefully research and understand the risks involved before investing in the crypto market.

Dogecoin: a meme coin created as a joke, but with a strong online brand and high-profile supporters

Dogecoin is a peer-to-peer, open-source cryptocurrency that was created as a joke on Bitcoin in 2013. It is based on the 'doge' meme, featuring a Shiba Inu dog as its logo. Despite its light-hearted origins, Dogecoin has become an internet sensation, attracting a passionate and active community, as well as high-profile supporters such as Elon Musk and Vitalik Buterin.

Dogecoin has a strong online brand, encapsulated by its fun and playful ethos. The Dogecoin community is committed to supporting each other, being kind, teaching people about cryptocurrency, fundraising, having fun, making memes, and being absurd. This is summed up in Dogecoin's unofficial tagline: 'Do Only Good Everyday'. The Dogecoin Foundation is dedicated to protecting the Dogecoin brand and community from exploitation and misuse, ensuring that the logo and name are used in line with the community's values.

Dogecoin has a loyal community of supporters who use it as a tipping currency for social media content and for donations to charities and humanitarian initiatives. It is also accepted by many online retailers as a form of payment, including Elon Musk's SpaceX and the Dallas Mavericks.

Dogecoin's infrastructure is slowly gaining traction with fans and developers, and it continues to operate and trade due to its active community of miners. In May 2024, Dogecoin's market capitalization was nearly $24.39 billion, and it surpassed $1 billion for the first time during the crypto bull run of 2017-2018.

However, it is important to note that Dogecoin is a memecoin with no intrinsic value beyond its strong community. It has unlimited supply, which leaves it susceptible to devaluation as its supply increases.

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