Best Cryptocurrency Investment Options: Where To Invest Now?

With thousands of cryptocurrencies to choose from, investing in the volatile world of cryptos is not for the faint-hearted. Bitcoin and Ethereum are in a league of their own as the two best cryptocurrencies to buy.

Bitcoin is the original cryptocurrency that was launched about 15 years ago and is the most popular and valuable cryptocurrency. It has a market capitalization of about $1.3 trillion, or roughly 53% of the overall market.

Ethereum is the second-largest crypto by market cap and accounts for nearly 18% of the total cryptocurrency market. Its blockchain was the first to introduce smart contracts, and it is also used for so-called Web3 applications and the trading of non-fungible tokens (NFTs).

Other cryptocurrencies worth considering include Avalanche, Polygon, Binance Coin, Solana, Cardano, and Dogecoin.

Bitcoin: the original cryptocurrency with a clear use case and widespread adoption

Bitcoin is the original cryptocurrency, created in 2009 by Satoshi Nakamoto. It runs on a blockchain, or a distributed ledger that records transactions across thousands of computers. This distributed ledger system, secured by a process called "proof of work", ensures that Bitcoin is safe from fraudsters.

Bitcoin has become a household name, with a market capitalization of about $1.3 trillion as of June 2024, and it represents more than 45% of the total cryptocurrency market. It is the most well-known and widely adopted cryptocurrency, commonly used as a store of value and a speculative investment. Its price has skyrocketed over the years, with a single bitcoin costing around $56,902 as of September 2024, up from about $500 in May 2016.

One of the primary drivers of Bitcoin's adoption is its use as a medium of exchange or a means of payment. An increasing number of businesses and online retailers have started accepting Bitcoin as a form of payment, recognizing its potential to reduce transaction fees. Additionally, Bitcoin's decentralized nature and independence from government control appeal to those seeking financial independence and protection from financial system vulnerabilities.

Another factor contributing to Bitcoin's widespread adoption is its ability to facilitate cross-border transactions. Bitcoin allows for fast and cheap international transfers, making it attractive for remittances and trade. This is especially beneficial in countries with volatile fiat currencies and limited access to traditional banking services, as it provides a more stable store of value and promotes financial inclusion.

To encourage further adoption, strategies such as education and awareness campaigns, user-friendly interfaces, regulatory clarity, and partnerships with traditional financial institutions are being implemented. These efforts aim to simplify complex concepts, enhance security, provide clear guidelines, and build trust among individuals and businesses.

In conclusion, Bitcoin, as the pioneer cryptocurrency, has made significant strides and continues to dominate the market. Its clear use case as a medium of exchange and a store of value, combined with its widespread adoption, make it a compelling investment option in the world of cryptocurrencies.

Ethereum: a smart contract capable blockchain with NFT and DeFi capabilities

Ethereum: A Smart Contract-Capable Blockchain with NFT and DeFi Capabilities

Ethereum is a decentralised software platform that enables smart contracts and decentralised applications (dApps) to be built and run without any downtime, fraud, control, or interference from a third party. The goal behind Ethereum is to create a decentralised suite of financial products that anyone in the world can freely access, regardless of nationality, ethnicity, or faith.

Ethereum is both a cryptocurrency and a blockchain platform. It is a favourite of program developers because of its potential applications, like so-called smart contracts that automatically execute when conditions are met and non-fungible tokens (NFTs).

Smart Contracts

Smart contracts are computer protocols that facilitate and verify the execution of agreements between parties. They are stored on a blockchain network, where some external event triggers them. Once they are triggered, they autonomously and irreversibly execute the terms of the contract. A massive benefit of smart contracts is the reduced risk of fraud or tampering. Once the contract is on the blockchain, you can't change the code.

NFTs

NFTs are tokens that are individually unique. Each NFT has different properties and is provably scarce. This is different from tokens like USDC, where every token is identical and has the same properties. NFTs are often used to represent ownership of digital or physical assets, such as art, collectibles, or real estate.

DeFi

Ethereum is a well-known example of a decentralised protocol in the crypto space. It is a set of rules and conventions governing how different network parts interact. These protocols provide a trustworthy, secure, and efficient way of exchanging assets without a central authority.

Market Performance

Ethereum has experienced tremendous growth. From April 2016 to the end of September 2024, its price went from about $11 to around $2,343, increasing by 21,196%. As of August 2024, Ethereum is the second-largest cryptocurrency by market capitalisation, with a market cap of about $450 billion.

Ethereum's unique capabilities, such as smart contracts, NFTs, and DeFi, make it a compelling investment opportunity. Its strong market performance and widespread adoption by developers further enhance its potential as an investment option.

Binance Coin: the native coin of the BNB Chain, offering lower fees and exclusive access

Binance Coin (BNB) is a cryptocurrency issued by the Binance exchange, which in May 2024 was the second-largest cryptocurrency exchange in the world, with a daily trading volume of $11.8 billion. BNB is the native token for the Binance blockchain, which was built using Ethereum. It has a strict maximum of 200 million BNB tokens.

BNB was initially created as a utility token for discounted trading fees on the Binance exchange. However, its uses have expanded to numerous applications on a wide range of platforms.

Uses of Binance Coin

• Reduced trading fees: When trading fees on Binance are paid using BNB, users are entitled to a 25% discount.
• Binance Account Tier: Users with account balances in BNB and 30 days of accumulated trading volume above certain thresholds are given VIP tiers with additional fee discounts and perks.
• Dust conversion: Users can convert non-tradeable amounts of various cryptocurrencies called dust in their Binance account into BNB.
• IEO Lottery: Binance’s Initial Exchange Offerings (IEO) are conducted using lottery allocations determined by the amount of BNB held by users.
• Transaction fees on the Binance Exchange: BNB can be used to pay for transactions on the Binance Exchange, and users also receive a discount for doing so.
• Credit card payments: BNB can be used to pay crypto credit card bills on Crypto.com.
• Payment processing: Merchants can offer BNB as a means of payment for customers, offering more flexibility in payment methods.
• Booking travel arrangements: BNB can be used to book hotels and flights on select websites.
• Entertainment: BNB can be used for virtual gifts, lottery tickets, and more.
• Investment: Several platforms allow investors to invest in stocks, ETFs, and other assets using Binance Coin.
• Loans and transfers: BNB can be used as collateral for loans on certain platforms. Apps also allow users to split bills and pay friends and family through Binance Coin.

Benefits of Binance Coin

Binance Coin has seen massive growth in interest due to its multiple use cases and the various benefits it offers.

• Token burn: Binance Coin is designed with token burn in mind to induce scarcity and drive up the value of the token. In its v1.1 whitepaper, Binance stated that 20% of its profits would be used to purchase and destroy BNB every quarter. In 2019, Binance updated its whitepaper to state that BNB burns would be based on its exchanges’ trading volume. Since Binance began burning BNB in October 2017, 10 rounds of token burns have taken place, with about 16.7 million BNB worth approximately $208 million burned up until January 2020.
• Discounted fees: Users of Binance Coin receive a discount on transaction fees on the Binance Exchange as an incentive.
• Exchange access: BNB can be exchanged or traded for other cryptocurrencies, such as Bitcoin, Ethereum, Litecoin, etc.

Risks and Considerations

As with any cryptocurrency, investing in Binance Coin comes with risks. Here are some factors to consider:

• Volatility: Cryptocurrencies are incredibly volatile, and the value of BNB can fluctuate significantly.
• Regulatory issues: In November 2023, Binance and its CEO Changpeng Zhao pleaded guilty to money laundering charges and agreed to pay a $4.3 billion settlement. Changpeng Zhao stepped down as CEO and served four months in prison. While Binance remains operational and popular, this incident highlights the regulatory risks associated with cryptocurrencies.
• Security: Cryptocurrency exchanges and wallets have been subject to hacks and security breaches, resulting in the loss of funds.
• Competition: The cryptocurrency market is highly competitive, with new coins and tokens launching regularly. BNB faces competition from other cryptocurrencies and blockchain platforms.
• Market conditions: The crypto market is subject to boom and bust cycles, and market conditions can significantly impact the value of BNB.

In conclusion, Binance Coin (BNB) is a well-established cryptocurrency with a wide range of use cases and benefits, including discounted fees, token burns, and access to the Binance ecosystem. However, investors should carefully consider the risks and volatility associated with cryptocurrencies before investing.

Solana: a blockchain with fast transaction speeds and low fees

Solana is a blockchain platform designed to support decentralised applications (dApps). It is often referred to as an 'Ethereum killer' due to its ability to process a much higher number of transactions per second than Ethereum, as well as its lower transaction fees.

The Solana blockchain has a few different types of fees and costs that are incurred to use the permissionless network. These include transaction fees, priority fees, and rent fees. Transaction fees are paid to validators who process transactions/instructions, priority fees are optional fees that boost transactions processing order, and rent fees are withheld to keep data stored on-chain.

Solana has a base transaction fee of 5k lamports per signature, with additional priority fees added on top. The average transaction fee paid by Solana users in the last epoch was 0.000058416 SOL, with the average fee for all transactions, including vote transactions, being 0.000015894 SOL.

Solana's transaction fees are significantly lower than those of its primary competitor, Ethereum. In September 2021, the average transaction fee for Ethereum was between $3 and $10, with fees sometimes reaching as high as $50 or $100 for minor transactions.

Solana's low transaction fees can be attributed to its better block time and block size. While Ethereum has a block time of 13 seconds and a block size of 70 transactions, Solana boasts a block time of 0.4 seconds and a block size of 20,000 transactions. This allows the Solana network to offer incredibly low transaction fees, making it one of the blockchains with the cheapest transaction fees.

In addition to its low fees, Solana also offers fast transaction speeds. Its hybrid protocol allows for significantly decreased validation times for both transaction and smart contract execution, making it attractive to both small-time users and enterprise customers.

The Solana protocol is designed to facilitate decentralised app (DApp) creation and improve scalability by introducing a proof-of-history (PoH) consensus combined with the underlying proof-of-stake (PoS) consensus of the blockchain. This innovative hybrid consensus model has garnered interest from both small-time traders and institutional traders.

The Solana Foundation, which launched the Solana protocol and SOL token in 2020, aims to make decentralised finance accessible on a larger scale. With its fast transaction speeds, low fees, and focus on scalability, Solana has climbed to the top of the cryptocurrency market, currently ranking as the fourth-largest cryptocurrency in the world, excluding stablecoins.

XRP: a payment settlement system for fast and easy international transfers

XRP is a payment settlement system designed for fast and easy international transfers. It is the native cryptocurrency of the XRP Ledger, a decentralised, open-source, public blockchain. The XRP Ledger was launched in 2012 by David Schwartz, Jed McCaleb and Arthur Britto as a faster, more energy-efficient alternative to the Bitcoin blockchain.

The XRP Ledger is maintained by a global community of businesses and developers, and has offered over 10 years of error-free, uninterrupted performance over more than 63 million ledgers. It is highly performant, settling thousands of transactions in a matter of seconds, and is highly sustainable, with low transaction costs.

The XRP Ledger uses a unique Federated Consensus mechanism as its method of validating transactions. Transactions are confirmed through a consensus protocol, in which designated independent servers called validators agree on the order and outcome of XRP transactions. All servers in the network process each transaction according to the same rules, and any transaction that follows the protocol is confirmed immediately. All transactions are public and transparent, and anyone can operate a validator. There are currently over 150 validators on the ledger, run by universities, exchanges, businesses and individuals worldwide.

XRP is highly scalable, processing 1,500 transactions per second, and is also carbon-neutral and energy-efficient. It is also inexpensive, costing a fraction of a penny per transaction.

XRP has a market cap of $30 billion as of September 2024, with a price of $0.53 per token.

Frequently asked questions