The Crypto Investment Conundrum: Which Coin To Choose?

With thousands of cryptocurrencies to choose from, investing in the volatile world of crypto isn't for the faint of heart. But if you're looking to dip your toes in the water, here are some of the top cryptocurrencies to consider:

- Bitcoin (BTC) - The original cryptocurrency with the most mainstream acceptance and the largest market capitalization.

- Ethereum (ETH) - The native token on the widely used Ethereum blockchain, which is custom-made for smart contracts and decentralized finance tools.

- Solana (SOL) - A fast-growing smart contract platform that has become known for facilitating the easy creation of decentralized applications.

- Binance Coin (BNB) - The native token of the Binance exchange, which is one of the largest crypto exchanges in the world.

- Cardano (ADA) - A proof-of-stake blockchain that aims to foster a developer-friendly ecosystem for decentralized applications.

- Dogecoin (DOGE) - A meme coin that gained popularity due to its association with Elon Musk and a dedicated community.

- Tether (USDT) - A stablecoin backed by fiat currencies, which means its value is supposed to be more consistent than other cryptocurrencies.

- Polygon (MATIC) - A layer-2 scaling solution for the Ethereum network, designed to improve transaction speed and verification.

- Avalanche (AVAX) - A layer one foundational blockchain that can execute smart contracts and handle large volumes of transactions.

- Chainlink (LINK) - A decentralized oracle network that facilitates secure interactions between blockchains and external data feeds, events, and payment methods.

Bitcoin vs. other cryptocurrencies

Bitcoin is the original cryptocurrency, created in 2009 by the mysterious Satoshi Nakamoto. It runs on a blockchain, a ledger logging transactions distributed across a network of thousands of computers. As of 2024, it has a market cap of over $1 trillion and is still the coin people generally reference when they talk about digital currency.

However, there are thousands of other cryptocurrencies, known as 'altcoins', which have become highly popular. These include Ethereum, Tether, Binance Coin, Solana, USD Coin, XRP, Dogecoin, Toncoin, Cardano, Avalanche, Polygon, and Cardano.

Ethereum is the second-largest cryptocurrency by market cap and is used by developers to create decentralised applications and smart contracts. It is also used to create non-fungible tokens (NFTs).

Tether and USD Coin are examples of 'stablecoins', cryptocurrencies that are pegged to the US dollar to reduce volatility.

Other altcoins have been endorsed as having newer features than Bitcoin, such as handling more transactions per second or using different consensus algorithms.

Bitcoin is still the most popular cryptocurrency, but its introduction spawned a host of imitators, alternatives, and new technologies based on its blockchain and many of the theories behind it. Altcoins range from being a joke (Dogecoin) to a coin that pays for transactions on a distributed and global virtual machine.

The world of cryptocurrencies is incredibly volatile and not for all investors. It is important to do your research and understand the risks before investing in any cryptocurrency.

Ethereum's potential

Ethereum is a cryptocurrency and blockchain platform that is a favourite of program developers due to its potential applications. It is the second-largest cryptocurrency by market capitalisation, which is currently valued at $407.15 billion.

Ethereum has experienced tremendous growth, with its price increasing by 30,893% from April 2016 to the end of July 2024, going from about $11 to around $3,409. As of July 29, 2024, the ETH price is $3,384.

Ethereum is the native token on the widely used Ethereum blockchain. Its underlying network is more than just a tool for peer-to-peer payments; the Ethereum blockchain is custom-made for smart contracts and decentralised finance tools, as well as for so-called Web3 applications and the trading of non-fungible tokens (NFTs).

Ethereum's switch from the energy-inefficient proof-of-work protocol to the proof-of-stake system gives it an advantage over Bitcoin in an increasingly environmentally conscious world.

Ethereum has had a positive start to 2024, with its price surging 65.1% through June 3. Crypto experts predict that in 2025, the minimum price of Ethereum will be around $5,588, with a maximum expected price of $6,786. On average, the trading price might be $5,791 in 2025.

Ethereum's price is predicted to continue to increase in the medium to long term. "Bitcoin's achievement of an all-time high two months post-ETF launch provides a compelling precedent. Anticipating sustained institutional interest, Ethereum's price trajectory may gradually converge with its previous all-time high," QCP Capital analysts said.

NFT-focused coins

Non-fungible tokens (NFTs) are unique digital identifiers recorded on a blockchain and used to certify ownership and authenticity. They are not mutually interchangeable, meaning they cannot be copied, substituted, or subdivided.

NFT coins, on the other hand, are fungible and can be traded or exchanged for another NFT coin of similar value. NFT coins are used to support the NFT ecosystem and power the economy of NFT projects.

• Axie Infinity (AXS): The AXS coin is the native token of the NFT blockchain game Axie Infinity. It is used to power staking and voting, maintaining the game's play-to-earn economy.
• SAND: SAND is an Ethereum-based utility token used in the Sandbox metaverse, a virtual world where users can monetize their gameplay. With SAND, users can personalize, build, and monetize their gaming experience.
• SLP: SLP is another NFT coin that assists decentralized programs by facilitating various vital functions, such as acting as an in-app currency or governing token.
• MANA: MANA is the NFT coin used in Decentraland, a virtual world in the metaverse universe. With MANA, users can purchase parcels of land (land NFTs) and other digital assets. Landowners can also create hotels, concert stages, and casinos and charge people for access in MANA.
• Tez (XTZ): Tez is the native cryptocurrency of the Tezos blockchain, a decentralized open-source blockchain solution. Tez enables the Tezos platform to offer low-cost transactions for users in NFT, DeFi, and Metaverse ecosystems.

Meme coins

Dogecoin and Shiba Inu are the leading meme coins, though there are hundreds of others available. Other popular meme coins include Bonk, Floki, and Pepe.

Stablecoins

There are three main types of stablecoins:

• Fiat-collateralized stablecoins: These are pegged to a specific asset, such as a fiat currency. The entity behind the stablecoin maintains a reserve of the asset or assets backing it, supporting its value. Examples include Tether (USDT) and TrueUSD (TUSD), which are popular stablecoins backed by US dollar reserves and denominated at parity to the dollar.
• Crypto-collateralized stablecoins: These are backed by other cryptocurrencies. Because the reserve cryptocurrency may also be prone to high volatility, such stablecoins are generally over-collateralized, meaning the value of the cryptocurrency held in reserves exceeds the value of the stablecoins issued. An example is MakerDAO's Dai (DAI) stablecoin, which is pegged to the US dollar but backed by Ethereum (ETH) and other cryptocurrencies worth about 155% of the DAI stablecoin in circulation.
• Algorithmic stablecoins: These may or may not hold reserve assets. They maintain their value stable by controlling their supply through an algorithm, essentially a computer program running a preset formula. An example is TerraUSD (UST), whose price plunged more than 60% in May 2022, vaporizing its peg to the US dollar.

Frequently asked questions