Millions of new investors have decided to buy their first cryptocurrencies. The bull market, which was only seemingly caused by Bitcoin's cyclical halving, is rooted in the panic caused by coronavirus in 2020.
High inflation and zero interest rates are definitely not conducive to storing capital in fiat currencies, which is why many people have turned to Bitcoin and cryptocurrencies as an alternative for safely storing funds.
The situation has been going on for almost two years, so many new investors are wondering if 2021 is a good time to get into cryptocurrencies and which cryptocurrencies to invest in?
A clear upward trend has continued in the cryptocurrency market since the beginning of the second quarter of 2020. As I mentioned, this was a response to the uncertainty that the coronavirus caused in society.
In June, many investors were confident that the bears had come out of their roost and chased the bulls away. However, in mid-August, the cryptocurrency market led investors astray - rises began again, while raising investors' hopes for a new record price for Bitcoin and many other cryptocurrencies.
The market situation is never clear-cut, but according to numerous opinions it is still worth investing in cryptocurrencies. Not just because of the bull market - cryptocurrencies can be an asset that will hold value better in the long term than fiat currencies or gold.
The cryptocurrency market is a place of huge turnover. Projects rise, grow and fall, which is why it's important to distinguish between a forward-thinking cryptocurrency, a gem of its kind, and Shitcoin, which was created solely to extract money from fresh investors.
We currently have over 11,000 cryptocurrency projects on the market. I'll help you build the foundation by which you find the cryptocurrencies of the future yourself. Learn about established projects that have the potential to change the future. Treat them as a template to which you will compare other cryptocurrency projects.
Bitcoin is the oldest and most established project. It was created in 2008 as a response to the financial crisis and uncertainty in society. Bitcoin is a decentralised means of conducting transactions between two users.
The lack of an overarching authority is a feature that guarantees full freedom of transfer of funds, but at the same time causes the problem of double spending - who will ensure that the same funds are not transferred twice to different users? Who will confirm ownership of the funds?
The solution to this problem turned out to be requiring independent Nodes, or miners, to approve transactions. Miners validate transactions while adding information about them to blocks in the Blockchain. Blocks in the network have a limited capacity; when one block fills up, it is added to the blockchain and the next block begins. For mining
a block, miners are rewarded with a certain amount of BTC.
Currently it is 6.25 BTC per block, but initially the value was much higher at 50 BTC per block. To avoid premature mining, Bitcoin's creator - Satoshi Nakamoto - designed a system of halving, which takes place every 60,000,000 blocks, i.e. cyclically every 4 years or so.
Satoshi Nakamoto's cryptocurrency is not chosen by investors for its trading properties. The property that encourages investment is its ability to store value over time. Looking at the big picture - Bitcoin's value continues to rise - despite the highs called bubbles and the lows, during which all the skeptics talk about the end of Bitcoin, which in the mouths of non-investors comes up as often as auguries about the end of the world.
As a means of storing value, bitcoin is often compared to gold, and is even referred to as digital gold
.
Numerous voices are saying that still in 2021 Bitcoin will try to hit the price of $100000, which would be almost double the current ATH (all time high). This is claimed by Bloomberg analyst Mike McGlone, among others. Time will tell if the analysts were indeed right in their assumptions.
Ethereum is a decentralised Blockchain platform. It stands out primarily for its support of smart contracts and the ability to create decentralised applications. The project was created at the end of July 2015, and its main originator and main face is Vitalik Buterin, who in the cryptocurrency community is seen as a genius in the field.
The project was started in a completely alternative way at the time - through crowdfunding - which was not as obvious then as it is now.
Ether, as the cryptocurrency based on the blockchain Ethereum is called, is a cryptocurrency that enables transactions and is commonly used to make payments in smart contracts.
Like Bitcoin, Ether still relies on a Proof Of Work system, generating new units of cryptocurrency with miners confirming transactions and mining new blocks. However, Ethereum is evolving away from the current system and moving more boldly towards Proof Of Stake, which could have a huge impact on Ethereum network-based tokens.
Since Elon Musk's memorable tweet about the amount of electricity cryptocurrencies consume, Ethereum has gained many new enthusiasts. Despite the fact that Ethereum is still running on Proof-of-Work, it will likely be fully upgraded to Ethereum 2.0, which is based on Proof-of-Stake, by the end of 2021.
PoS is a system that uses 99.95% less electricity than the current system, which according to numerous investors has the effect of reducing the carbon footprint.
However, Ethereum is not just being chosen for its environmental credentials - features such as technological value and corporate interest are also important aspects. One of the more relevant is MasterCard, which intends to base its future payment and non-payment infrastructure precisely on Ethereum.
Enthusiasts of this cryptocurrency predict a bright future for Vitalik Buterin's project. As advantages over Bitcoin, they point to higher technological sophistication, lower electricity requirements and a higher probability that ETH will be widely used as a means of payment.
The Ripple platform project is older than Bitcoin, but despite starting in 2004 under the name RipplePlay, the platform is not associated with the origins of cryptocurrencies. XRP and the Ripple platform were created by Canadian programmer Ryan Fugger. Initially, XRP was intended to serve as an exchange system for the local community, but in 2012 it was decided to create a standalone computing unit based on Blockchain technology.
Today, XRP is a token that operates as part of a comprehensive system that allows banks and financial service providers to transfer funds quickly and globally. The transaction protocol in XRP does not have to support only cryptocurrencies, the transaction can be based on fiat currencies, commodities or any unit of value - such as points, minutes or hours to be used for a specific service.
Ripple Token (XRP) is a dedicated solution for banks and financial institutions, especially friendly for users needing to complete a transaction from one end of the world to the other. Transaction commissions and turnaround times are much lower than classic solutions. An additional advantage is the certain deflationary pressure exerted by burning tokens when transactions are carried out.
In addition to deflation, scorching also has a security function - it makes DDOS attacks extremely expensive, making them virtually impossible to execute.
According to investors pinning their hopes on XRP, the course of this cryptocurrency is largely based on the adoption of Ripple technology in banking and financial institutions. Currently, the solution is used by more than 100 banks around the world and more than 300 companies in total, making enthusiasts believe there is huge potential for further expansion among financial sector clients.
Currently, Ripple covers the likes of Bank Santander, American Express, JP Morgan and HBSC Holdings.
Ripple is set to lead a revolution in global transaction technology. However, there are concerns from some investors about the centralisation of cryptocurrency. Many fear the threat of XRP being exchanged for another solution, whereby XRP would lose its usefulness altogether, and consequently its value.
Among the cryptocurrencies that are worth investing in, there is also the old and old Litecoin. The currency which has been on the cryptocurrency market since the very beginning - 2011. Currently (at the time of writing) Litecoin's value oscillates around $170 with a capitalization of $11.5 MLD, which places the project in the 14th place on the cryptocurrency ranking.
While Litecoin was presented as a faster version of Bitcoin, it was never meant to compete with its big brother - it was only meant to be an alternative to smaller payments, of which it was intended to be entirely more. Digital silver, as LTC has been hailed by retail investors, is still an interesting alternative in the market, despite the fact that the odds, or rather their stability, do not give investors hope for the soaring prices that younger projects have.
Investors choose Litecoin mainly because of its greater price stability, very low transaction costs and fewer scalability issues than Bitcoin.
However, it is worth remembering that Litecoin is used as a testing ground. The cryptocurrency is often used as a testing ground for optimising block sizes and algorithms for processing transactions, which in theory indicates that it is a high-risk cryptocurrency, which in practice stands in opposition to retail investor behaviour.
Cardano has its origins in 2015, but the network was only launched in 2017. The creator of the blockchain and cryptocurrency is Charles Hosikson, who is also the co-founder of Ethereum. Currently, Cardano's team consists of more than 30 developers, and the project itself has a capitalisation of $80 MLD, which translates into a price in the region of $2.7. In 2021, ADA reached a new ATH, hitting a price of $2.97.
ADA is a cryptocurrency operating within the Cardano platform. The purpose of its creation, was to create a platform for smart contracts, decentralised applications and tokens distributed through ICOs.
The project is strongly associated with academia and this is also the image it has built - the first Blockchain based on academic methods and research. The creators wanted to create a platform with above-average scalability, which would maintain decentralisation and the highest security standards.
The development of Cardano is very carefully planned, in the form of a precise schedule. The project path is planned in five stages, which can be followed on the official project website.
Cardano is a viable competitor to Ethereum. A strong team and clearly outlined, publicised plans highlight the ambition behind the project. Investors see Cardano as a project worth investing in, with the potential to revolutionise the cryptocurrency market.
Skeptics point out that the cryptocurrency is characterised by a high degree of centralisation, by concentrating much of the ADA into a small number of wallets, and that the cryptocurrency was created using unpopular programming languages, which may translate into less popularity for creating smart contracts than Ethereum. In 2021, ADA's success is expected to shoot up from $0.17 to a record high of $2.97.
The creator of TRON is one of the former members of the Ripple team. The project began its life in August 2017, when an ICO was conducted that raised a planned $70 million in funding.
TRX is a competing solution to EOS and Ethereum, another platform that enables the creation of smart contracts and decentralised applications. TRON stands out for its enormous scalability, which currently beats the number of transactions supported by Ripple.
How many transactions is that?
Ripple supports 1500 TPS (Transactions per second), which is very impressive in the cryptocurrency world - Bitcoin only supports 7 TPS. Here comes TRON, all in the red, then announcing to the world that it can handle 2000 TPS!
The vision the creators are pursuing is a free, free and decentralised internet. The realisation of this vision is to be based on the use of blockchain technology. Internet 3.0 based on TRON is to provide a high level of privacy and its users would have access to entertainment materials such as films, music and games.
Although TRON has not escaped controversy, it is a very ambitious project that many are calling Internet 3.0. The huge community around the project has allowed the project to gather a very high capitalisation, allowing TRX to stand shoulder to shoulder with the most ambitious projects on the cryptocurrency market.
In addition to a dense community of investors, the TRON blockchain is also surrounded by innovative projects that are or will be integral to the ideas of TRX's creators. The project is currently valued at $0.08 with a capitalisation of $6 MLD, which ranks TRX 27th in the cryptocurrency market.
Solana is a blockchain network that aims to achieve super-fast transactions and high throughput. Solana's native cryptocurrency is SOL, with which transaction fees are paid and through which smart contracts can be interacted with.
The Solana blockchain was created in 2017 through the initiative of Anatoly Yakovenko of Solana Labs. The unique feature of the third-generation Proof of Stake blockchain is its departure from the traditional PoW or PoS and evolution into a consensus called Proof of History. The use of the new consensus has meant that Solana can handle thousands of transactions per second, according to its creators as much as 50000 TPS, which in theory puts Solana not far behind VISA, which handles 65000 TPS.
Bitcoin and many other cryptocurrencies combine transactions into blocks, where each block has a time signature. In this arrangement, each block must be verified in concert with other nodes, which significantly increases the time it takes to confirm a block across the network.
Solana, based on PoH, also hashes events and transactions using SHA-256 as in the Bitcoin Network, but instead of dividing the chain into blocks, Solana creates a very long, unbroken chain of hashed transactions. Thanks to the known order in the unbroken chain, there is no need to use a conventional time signature so validators can easily verify transaction times while saving a lot of time.
Solana is a state-of-the-art design based on third generation Proof of Stake technology. With 8 unique features, Solana has a block time of equal to 400ms and is capable of running 50000 TPS.
Investors often invest in SOL because of the token staking capabilities of the PoS mechanism. Tokens made available for staking are used by validators to confirm subsequent transactions. There are currently around 950 validators in Solana's network.
Dogecoin is a cryptocurrency - a joke - that has unsurprisingly become a serious speculative asset, despite having originated as a satire on investors' speculative approach to cryptocurrencies.
In early April 2021, DOGE began an unexpected charge. Within a month, the cryptocurrency went from being a joke and valued at $0.05, to breaking out at $0.73! The culprit behind this amazing situation was probably Elon Musk, who promoted Dogecoin via Twitter.
The Doge price quickly fell and is currently oscillating around $0.3. Cryptocurrencies, especially the most popular ones, have not often experienced such huge increases in value in such a short period of time. Dogecoin as a very old and low-tech project took investors by surprise.
The capitalisation of the dog cryptocurrency reached 88 billion Dollars (USD) at its peak, placing it in the top 10 on the cryptocurrency ranking.
Dogecoin was initially intended to serve in an online tipping system, on sites like Reddit and Twitter, but the cryptocurrency has gained huge interest over time and the gigantic price fluctuations associated with it. Within a month, the cryptocurrency gained $80 billion in capitalisation, only to lose more than half a little time later and fall to $36 billion in capitalisation.
These huge price fluctuations are a tasty morsel for speculators and gamblers, making many people very interested in Dogecoin and the CFDs that are based on its price. The reason why people invest in cryptocurrencies like DOGE is because they believe that their investment can bring a return in a very short time. They base their belief on the past performance of such cryptocurrencies.
However, leaving aside the fact that it is susceptible to price manipulation, Dogecoin is surrounded by a powerful group of enthusiasts who believe in the potential of DOGE to bring change to the financial world. Users are highly engaged, known for creating charity events to raise funds in Doge!
IOTA's story began in 2015, when the development team launched a fundraiser that raised over $500,000. The project's public network launched in early 2017. The purpose of its creation was to preserve the integrity of data and industrial devices used in IoT (Internet of Things) projects.
A huge advantage of IOTA is its theoretically infinite scalability. The feature stems from the use of the Tangle network instead of the traditional blockchain. The network is built on the principle of a spiderweb, not resembling a traditional synchronous blockchain at all.
However, IOTA is a very complex project that suffers from infancy issues. It will still be a long time before developers master the full potential of the Tangle network solution.
Investor enthusiasm for IOTA was due in part to huge interest from giants such as Samsung, Bosch, Microsoft and Fujitsu. However, the project struggled with security issues, including double-spending, which is a fundamental problem for decentralised networks.
Once IOTA has resolved the issues and emerged from its early stages of development, there is a huge possibility that it will become an important part of the cryptocurrency market.
Before you buy cryptocurrencies, carefully plan your investment strategy. Determine how much you will invest and the return you want to collect. You also need to determine the risk and set up a stop loss accordingly, which will automatically protect you from a bigger loss than the one you set.
Before the investment, it is still worthwhile to carry out technical analysis assets you intend to invest in, this will significantly increase your chances of a successful investment.
If you also set a take profit, you won't have to spend time constantly reviewing the cryptocurrency price.
Remember that cryptocurrencies are a high-risk asset. Their prices fluctuate very dynamically and there is.
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