I have been on the sidelines of crypto, but it is a fascinating asset class for many reasons. For many cryptocurrency investors, the conversation about the best cryptocurrencies begins and ends with Bitcoin (CCC:BTC-USD). However, it is becoming increasingly apparent that Bitcoin does not need to be your digital currency of choice.
That’s because there has been a massive wave of altcoins entering the crypto market. Altcoins (or altcoins) are loosely defined as any currency other than Bitcoin. Based on that definition, Ethereum (CCC:ETH-USD) is the best known altcoin. But now there are dozens of other altcoins vying for attention. And some of these can be considered the best cryptos for speculative investors.
For a long time, the price of altcoins had a strong correlation with the price of Bitcoin. But that has started to change. This can be a sign that the market is maturing. Altcoins are typically created to solve specific problems that Bitcoin leaves unsolved. However, in a free market, investors are free to vote with their dollars (in this case, their digital dollars). And in that sense, some altcoins seem more useful over time.
With that in mind, here are seven of the best cryptocurrencies you might want to consider.
The 7 best cryptocurrencies for a new season
I did not include Ethereum in this list of the best cryptocurrencies, but that is not because it does not belong. However, with only room for seven of these, he didn’t want to take a place with the altcoin that many investors have already formed a strong opinion on.
And that brings me to Cardano, which many crypto analysts see as a hedge against Ethereum. One thing I liked about Cardano when it first launched was that it is a proof-of-stake (PoS) coin. This sets it apart from almost all other altcoins right now. While this won’t always be an advantage, it did give Cardano the advantage of being the first to move when it tried to part ways with Ethereum.
Cardano is launching its network in five phases. The network will not officially launch until all five phases are completed. It’s a methodical approach that can frustrate some investors. However, making sure it is correct, and perhaps not first, would appear to be a solid approach.
Cardano is a proof-of-stake (PoS) coin that uses the Ouroboros algorithm.
Speaking of PoS coins that serve as a hedge against Ethereum, we have Neo.
Neo is the native currency of the NEO blockchain. It is often referred to as the “Chinese Ethereum”. That’s because the NEO blockchain enables smart contracts. And the large size of the Chinese market offers investors a reasonable guarantee that Neo will find a place among the best cryptocurrencies. However, investors should consider Neo as a hedge against Ethereum.
Neo is a bit less decentralized than Ethereum. That’s because the network relies on less than 10 nodes to make decisions.
Neo’s total supply is limited to 200 million. Approximately 165 million have already been distributed. This means that the value of NEO should increase as demand increases.
A recent catalyst for cryptocurrency is the launch of the N3 mainnet blockchain. Neo’s price soared more than 150% after launch. And while there have been some corrections since then, Neo seems like a solid option for crypto investors.
Litecoin has risen in 2021 because it seems like a strong candidate to tackle one of the strongest obstacles to cryptocurrency adoption. The cryptocurrency offers faster block hash times and lower transaction fees than Bitcoin. This leads many analysts to believe that Litecoin could be an altcoin that achieves retail adoption.
So you can imagine how excited investors were to hear that. Walmart (NYSE:WMT) would start accepting Litecoin as a payment method. There was only one problem. The story was faked. There is no indication that Litecoin had anything to do with the hoax. So I imagine that any liquidation in the altcoin will be short-lived.
That means investors are likely to focus on the reasons they like Litecoin to begin with. And the company is also giving investors another catalyst with its participation in the growing market for non-fungible tokens (NFT).
Binance Coin (BNB)
Binance Coin is another rival to Ethereum. The company recently launched Binance Smart Chain (BSC), which is clearly breaking the monopoly Ethereum enjoyed with the DApp and DeFi communities.
Like Cardano and Neo, Binance is a utility token. So the value of the currency is tied to its utility and how much demand there is for that utility. Indeed, part of the bullish case for Binance is that, unlike some utility tokens, there are many use cases for the BNB token and they are developed more on a regular basis. In theory, this means that there will be a higher demand for the altcoin, which will increase its price.
Binance Coin is the fifth largest cryptocurrency with a market capitalization of $ 73 million. It also shows an impressive amount of liquidity, which is combined with a high trading volume.
Stellar Lumens (XLM)
Stellar Lumens strikes me as one of the most attractive altcoins due to its use case for facilitating cross-border transactions. As i wrote in january, “Stellar’s decentralized network allows users to create a digital representation of virtually any currency and then send or exchange it through a single network. In theory, this will allow web coders and developers to build features such as currency trading and trading systems directly on the sites and applications they develop. “
It is a kind of cousin of Wave (CCC:XRP-USD). However, while Ripple targets banks, XLM is used primarily (though not exclusively) by individuals and small businesses.
Stellar Lumens illustrates the bullish and bearish case for altcoins. In this case, the coin has a specific use case. But that use case generated 4.3 million accounts the last time I looked. Since Lumens (which is the altcoin for the Stellar network) has no value in and of itself, the value of the altcoin will come from the value of the Stellar network. The scarcity of the currency will also help increase its value.
Earlier this year, I don’t think I would have put Polkadot on this list. But the DOT token has become the ninth largest cryptocurrency by market capitalization. A key reason for this was the successful launch of the the company’s first parachain at the beginning of this year. the polkadot parachain it can handle up to one million transactions per second.
Polkadot is a connected blockchain ecosystem. The central chain provides security for the entire network, while the side chains (which are called parachutes) make the Polkadot network more scalable. Some would even say that the network is more scalable than Ethereum.
Parachutes will also allow developers to build “bridges” that allow parachutes to connect to external networks (think Ethereum or Bitcoin blockchains). A key benefit of parachutes will be the ability to create a smart contract on the Ethereum blockchain. But the contract could simultaneously interact with a blockchain designed for different information. Both transactions can be managed in parallel.
Chain link (LINK)
Last on this list of the best cryptocurrencies is Chainlink, which may seem like a grizzled veteran since it launched in 2017. Like many altcoins on this list, Chainlink is primarily used for smart contract applications. Chainlink is known as a cryptographic “oracle” that uses data from the outside world to confirm aspects of a smart contract.
For example, if a contract is supposed to make a payment when certain conditions are met, Chainlink is used to confirm that the conditions were met. This may not sound like a big deal, but it is.
This is one aspect of the blockchain that is turning it into popular in the DeFi sector. As Alex Sirois wrote, blockchains “do not allow data to be collected from outside their chain or data to be sent outside of their chain.”
Chainlink provides a potential solution to both problems, and that will likely be enough to keep interest in LINK strong.
At the time of publication, Chris Markoch did not hold (directly or indirectly) any position in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to InvestorPlace.com
Chris Markoch is a freelance financial writer who has been covering the market for seven years. He has been writing for InvestorPlace since 2019.