It has been over a decade since the bitcoin network first breathed its digital life, bringing with it the blockchain concept. Since then, the search for the best cryptocurrency has riveted both blockchain advocates as well as the mainstream media. No matter what your opinion about cryptocurrencies, they undoubtedly represent a bold vision of our financial future.
More importantly for those who are considering the best cryptocurrency for their portfolio, the virtual currency market has staying power. Not surprisingly, most crypto critics have blasted bitcoin and other blockchain reward tokens as modern day tulip mania. Admittedly, while bitcoin has certainly enjoyed periods of manic investor sentiment, it has one clear distinguishing point: it’s still trading.
Historians generally agree that Holland’s tulip mania occurred between 1633 and 1637. And when the tulip market finally crashed in February of 1637, many investors were “left penniless.” You simply cannot say that about bitcoin investors. Bitcoin, at the current market price of over $7,000, has a single-unit entry point substantially larger than most blue-chip stocks.
Nevertheless, I agree with the idea that searching for the best cryptocurrency has become much more complicated today. Lately, cryptocurrencies have seen substantial red ink, with the volatility having some fundamental justification.
Largely, I believe the wildness in crypto pricing stems from mismanaged expectations. For example, many had high hopes for Facebook (NASDAQ:FB) and its Libra cryptocurrency. However, political backlash against the virtual currency project was severe. Furthermore, China’s crackdown against cryptocurrencies have plummeted almost every single blockchain token.
Still, for contrarian investors, this may be an ideal time to either start or resume your search for the best cryptocurrency. Here are seven proven cryptocurrencies from which to choose:
Best Cryptocurrencies: Bitcoin
Of course, no discussion about the best cryptocurrency is complete without mentioning bitcoin. For most mainstream observers, bitcoin is synonymous with cryptocurrencies, and for good reason: it’s the first blockchain reward token that emerged. It also continues to capture broad attention, even if its market value has fallen considerably since its highs.
After all, at one magical point, a single bitcoin traded hands for nearly $20,000. Now, with each unit trading at the time of writing for $7,200, the king of cryptocurrencies has taken a 64% haircut. While it’s possible that further downside lies ahead, you can make the argument that the token is oversold.
I’m not just talking from a technical standpoint either.
One of the biggest hurdles for any virtual currency to overcome is credibility. No matter how useful its underlying blockchain may be, people must be convinced that the target asset will have future tradable value. And that’s where bitcoin always wins out in terms of the best cryptocurrency argument: bitcoin has achieved unprecedented mainstream adoption.
As any car enthusiast would know, you never buy the first-year model of any vehicle, especially sports cars. The initial model year is typically the one that has the most problems. By years two or three, the automaker in question has worked out the kinks, giving you less headaches.
That’s essentially the investment principle behind ethereum. While bitcoin will likely always dominate the discussion regarding the best cryptocurrency, in reality, the crypto has some undesirable nuances. Particularly, as the adoption rate increased, the original architecture could no longer support the increased demand and still provide lightning-quick transactions.
How to fix bitcoin has become an obsessive topic. And while ethereum has its own issues, it’s arguably a more streamlined platform.
Additionally, bitcoin has a strong focus on financial innovation. On the other hand, ethereum opens the doorway to “smart contracts” — agreements secured through the transparent and immutable attributes of the blockchain network.
Over time, ethereum could catalyze a world without lawyers: that alone is worth consideration as the best cryptocurrency of the future!
Although bitcoin has generated mainstream credibility as an alternative to government-based fiat currencies, it has one major flaw: its ridiculously small nominal base.
According to data from Coinmarketcap.com, a little over 18 million bitcoins are circulating today. As you know, bitcoin and most other cryptocurrencies are birthed through the mining process. In short, this is an intense, algorithmic-driven process where miners compete with others for the right to “stamp” or verify blocks of transaction data in a blockchain. For their troubles, miners receive a blockchain token.
However, the main issue with bitcoin is that only 21 million units will ever exist. When you consider the world’s population at over seven billion, there’s not enough whole bitcoins to go around. I don’t know about you but I’ll get confused buying a loaf of bread for 0.00055 bitcoin.
That’s where litecoin comes into the picture. With a much larger base — 63.7 million units in circulation — and lower per-unit price, litecoin is perhaps the best cryptocurrency for practical use.
From a speculative perspective, litecoin has strong market recognition. Combined with the law of small numbers, it has significant upside potential.
One of the core tenets of the broader cryptocurrency movement is decentralization. You’ll often hear that the blockchain is a decentralized public ledger, but what exactly does that mean?
Imagine that you have a spreadsheet with some critical information on it. If you send the spreadsheet to someone else, they can edit it at will. But under the blockchain, edits can only be approved by consensus. Furthermore, immutable records of the transacted data are stored among public computers throughout the world.
Essentially, cryptocurrencies demystify money by bringing its creation out into the open.
However, ripple separates itself from other cryptocurrencies to buy because its mining process is centralized under the Ripple Labs Inc. umbrella. That means individual miners who do not receive the tap on the shoulder cannot participate. As you might imagine, this doesn’t sit well with hardcore blockchain proponents.
Still, some benefits exist in having a centralized virtual currency. Principally, ripple has substantial credibility among major financial institutions, such as American Express (NYSE:AXP) and Banco Santander (NYSE:SAN). As such, ripple may be the best cryptocurrency for overall stability and utility.
On paper, stellar turned into one of the best cryptocurrencies to buy in the 2017 virtual currency bull market. But once the enthusiasm faded following severe corrections, stellar went back into “penny stock” status. Currently, one unit is trading hands for less than 6 cents.
Granted, because of the small denomination, stellar is incredibly risky. Nevertheless, the blockchain token offers an intriguing, forward-thinking narrative. At the heart of the stellar blockchain is the ability to exchange “government-backed currency” pairs at lightning-quick speeds. We’re talking about two to five seconds to accomplish what would take the traditional banking system days.
Additionally, transactions within the stellar network are almost free. This opens up the door to economic maximization by allowing micropayments viability and sustainability. Currently, micropayments are not worthwhile to transact in the traditional banking system due to onerous costs. Therefore, the stellar blockchain may create an unprecedented paradigm shift.
If that wasn’t enough to pique your interest, major institutions like IBM (NYSE:IBM) and Deloitte have utilized stellar’s blockchain technology.
Among cryptocurrencies to buy, NEM is somewhat of a tragic tale. Once ranked among the top 10 cryptos by market capitalization, NEM is now barely holding onto its top 30 ranking.
While NEM demonstrated great potential, a hack at Japanese crypto exchange Coincheck gradually took the air out of the token. Moreover, the NEM Foundation has lost substantial money according to their own statements. This is probably due to poor management.
Still, NEM may belong on your list of speculative cryptocurrencies to buy based on fundamental drivers. Underneath the hood is a blockchain architecture that was “designed and coded from the ground up for scale and speed.” One of bitcoin’s conspicuous flaw is scalability. Its limitations didn’t matter when no one was using the blockchain; a completely dissimilar story exists today.
Additionally, NEM is much more efficient than bitcoin. According to NEM Foundation Vice President Jeff McDonald, bitcoin requires significant and costly upkeep. In contrast, NEM requires minimal maintenance, theoretically giving investors more bang for their buck.
For now, bitcoin’s public credibility makes it the undisputed champion. But as the blockchain concept integrates further into our everyday lives, look for NEM to potentially make a huge splash.
For my last idea for best cryptocurrencies to buy, I’m going to go speculative with 0x. This unusually named token stems from an ethereum-based blockchain. And like many other blockchain projects, 0x is a free, open-source infrastructure that allows developers to build a crypto-supported ecosystem.
At least, that’s the best that I can describe it with my limited knowledge.
Of course, countless cryptocurrencies claim similar attributes. What makes 0x stand out to me, though, is that Coinbase includes it on its platform. That’s a huge deal because when most people venture into the world of cryptos, they usually do so through Coinbase. In the world of virtual currencies, this is akin to a listing on the New York Stock Exchange.
Secondly, the 0x price has found an equilibrium point at around 25 cents. If you consider the history of many cryptocurrencies to buy, you’ll notice that the upside often comes following a lull. That description fits 0x to a “T,” making me bullish on the virtual currency.
As of this writing, Josh Enomoto is long all the cryptocurrencies mentioned above. He does not own any shares of the aforementioned publicly traded companies.