There are a lot of cryptocurrencies out there at the minute. CoinMarketCap currently lists 5457 separate cryptocurrencies, and with a total market cap of $1.61 trillion. And even after a roughly 40% market pullback, there is plenty to chose from. So which ones should you be keeping an eye on?
The king of cryptocurrencies is still… Bitcoin
The top of any cryptocurrency list has to be Bitcoin. The first working example of a decentralised trustless financial solution has now been around over a decade. Despite all that time, has never been directly hacked though many have tried.
In 2021 so far it has broken through and even tripled its previous all-time high. This is at least in part due to open institutional investment.
There are lots of discussions around if this level of institutional buy-in is healthy or desirable for Bitcoin. But one thing we know is that it certainly affects the price. As many predicted, following its break out to $60k, Bitcoin and the entire market has experienced a major pull-back. At one point it even dropped as low as $30k.
Regardless of price, however, Bitcoin is likely to remain a strong long term investment. It is the founding father of cryptocurrencies and the Gold standard by which we continue to judge all others.
Etherum, the runner up of cryptocurrencies
Next on the list, Ethereum is another long-running crypto. It has both a well-established user-base and high levels of adoption.
Launched in July 2015 it was designed to be less of a cryptocurrency and more of a global computing platform. Ether, the currency, was meant to be acting for on-platform transactions.
During the last few years, it has seen massive changes, and there is lots of discussion as to that being a good or bad thing. Many Bitcoin fans think a protocol should be as static as possible, with only essential changes being made.
Ethereum tends towards faster evolution which appeals to a lot of groups who have new challenges they want it to overcome. Ethereum adoption has been slowed somewhat by its fees recently, which can rise to very excessive costs limiting what users can do. But this ability to change means they can solve these issues if they need to.
Regardless, thousands of cryptocurrencies and solutions choose to build on Ethereum, and that popularity shows its promise.
Next on the list, we move away from the top coins by market cap to something a bit different and newer, Flow. Imagine a version of Ethereum built purely for NFT’s, with no fees, and some huge organisations already using it on launch. That is Flow, and it fixes many of the problems Ethereum is currently working on.
Built by Dapper Labs, the team behind Crypto Kitties on Ethereum, Flow is built to solve the problems they faced.
Flow launched their original ICO in October 2020, where tokens were sold at $0.10. Within a couple of months from the ICO, it had hit $40.
This was largely due to the partnerships and products already in place to use the platform. NBA Topshots, creating NFT’s from in-game basketball moments was wildly successful on launch. They also have UFC NFT’s in the pipeline. As well, NFT-based games such as Chainmonsters and Dark Lands are already active on the platform.
Like all new projects, Flow has not been without its issues, but based on the team running it, user adoption and price since launch, it definitely could become a major player.
Next on the list is Wax. Wax is another NFT targeted solution, but it has been around as a stand-alone service since July 2019, having previously launched on Ethereum.
One of Wax’s main selling points is the ease of access for NFT creators. Anyone can buy some Wax, log onto AtomicHub and use the step by step creator to launch their own NFT series in minutes, with no technical coding required.
In addition to this, it has a lot of extra power and pre-built smart contracts users can call for more advanced functions. This gives it huge cross-market appeal, from artists who want to sell simple NFT’s through to businesses looking for complex solutions around NFT products and games.
When it comes to user adoption, making things simple is key. Many solutions make buying NFT’s or crypto easy, Wax makes creating them easy as well.
The final cryptocurrency with huge potential to look at is very unusual. IOTA has been around for quite a while and has had a rocky road but, if they crack it, has massive potential.
Most cryptocurrencies are designed using a blockchain and are for people to use. IOTA on the other hand, is built for machine-to-machine microtransactions using a Directed Acyclic Graph.
Blockchain solutions such as Bitcoin or Ethereum all have a similar problem.
They are slow and cumbersome, they can’t handle high volumes of transactions and have massive data transfer and storage overheads. If using Proof of work they also have huge power requirements.
The thing is, that is deliberate in their design and a key reason why, in return, they provide huge security and censorship resistance.
Rather than trying to make a blockchain solution faster and more efficient, IOTA built a new system using DAG which is lightweight, incredibly fast and maintains the security of blockchains through different methods.
The trade-off is, they had no one to copy or clone as a starting point so their path to getting the technology working as expected has been challenging.
That said, the project is still going strong, has major changes coming up to resolve some of the few remaining issues. If it gains traction it could rapidly find its way inside every piece of technology we own.
Imagine instead of paying for road tax annually, your car made a micropayment for every meter of the road you drove it on. At the same time, you could be rewarded if you drive a low carbon or electric vehicle in micropayments.
That is the sort of possibility IOTA opens up and if they can get it fully working the sky is the limit for adoption.
Cryptocurrencies and user adoption
The key thing all these promising cryptocurrencies have in common is user adoption. They all solve a problem and all have a target audience if not already engaged, at least in mind. That gives them huge potential both as solutions and as investment opportunities.