With all of the cryptocurrencies available, how does an investor decide which one to invest in? ICOs can be problematic and some coins simply vanish. In fact, the SEC has really started cracking down on ICOs and the companies that offer them.
Even with the huge fluctuations in price, people are still interested in investing in cryptocurrencies. It's risky - you could lose everything or see your value sliced 90% overnight. But it can also pay off handsomely.
In this article, we vetted 10 of the most popular cryptocurrencies by current use and potential. These cryptocurrencies have been around for a while as well. It doesn’t mean they can’t disappear at some point but they don't appear to be fly-by-night scams either.
Before we dive in, it's important to note that to look at, use, and transact in crytpo, you need a digital wallet. We recommend Coinbase because it's free, has a great app, and they give you a bonus for depositing $100. Check it out. Or, check out this list of the most popular crypto investing platforms.
Still dominating in market cap and popularity, Bitcoin isn’t going anywhere soon. It still makes all the headlines and is what most people think about when they hear the word cryptocurrency.
Bitcoin has turned into the go to cryptocurrency for traders. But for investors, who can hold through the volatility, they see advantages to bitcoin as well. Once 21 million bitcoins have been mined, no new coins will be created ever.
Looking at it from a supply/demand stand point, long-term investors stand to gain. Plus, Bitcoin is the base currency that you need to purchase if you want to end up getting some of the other currencies on this list. You can't simply buy many of these others with USD - you need BTC.
Bitcoin is one of the easiest cryptocurrencies to invest in. Just open a Coinbase account and get started >>
Ethereum was initially seen as the cryptocurrency that could shove bitcoin off of its thrown as the dominant currency. It didn’t work out that way but Ethereum holds a solid #2 by market cap.
Ethereum did provide a few enhancements over bitcoin. Namely smart contracts and 5X higher transactions per second (TPS) than bitcoin.
Litecoin has similarities in its infrastructure to bitcoin. Litecoin’s transaction fees are far less, at around $0.35 per transaction. Just like Ethereum, Litecoin also has higher TPS than bitcoin.
Litecoin has an $81 million cap on coins that can be mined. This means Litecoin could potentially see steady increases in price, depending on future demand. Litecoin is currently ranked at #5 by marketcap so it isn’t a slouch by any means.
4. Ripple (XRP)
Ripple is more than just an exchange of value. It helps make cross border financial transactions more efficient. By working with financial institutions, Ripple lowers currency exchange rates and provides for real-time exchange rates.
Before Ripple, banks often had to use intermediaries for cross border transactions. These were expensive and could takes days to complete. Ripple has greatly improved efficiencies in how cross border transactions operate.
For an investor, this shows that Ripple is providing real value in the world beyond the basic store or exchange of value premise.
Zcash stands for Zerocash protocol. It is a derivative of the bitcoin codebase. It’s main difference is anonymity of transactions. With bitcoin, each transaction in the blockchain is public information. Zcash wants to change that.
Just as you can pay in cash and no one has to know anything about you, Zcash wants to allow the same for cryptocurrencies. There won’t be a way to trace the origin or destination of transactions. Transactions in the blockchain will remain confidential.
Zcash is also faster than bitcoin. Zcash has climbed from less than $30 in the first half of 2017 to over $2,000 today.
Zcash is also looking to put together a Zcash focused conference called Zcon0, which can bring awareness to the cryptocurrency. Additionally, it made news last year when JP Morgan decided to use it on their blockchain platform to enhance Ethereum smart contracts.
Zcash has steadily been rising in price and has proven itself as a useful cryptocurrency. It’s ideal for those looking to utilize the bitcoin codebase but with privacy and speed enhancements.
Zcash is also available to invest on Coinbase as of last year.
6. Steller Lumens
Steller’s functionality is similar to that of Ripple on the surface. Under the hood, it goes about things a little different. Both cryptocurrencies help in the fast exchange of currencies and at low cost. Steller is different in that it uses remittance companies and credits but the end result is still very similar to Ripple.
Even though Steller uses a different approach from Ripple, it doesn’t mean it is any less efficient. It can complete currency exchanges in less than 5 seconds for a fraction of a cent.
Investing in Steller and Ripple can provide for diversification of approaches within the cross border transaction space.
NEM allows both public and private transactions on its blockchain. For anyone company wanting to integrate blockchain technology, NEM can be written in a wide array of programming languages. This has commercial appeal since companies won’t have to bring in a new tech team to integrate a blockchain. They can likely use the tech they already know.
For investors, this means NEM potentially has better commercial adoption than other cryptocurrencies.
Check out our guide on How To Invest In NEM.
IOTA is the go-to cryptocurrency for any company wanting to utilize blockchain technology with IoT devices. It’s blockchain makes communication between IoT devices more efficient.
Given the increasing use of IoT devices, the advantages of IOTA should be clear.
Check out our guide on How To Invest In IOTA here.
Like Zcash, Monero focuses on anonymity of transactions in the blockchain. Both cryptocurrencies use different algorithms to accomplish this. Of the two, Monero is more technically advanced when it comes to completely hiding any trace of a transaction.
Monero is also older than Zcash and wasn’t derived from bitcoin. Monero has a large following among users wanting to keep their transactions private, even from regulators.
For investors, they’ll need to stay on top of how Monero handles future regulations. If it can successfully navigate regulation, it stands to come out on top of the privacy cryptocurrencies.
Check out our guide on How To Invest In Monero here.
Cardano allows for sending and receiving of digital funds. It’s more than just a cryptocurrency though, it’s also a platform for decentralized apps. It was built by a global team and has the goal of providing broad scale use of financial transactions (think VISA).
Cardano is currently ranked #6 by market cap. This shows great interest in the cryptocurrency. For investors, Cardano has a big mission but also lots of developers, which bode well for its future.
Check out our guide on How To Invest In Cardano here.
Remember, investing in any cryptocurrency is highly speculative. All of these currencies provide some value, but at the end of the day, you're only betting on price. You're hoping that someone else will pay more for the investment than you did.
Be sure that you are only committing funds that you are comfortable losing.
If you're interested in any other cryptocurrencies, we'd love to hear about. Share your picks, and more importantly the "why", in the comments.
Robert Farrington is America’s Millennial Money Expert® and America’s Student Loan Debt Expert™, and the founder of The College Investor, a personal finance site dedicated to helping millennials escape student loan debt to start investing and building wealth for the future. You can learn more about him on the About Page, or on his personal site RobertFarrington.com.
He regularly writes about investing, student loan debt, and general personal finance topics geared towards anyone wanting to earn more, get out of debt, and start building wealth for the future.
He has been quoted in major publications including the New York Times, Washington Post, Fox, ABC, NBC, and more. He is also a regular contributor to Forbes.