From Bitcoin and Ethereum to Dogecoin and Tether, there are thousands of different cryptocurrencies, which makes it overwhelming to get started in the world of cryptocurrencies. To help you find your way, here are the 5 best cryptocurrencies based on their market capitalization or the total value of all coins currently in circulation.
Bitcoin, the leading digital currency by market capitalization, has increased in value more than 10 times in the past year but has also experienced significant declines in value. However, several cryptocurrencies managed to win.
To say that 2020/2021 was a great year for digital currencies would not do the industry justice. Within a few months, digital currencies have skyrocketed in value, interest, and number, only to see their values plummet once again, before stabilizing. New digital currencies are released to investors every week, and several blockchain-related start-ups have followed in their footsteps, often backed by significant fundraising efforts via ICOs.
In the world of virtual currencies, wealth tends to rise and fall rapidly. The cryptocurrency space is dominated by volatility above many other factors. Following are the best cryptocurrencies by market capitalization as of 2021.
Bitcoin tops the list of the best cryptocurrency in 2022
Bitcoin is the original cryptocurrency and remains the leader in space. At the time of writing, the market capitalization of the world’s largest digital currency is over $125 billion, with a price per coin of over $7,305.
There are roughly 17.1 million BTC in circulation. All this despite previous speculations about which other digital currencies would permanently take the number 1 spot. This has yet to happen.
To buy Bitcoin or any other cryptocurrency, you will need a cryptocurrency exchange like Binance, Etoro, KuCoin etc where buyers and sellers meet to exchange dollars for coins.
There are dozens of exchanges, but as a beginner, we recommend choosing one that balances ease of use with low fees and high security. If you don’t have an exchange in mind yet, check out the internet for top picks of the best cryptocurrency exchanges.
The main reason a traditional investor might want to be exposed to Bitcoin is to protect themselves from inflation and potentially the collapse of the fiat-based economy. Bitcoin’s volatility is a concern for many investors, however, volatility is expected to decline forever as institutions and governments enter the market with long-term interests.
Advantages of Investing in Bitcoin:
Bitcoin’s overwhelming performance, as a currency and as an investment, has attracted traditional and institutional investors alike. Is Bitcoin a good investment? To be honest, it offers you several advantages over traditional investments.
Liquidity: Bitcoin is arguably one of the most liquid investment assets thanks to the creation of online trading, exchange, and brokerage platforms worldwide. You can easily trade bitcoins for cash or assets like gold instantly with incredibly low fees. The high liquidity associated with bitcoin makes it a great investment tool if you are looking for short-term gains. Digital currencies can also be a long-term investment due to their high market demand.
Lower risk of inflation: Unlike other world currencies, which are regulated by their governments, bitcoin is immune to inflation. The blockchain system is endless and there is no need to worry about your cryptocurrencies losing their value.
New opportunities.: Bitcoin and cryptocurrency trading is relatively undeveloped – new coins are becoming mainstream daily. This novelty brings unpredictable changes in price and volatility, which can create opportunities for huge profits.
Minimalist business: Stock trading requires a certificate or license. You also need to go to a broker to trade a company’s stock. But bitcoin trading is minimalist – buy or sell bitcoins from exchanges and put them in your wallet. Bitcoin transactions are also instant, unlike the settlement of stock trade orders, which can take days or weeks.
Ethereum, the digital token that fuelled the rise in initial coin offerings (ICOs), ranks second on our list of cryptocurrencies by market cap. It is significantly smaller than bitcoin; the current market capitalization is just under $50 billion, with a trading price of around $500 per token. There are just over 100.7 million ETH tokens in circulation at the time of writing.
While Bitcoin is the leading cryptocurrency based on the value of its coins in circulation, Ethereum is no exception. With a market capitalization of over $232 billion, it is the second leading form of cryptocurrency and is backed by business leaders such as Mark Cuban.
Plus, it is a profitable investment option. If you had invested $1,000 in Ethereum in August 2015, your investment would be worth a staggering $2.23 million nearly six years later.
Advantages of Investing in Ethereum:
Volatility – Although volatility was once considered negative, smart investors have recognized market cycle patterns and can take advantage of the parabolic gains generated by market bubbles.
Liquidity: Thanks to the creation of online trading, exchange, and brokerage platforms around the world, Ethereum is undoubtedly one of the most liquid financial assets. With very low costs, you can quickly exchange Ethereum for cash or valuables such as gold.
Tether comes in number 3 on the list of best cryptocurrencies in 2022. Unlike other forms of cryptocurrency, Tether (USDT) is a stablecoin, which means it is backed by fiat currencies like the US dollar and the euro, and hypothetically holds a value equal to one of those denominations. In theory, this means that Tether’s value should be more consistent than other cryptocurrencies and is favored by investors who are wary of the extreme volatility of other currencies.
With the creation of tether and other stablecoins, it is quick and easy to trade any cryptocurrency with tether, while converting a cryptocurrency to cash would take days and cost transaction fees. This creates liquidity for trading platforms, creates exit strategies at no cost to investors, and adds flexibility and stability to investor portfolios.
Advantages of Investing in Tether:
For many reasons, it is still worth considering investing in Tether. While Tether is not a long-term investment that will grow your money on its own because it remains pegged to the US dollar, there are lending platforms, exchanges, and wallets that will pay you high-interest rates for storing USDT on their platform.
Plus, the tether can be sent anywhere in the world much faster and with lower fees than wire transfers from traditional banks and financial institutions. While most people wouldn’t use bitcoin or Ethereum for everyday purchases and transactions due to their high volatility, it makes a lot of sense to use a tether.
Fourth place in the list of best cryptocurrencies goes to the much-acclaimed Ripple, with a total market capitalization of over $19.8 billion. Unlike the two main digital currencies (in addition to the one that follows directly), the price of each XRP token is very low. At the time of writing, that’s just over 50 cents per token. The total number of XRPs in circulation is rather high. There are currently over 39 billion tokens.
Ripple has a bright future ahead of it in 2022. With developments taking place within the XRP ecosystem, as well as in the cryptocurrency market in general, we could see XRP reach new all-time highs.
The XRP price forecast for 2022 is $1,934. As previously mentioned, it could even reach $3 if investors decided that XRP is a good investment in 2022, along with major cryptocurrencies like Bitcoin and Ethereum, as most cryptocurrencies are moving in the direction of the Bitcoin trend.
Advantages of Investing in Ripple XRP’s:
Quick settlement: Digital transaction confirmations are blazingly fast. They typically take four to five seconds, compared to the days it can take banks to complete a bank transfer or the minutes or potentially hours it takes to verify Bitcoin transactions.
Very low rates: The cost to complete a transaction on the Ripple network is only 0.00001 XRP, a small fraction of a cent at current rates.
Versatile exchange network: The Ripple network doesn’t just process transactions using XRP. But it can also be used for other fiat currencies and cryptocurrencies.
Used by large financial institutions: Large companies can also use Ripple as a transaction platform. Santander and Bank of America are some of those using this network, showing that it already has greater adoption in the institutional market than most cryptocurrencies.
Bitcoin Cash, the Bitcoin derivative that was released following a hard fork, ranks 5th in our ranking. The total market capitalization of this digital currency is approximately $14.5 billion, with a market price of $843 per coin and a total circulation of just over BCH 17.2 m
Bitcoin Cash is a cryptocurrency built on the same blockchain as Bitcoin. The coin was launched on August 1, 2017, through the so-called “hard fork” of the Bitcoin blockchain.
As noted, the key difference between Bitcoin and Bitcoin Cash is the block size. Thanks to this adjustment, Bitcoin Cash can have faster and cheaper transactions. A Bitcoin transaction costs an average of $59, while Bitcoin Cash costs less than a penny.
Advantages of Bitcoin Cash:
Faster and cheaper transactions: With a transaction cost of less than a penny and the ability to process more than 100 transactions per second, Bitcoin Cash could be a viable payment platform. However, Visa’s network processes 2,000 transactions per second, so Bitcoin Cash still has a long way to go.
More accessible than Bitcoin: The larger blocks of Bitcoin Cash allow for a more scalable blockchain, resulting in lower fees for users and therefore more transactional.
Decentralized money: For those concerned about too centralized control in the financial system by central banks and governments, Bitcoin Cash offers a currency-like system that is decentralized and not controlled by any entity.
Accessibility: Of the thousands of cryptocurrencies available, Bitcoin Cash is one of the most popular and can be purchased through most major exchanges, unlike lesser-known competitors. The price of BCH / USD is only $370 per coin, so it’s also cheaper than trying to buy a single Bitcoin.
Bitcoin Cash is widely available on major cryptocurrency exchanges such as Coinbase and Kraken. You open an account, deposit money and then use it to buy cryptocurrencies like Bitcoin Cash. You can also buy Bitcoin Cash on platforms like PayPal. After purchasing Bitcoin Cash, keep your coins as an investment in a crypto wallet, exchange them for other coins, or use them for transactions.
Potential risks involved in investing in Cryptocurrencies:
Investors are more interested than ever in cryptocurrencies. Criminals are too.
Reports of cryptocurrency crimes have increased an average of 312% annually since 2016, according to a report from Crypto Head, a cryptocurrency news bulletin that used Federal Trade Commission data to analyze cryptocurrency crime trends in the United States in the last few years. These crimes can include anything from hackers stealing investor coins to people falling into cryptocurrency investment scams.
According to experts, a cold wallet – an offline device that isn’t connected to the internet – is the safest place to store your cryptocurrency investment. Bitcoin has the highest number of crime reports of all cryptocurrencies, which makes sense as it is also the oldest and most widespread cryptocurrency. Beyond digital crime, Bitcoin’s security as an investment is often questioned due to the frequency and extent of fluctuations in its value.
Despite an increase in fraud and theft, many experts tout the security of Bitcoin investments, at least in terms of cybersecurity, if not investment stability, thanks to secure blockchain technology. So, is it safe to invest in Cryptocurrencies? The answer is, to do your research and get knowledge from reliable sources, prepare a backup plan and then plunge onto the bandwagon!
But always remember that the digital currency world is still underdeveloped and it will need a lot of time and effort to become widespread. Till then you can check out these 5 best cryptocurrencies to invest in.