March 9, 2022 - 1:57 pm
Cryptocurrency is digital money that isn’t managed by a central system like a government. Instead, it’s based on blockchain technology, with bitcoin being the most popular one. As digital money continues to gain traction on Wall Street, more and more options become available. There are currently almost 8,900 cryptocurrencies on the market.
While you can use cryptocurrency to make purchases, most people treat it as a long-term investment. However, volatility makes investing in cryptocurrency risky, so it’s important to know what you’re getting into before you buy in. These are eight top cryptocurrencies that are worthy of investment in 2022.
Top 8 Cryptocurrency Investments in 2022
|Binance Coin||$382.91||$63.22 billion|
|Data is accurate as of March 8, 2022.|
1. Bitcoin (BTC)
Bitcoin has been around for the longest of any cryptocurrency. It’s easy to see why it’s the leader, with a price and market cap that’s much higher than any other crypto investment options.
Many businesses already accept bitcoin as payment, which makes this cryptocurrency a smart investment. Visa, for example, transacts with bitcoin. Additionally, Tesla announced in February 2021 that it had invested $1.5 billion in it, and for a time, the company accepted it as payment for its cars — and it might again if mining it becomes more environmentally friendly. Plus, the larger banks are beginning to incorporate bitcoin transactions into their offerings.
Risks of Investing In Bitcoin
The value of bitcoin tends to fluctuate a lot. You may see the price go up or down thousands of dollars during any month. If wild fluctuations like these make you nervous, you may want to avoid bitcoin. Otherwise, as long as you keep in mind that cryptocurrency could be a smart long-term investment, these fluctuations shouldn’t be too concerning.
Another reason to reconsider investing in bitcoin is its price. With a single bitcoin costing nearly $40,000, most people can’t afford to buy whole bitcoins. For investors who want to avoid buying a fraction of a bitcoin, this is a negative.
2. Ethereum (ETH)
Ethereum is different from bitcoin because it isn’t only a cryptocurrency. It’s also a network that allows developers to create their own cryptocurrency utilizing the network. While ethereum is far behind bitcoin in value, it’s also far ahead of the other competitors.
Even though it came out years after some other cryptocurrencies, it has far exceeded its place in the market because of its unique technology, and it’s currently the second-largest cryptocurrency behind bitcoin.
Risks of Investing In Ethereum
While the Ethereum platform utilizes blockchain technology, it only has one “lane” for conducting transactions. This can lead to transactions taking longer to process when the network is overloaded. Transaction fees are also high, reaching a peak of $71.72 in May 2021, according to CoinMarketCap.
In 2016, a hack that took advantage of a security flaw led to the loss of more than $50 million worth of ether.
3. Binance Coin (BNB)
After years of relatively level prices, at least by cryptocurrency standards, binance coin took off at the beginning of 2021, surging from about $38 on Jan. 1 of that year to an all-time high of $683 in May. As of March 8, it has slipped back to $382.91.
Because of its performance, binance coin has proven to be one of the more stable investment options. Binance is the world’s largest cryptocurrency exchange, according to CoinMarketCap, but despite its extensive functionality and the coin’s success in Binance sub-projects, binance coin is still a highly volatile investment.
Risks of Investing In Binance Coin
What sets binance coin apart from its competitors is that it was created by a company instead of a group of tech developers. Although binance coin’s commitment to maintaining a strong blockchain has won over many skeptics, some investors remain leery of this cryptocurrency and its potential security issues.
4. Cardano (ADA)
The Cardano network has a smaller footprint, which is appealing to investors for several reasons. It takes less energy to complete a transaction on Cardano than on a larger network like Bitcoin. This means transactions are faster and cheaper. Last year, Cardano launched a “hard fork,” an upgrade that increased functionality — in this case, enabling smart contract deployment.
Cardano also claims to be more adaptable and more secure. It consistently improves its development to stay ahead of hackers.
Risks of Investing In Cardano
Even with a better network, cardano may not be able to compete with larger cryptocurrencies. Fewer adopters mean fewer developers. This isn’t appealing to most investors who want to see a high adoption rate. The platform has big plans, but there are doubts about whether it can live up to that potential.
Don’t be discouraged by fluctuations in the market. Your investment may lose money one day and make a profit the next. Instead of getting caught up in the day-to-day changes, look at the big picture.
5. Polygon (MATIC)
Polygon was created by a development team that made significant contributions to the Ethereum blockchain platform. Polygon is designed for Ethereum scaling and infrastructure development, according to CoinMarketCap. As a “layer two” solution, it expands Ethereum into a multi-chain system, improving transaction and verification speed.
Polygon has backing from the Binance and Coinbase cryptocurrency exchanges. Its token, MATIC, is used for payment services, transaction fees and as a settlement currency.
Risks of Investing In Polygon
Late last year, Polygon disclosed that it had patched a vulnerability that put about $20 million worth of its coins at risk, CoinDesk reported. A hacker discovered the exploit and notified Polygon, which had a fix in place within two days. However, black-hat hackers had already stolen over 800,000 tokens, leaving Polygon on the hook for about $1.4 million.
6. Solana (SOL)
Solana has taken the crypto world by storm, starting in 2021 with 0.01% of the market and soaring to a top 10 cryptocurrency by market cap by September 2021, giving its main competitor, ethereum, a run for its money. As of March 2022, solana ranks ninth in terms of market cap, which currently sits at $26.4 billion, according to CoinMarketCap. Its appeal lies in the speed and scalability of its network and the ease with which it can be used to create decentralized apps that run on a blockchain, Decrypt explained.
Risks of Investing In Solana
Solana has seen an astounding appreciation of nearly 4,000% over the past year, and prices could drop as quickly as they grew. Reliability might also be an issue, considering Solana suffered a nearly day-long outage due to “resource exhaustion,” according to Bloomberg, as reported by CNBC.
7. Avalanche (AVAX)
Avalanche is a new “layer one” blockchain — a blockchain that improves the base protocol to make the system more scalable, as Binance described it — founded as an Ethereum competitor by Ava Labs and computer scientists at Cornell University, one of whom, professor Emin Gun Sirer, is a veteran in cryptographic research, according to CoinMarketCap. Whereas Ethereum’s nodes must all validate each transaction, Avalanche’s three individual blockchains can validate transactions independently. This makes Avalanche more scalable and better able to handle large volumes of transactions — up to 6,500 per second. As a result, it’s increasingly popular among Ethereum projects, U.S. News reported.
AVAX began trading in 2020, in a 24-hour initial coin offering. It price has fluctuated from a low of $9.34 to a high of $146.22 over the past year. The coin currently trades for $74.20.
Risks of Investing In Avalanche
Sirer introduced the cryptocurrency via a white paper in 2018. Its launch took place in 2020. With such a short history, avalanche doesn’t have a track record for comparison, making it a riskier investment for potential buyers.
8. Chainlink (LINK)
Chainlink uses a decentralized oracle network to facilitate secure interactions between blockchains and external data feeds, events and payment methods the developers hope will allow smart contracts to become the dominant form of digital payment, according to CoinMarketCap.
One thing working in Chainlink’s favor is a strategic partnership with Google under which Google uses Chainlink’s protocol to connect users to its cloud services, Benzinga reported. The project’s advisors include former Alphabet Chairman Eric Schmidt, DocuSign co-founder Tom Gonser and former LinkedIn CEO Jeff Weiner, according to Securities.io.
Risks of Investing In Chainlink
Despite its proven utility and support from major players, chainlink has experienced the same kind of volatility as other cryptocurrencies. Its price dropped from about $52 in May 2021 to just over $13 in March.
Don’t settle on any number of cryptocurrency investments without continuing to learn about the market. A new cryptocurrency network could easily climb the ranks and emerge as a leader above other platforms. As an investor, the smartest thing you can do is to stay abreast of market happenings.
Rating the Top Cryptocurrency Choices
Run a quick online search and you’ll find dozens of recommendations for how to invest in cryptocurrency. In choosing the top eight picks, the following factors were considered.
How long has the cryptocurrency been around? New cryptocurrencies aren’t immediately ruled out, but having historical data for comparison helps you see how a company has performed up until now.
How has the company performed during its years in business? If you see stability in prices, that’s a good sign. If you notice that the cryptocurrency is gaining traction and becoming more valuable with time, that’s even better.
Good To Know
Past performance is not indicative of future performance. At any time things can change, and an investment may perform better or worse than it has in the past.
How does the platform compare to others in terms of usability and security? The first thing you want to look for is the speed at which transactions occur. The network should be able to handle transaction traffic with ease.
You also want to make sure your investment is secure. Most cryptocurrencies use blockchain technology, making all transactions transparent and easy to track. Blockchain technology doesn’t necessarily make it harder for hackers to steal your cryptocurrency. It does make it easier to track your investment so it can be recovered instead of being lost following fraud.
How many people are investing in the cryptocurrency you’re considering? When you see a high level of adoption, that means the cryptocurrency has better liquidity. Trading, selling or spending will be easier in the future.
There’s no question about it: Cryptocurrencies are here to stay. The question becomes, where is the best place to invest your money in the market?
As you decide which cryptocurrency is the best investment for you, here are some other things to keep in mind:
- The speed at which transactions are completed
- The fees associated with transacting
- The ability to use your cryptocurrency for regular purchases and bank transfers
If you’re strictly looking to invest without transacting within the network, remember that cryptocurrency isn’t a get-rich-quick scheme. Instead, you should consider it a long-term investment.
GOBankingRates’ Crypto Guides
Daria Uhlig contributed to the reporting for this article.
Data is accurate as of March 8, 2022, and subject to change.