Which is the best cryptocurrency you can invest right now?

Highlights

• Cryptocurrencies are decentralised virtual currencies based on blockchain technology.
• A drop in prices of the cryptocurrencies offers a smart buying opportunity for investors.
• What cryptocurrency you should choose will depend on a range of factors.

Cryptocurrencies are decentralised virtual currencies based on blockchain technology, which can be exchanged online without being controlled by a bank, treasury or country. As of 2021, there are more than 6,000 cryptocurrencies across the globe, of which Bitcoin is the most popular one. Other top cryptocurrencies include Ethereum, Dogecoin, and Cardano etc.

The multi-billion-dollar global crypto market is an attraction for investors for several reasons. It provides an alternative to the traditional banking system, which is a restricted system and is controlled and maintained by a central authority through a centralised ledger or record. Cryptocurrencies, on the other hand, use a decentralised system and a distributed ledger based on blockchain technology, which falls outside the control of central authorities.

From record-breaking highs to crashing lows in a few months, the crypto market has recently been on a roller coaster ride with ups and downs. Many major cryptocurrencies, like bitcoin and Ethereum, are still in a slump, and their prices have dropped off significantly. Many investors capitalise on the market downturns and “buy the dip”, i.e. invest in cryptocurrencies when their prices are falling. All cryptocurrencies are different having both advantages as well as disadvantages and choosing the right one for yourself will depend on a number of factors. It is important to weigh your options carefully and minimise your risk as much as possible, as cryptocurrencies are a highly speculative and risky investment.

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Best cryptocurrencies to invest in right now

Investors are looking for feasible cryptocurrency assets to diversify their portfolios, and even companies have started accepting payments in the form of cryptocurrencies due to their increasing legitimacy. Among thousands of cryptocurrencies options available on various platforms, some of the best options are as follows:

Also read: 7 Cryptocurrencies to look at in 2021

Bitcoin (BTC)

Created in 2009 after the hard-hitting financial crises in 2008, Bitcoin is among the oldest cryptocurrencies. Also called as “digital gold”, the dominant player has a limited supply of tokens, which may significantly increase its value in the future due to scarcity. The acceptance of Bitcoin is far more than any of its counterparts in the market, and it this wide acceptability and adoption will play a crucial role in its survival in the long run.

A major downside of Bitcoin is that it is very energy intensive. According to University of Cambridge’s data, the energy used in the bitcoin mining process is more than the energy used by the entire country of Austria. This will create a substantial negative environmental footprint, which is a point of concern for many investors and regulators. The bitcoin is currently trading at £33,503.85.

ALSO READ: Bitcoin vs Ethereum: Their journeys so far

 Ethereum (ETH)

Second largest cryptocurrency after Bitcoin, Ethereum, controls around 18% share of the total crypto market, as compared to Bitcoin’s 47%. But its share is four times larger than the next-closest token. The native currency on the platform is called ether, but it is colloquially known as Ethereum. With the increasing buzz around decentralised finance, or DeFi, the usage of the platform is also increasing, as Ethereum is a blockchain itself. It allows developers to use its technology to build applications, for example both decentralized finance and non-fungible tokens (NFTs) use its blockchain, which in turn creates utility outside of cryptocurrency alone. The success of Ethereum is correlated with the success of these applications. It has the potential to become a dominant cryptocurrency if any of its blockchain solutions become mainstream in future.

The future of blockchain technology is unpredictable, and whether it will gain mass acceptability is still debatable. If it doesn’t happen, it will probably be very difficult for Ethereum to compete with Bitcoin. The cryptocurrency is currently trading at £2,316.47.

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Dogecoin (DOGE)

After witnessing a surge of around 4,000% this year, Dogecoin has become the eighth largest cryptocurrency as per market capitalisation. Its price peaked at over 70 cents in May, but it has been falling since then. Due to the significantly large circulation of Dogecoin, as well as its unlimited capacity to mine more, its price well remains under a dollar. Unlike the supply of bitcoin being capped at 21 million coins, 130 billion dogecoins are already circulating in the market, along with new blocks accessible to be mined every year. With a comparatively quicker mining rate, or hash rate, than Bitcoin, Dogecoin is somewhat more advantageous than the premier cryptocurrency. But it is carrying the highest risk among all three options due to lack of much competitive advantage in the crypto industry. Many other cryptocurrencies have a lower transaction fee than Dogecoin, and it is also not widely accepted as a form of payment, but it has seen rising popularity due to an increasing following among retail investors as well as celebrity billionaires like Elon Musk. The cryptocurrency is currently trading at £0.1954516785.

ALSO READ: Would these five cryptocurrencies surpass Ethereum's popularity?

Summing up

It is still quite unpredictable if cryptocurrencies will become mainstream or not, and this uncertainty can prove out to be quite dangerous in future. Thus, it is important to consider the pros and cons of all crypto assets before investing. Investments should be made depending on how much risk you're willing to tolerate. For example, Bitcoin or Ethereum are safer options as compared to Dogecoin, which is the riskiest and is more like gambling than investing.

Apart from these three options, there are many other feasible cryptocurrencies that you can go for, such as Bitcoin Cash (BCH), Cardano (ADA), Binance Coin (BNB), and Polkadot (DOT) etc.

Also read: Which Countries Are Trying To Create Their Own Digital Currency