There are currently more that 11,000 cryptocurrencies in circulation. It is not easy to predict which cryptocurrency has the best long-term prospects.
According to The Motley Fool cryptocurrency investing is different from stocks. Because the market is new, it can be difficult to assess the fundamentals. Because of the lack of rules, you can’t always be sure that people are telling all the truth.
Experts predict that many of the cryptocurrencies will fail during the next phase. Therefore, cryptocurrencies that will succeed long-term are those with strong leadership and solid foundations.
Dogecoin: Forget it
Before we begin to dive into the list, here are some reasons why Dogecoin is not recommended.
- Dogecoin is not represented by a whitepaper, nor does it have a full time team. Dogecoin’s loyal followers are many, but there is no leader.
- Elon Musk’s tweets have a significant impact on the price. Dogecoin’s price explosion has been driven in part by the Musk effect. But, this is not a factor that will drive sustained growth.
- There is a lot to choose from in the digital payment space. While digital currencies have the advantage of being fast and easy to use, it is possible that government-backed and stablecoins will make this market less attractive.
Elon Musk’s tweets have a significant impact on the price. Dogecoin’s price explosion has been driven in part by the Musk effect. But, this is not a source of sustained growth.
A number of exciting projects are opening up new avenues using blockchain.
These are three cryptocurrencies that promise bright futures:
1. Ethereum (ETH).
Vitalik Buterin is crypto visionary and the brain behind Ethereum. This project has attracted active communities of coders.
Ethereum is the 2nd largest cryptocurrency in market capital.
A smart contract refers to a small piece or self-executing code that is available on the blockchain. It went from a system which logs individual transactions to one that could run applications. This resulted in nearly 3,000 applications being built and many more cryptocurrencies.
2. Cardano (ADA)
Charles Hoskinson who was also the cofounder of Ethereum founded Cardano. It is the third generation cryptocurrency.
Cardano opted to upgrade instead to address energy consumption and scaling issues. It was designed from the ground up to make it faster and more durable.
Cardano has also shown real-world skills. This cryptocurrency is currently involved in several projects in developing economies, including a partnership between the Ministry of Education of Ethiopia. Cardano Blockchain will be used to record 5 million students’ academic progress.
3. Aave (AAVE)
Decentralized finance (DeFi) is an umbrella term that refers to applications that remove banks and intermediaries from financial transactions. You could, for example, use cryptocurrencies as collateral in order to obtain a loan without having to go through credit checks or complete paperwork.
Aave is basically a DeFi lender. Investors earn interest when they donate their crypto to a loanpool fund. They are paid back the interest that the borrower charges on their loan. It has strong partnerships, a strong reputation and is highly regarded. DeFi can also change how we view banks.