The market for digital currency (also known as cryptocurrency) is now growing at a rapid pace. Those who are looking to grow their wealth are now considering cryptocurrency as a way to diversify their investment portfolio. Along with real estate and stock, it’s probably a good idea to have some cryptocurrency just in case the value goes up.
Some people who just want to have some digital coins in case it becomes mainstream. No matter what the reason is, it’s only logical that more and more people are now interested in this form of currency.
However, the first hurdle to buying cryptocurrency (barring the financial means) is the sheer amount of choice you have.
There’s the original Bitcoin BTC/USD, of course, with satoshis available to make it more accessible to investors. In the past year and even before that, there has been a slew of new cryptocurrencies. Many companies are now allowing payments using such digital assets, also utilizing blockchain technology.
Ethereum ETH/USD, Tether USDT/USD, and Dogecoin DOGE/USD are just a few examples of Bitcoin alternatives. All of this is now known as decentralized finance, or DeFi for short.
It’s not hard to imagine currency becoming independent of any central banks or other authorities. In the near future, we might have several peer-to-peer networks offering all kinds of financial transactions. The world of cryptocurrency and real estate is already linked, so it’s possible that we might be able to buy up some mobile homes for sale with Bitcoin.
So, which one of these cryptocurrency projects are best for investing in right now? Some of these currencies are decentralized, while others are not. Several include community input regarding new protocols. Overall, there are now around 4,000 cryptocurrencies to choose from.
With the year 2022 ahead, many investors are now looking towards cryptocurrencies but not really sure which one to choose. Fortunately, we do have the opinion of experts regarding the top 5 cryptocurrencies to watch out for in the next year. Let’s discuss them in detail below:
What are the Top 5 Cryptocurrencies?
Before we delve into the top cryptocurrencies for 2022, let us clarify that there is as yet no absolute formula for determining the best among the lot. We can ask and get some answers to questions that might determine the possible success of these currencies, but the future is always uncertain.
Just a few factors that determine the potential of a cryptocurrency include:
- The adoption rate
- The need it fulfills (whether this need was critical or not)
- Its competitors
- Plans for updates in the future
- Investors' perception
There might be other factors influencing the position of a cryptocurrency, but these should be enough to determine the performance level of the cryptos today. Here are the top 5 options for now:
1. Bitcoin
Bitcoin, also known as BTC, is the first and probably the most famous cryptocurrency. It was made known to the public in 2009, and supposedly created by someone named Satoshi Nakamoto. To this date, we’re not really clear on who this person actually is. While there is a real individual with this name, he has stated that he is not the creator of Bitcoin. Others have come forward with the claim, but have failed to provide proof.
Like most cryptocurrencies, Bitcoin is based on blockchain technology. This involves a complicated network of many computers, which keep Bitcoin safe with consensus mechanisms. This means that the computers verify the data on the cryptocurrency ledger, which is known as Proof-of-Work or PoW.
Why should we invest in BTC?
There are several upsides to investing in Bitcoin. First off, the transactions in this cryptocurrency are economical and quick, especially when compared to other options. There’s a new block in existence every ten minutes, and the maximum throughput is around 7 TPS or transactions per second. What’s more, unlike fiat currencies, transactions in BTC don’t require the private identification or financial information from users.
At present, BTC is the second-fastest growing digital currency and the most prominent one as well. In April 2021, its price peaked at about $64,000.
Bitcoin also has the advantages of being the first mover in the market. It is gradually becoming more acceptable and usable in several parts of the world, with El Salvador being the first country to make BTC one of its national currencies.
According to blockchain Centre, the first part of 2021 saw around 488.000 Bitcoin addresses coming into existence. Till today, these should now be over 90 million, and the number is consistently increasing.
Bitcoin is also considered to be an asset that’s resistant to the influences of inflation, making it similar in nature to gold. This is one major reason why it’s the usual crypt choice for SoV or Store of Value.
Investors should also consider the high liquidity of BTC and its lack of ties to the world’s financial system. All this makes this cryptocurrency suited to macro investment purposes. It doesn't require brokers like stocks do, and a private individual can easily buy and sell it within several exchanges.
Since its inception, Bitcoin has also performed better than the stock market. However, keep in mind that this history is a mere 12 years old. It’s likely that these high returns will decelerate at least a little as time goes by.
What Might Be The Long Term Price For Bitcoin?
Price predictions for Bitcoin in the year 2022 are quite optimistic. Bitcoin investor and venture capitalist billionaire Tim Draper has predicted that BTC could go up to $250,000 shortly after 2022. Ali Mizani Osuki, who is the CIO of FiCAS AG Swiss, has predicted that the price could be from $200K to $300K from the end of 2021 to March 2022. Bloomberg also published a report in April 2021, with the prediction of BTC priced at $400,000 at the end of the year. Online websites are less optimistic, with a prediction of a 66 percent run at $75,000 for the end of the year. However, by early 2022, the price might go up to around $90K.
2. Ethereum
Ethereum is another well-known cryptocurrency. It also has a network based on blockchain, with the cryptocurrency bearing the name “Ether” or ETH for short. The currency here is one of the top options due to smart contract functionality.
Smart contracts are a lot like regular paper contracts, with conditions to meet. However, this contract doesn’t have a bank or any other middlemen as the intermediary. For now, developers are using this network to create many offerings such as Security Tokens, non-fungible tokens, or DEXs (Decentralized Exchanges).
Non-fungible tokens, or NFTs, are for replacing valuable items such as artwork. Security Tokens might be able to replace financial products like paper stock certificates. Along with this, Ethereum might be able to make whole new cryptocurrencies with the token ERC-20 standard.
At present, Ethereum is switching from a consensus mechanism to Proof of Stake or PoS from the PoW mechanism. This is made possible with an ETH2.0 upgrade. Now, stakers in this currency can give their ETH and use it as an investment to gain more passive income.
Why Should We Invest In Ethereum?
When it comes to decentralized applications, Ethereum is the option with the largest network for blockchain. It also has a large market cap, second only to Bitcoin’s.
With the ERC-20 token standard and decentralized system, there are several usages for Ethereum. This is why it's currently the best and most dominant choice for the development of new digital coins.
Ethereum is also one of the very few digital coins that have ever surpassed Bitcoin. All the apps, security tokens, smart contracts, and other offerings need ETH for running on the blockchain.
At present, Bitcoin needs the lightning network and other solutions for running smart contracts. This limitation makes Ethereum the better option for this aspect of business.
Since 2015, Ethereum has been a fairly popular cryptocurrency. It’s also proven its mettle as being robust and capable. At the same time, it still evolves into a better version of itself. The upgrade makes the changes it needs to become faster and more efficient.
If you’re interested in ETH, keep in mind that staking could be a good option as well. Staking means that you make your crypto work for you, earning rewards along the way. This process means that you commit the digital assets for a blockchain network and confirm the transactions. This is why Ethereum uses Proof-of-Stake for processing payments.
On the downside, ETH has started to burn, which will cause deflation. While this occurrence will increase the ETH price, it’s expected that the value will peak and start declining again in early 2022.
What are the predictions for Ethereum?
According to digitalcoinprice.com, the Ethereum prediction for 2021 is quite high. The price is expected to cross $5K by the year’s end, being a return of around 56 percent on the current $3,411.32. The forecast from there to 2028 is also high, surpassing $16K in November 2028.
In fact, several experts believe that ETH might overtake the record BTC market cap by 2026. By 2023, it might even become the leader in cryptocurrency transactions.
3. Polkadot
Also known as DOT, Polkadot DOT/USD is a blockchain network of the Parahcain variety. It has several connected blockchain with their own functions, but they all work together. Similar to Ethereum, Polkadot also allows its developers to create smart contracts and build apps.
Polkadot also has relay chains, which allow the dApps to communicate with other different blockchain networks. The nature of this network is such that transferring assets between blockchains has become almost effortless. Plus, Polkadot also boasts the highest potential for transaction speeds (more than 150,000).
Why Should We Invest In Polkadot?
The main reason why investors are excited about Polkadot is that it can “talk” to Ethereum and various other networks.
This means that this network has a large and growing programmer base. Keith Bliss has stated that the adoption of Polkadot is useful as a competitor to Ethereum. He also said that several programmers find Polkadot safer to use, as it allows users to create blockchains of their own.
Basically, Polkadot provides an answer to the major blockchain problem of scalability. The prachains in Polkadot reduce the usual congestion, thus enhancing the currency and making it viable for investment purposes.
Vitalik Buterin is one of the founders of Polkadot and Ethereum. This factor again gives Polkadot a stable foundation for the investors.
How Will Polkadot Perform In The Future?
Of course, the million-dollar question is whether DOT will perform well in the short and long term. In September 2021, the price for the currency stood at $31.89.
This number might not be very large, but many experts are quite optimistic about the future of Polkadot. Coin Price Forecast has made a long-term forecast, expecting the price of DOT to go up to $50 around 6 months in 2022. According to their numbers, the price could go up to $75 when 2023 is at an end.
After that, 2025 might see a massive 210 percent increase, with a slight drop around 5 years later.
Overall, the annual returns are expected to be around 12.6 percent on average. This is not a very lucrative prospect, but it just might be a very stable one.
On the other hand, different sources like GOV Capital are leaning more towards a forecasted price of $122.42 with January 2022 seeing a large dip. In a five-year forecast, the expectation was around $1000.46 with an average return of 96.4 percent per annum.
According to digitalcoinprice.com, the expectation is that DOT will move up to $46.49 by the end of 2021, and all the way to $61.11 in the following year. In 2025, the price could be upward of $103, while 2028 will probably see it at $153.
When all these predictions are taken into account, it is evident that the expectations for Polkadot are all over the place. However, we can take an average of all the most reliable predictions. This will result in a return of around 44.26 percent annually.
At the end of the day, such a return might not be as exciting or impressive as Bitcoin or even Ethereum. However, if we buy enough of these DOT digital assets and see them improving as expected, that investment will become lucrative in a few years. It’s also expected to increase in value for the most part, and that prediction is what usually counts.
4. Binance Coin
Binance Coin BNB/USD, or BNB, is the cryptocurrency of choice for paying fees and trading in the Binance exchange. It is also useful for trading when you want to buy the most major cryptocurrencies like Bitcoin or Ethereum.
Why Should We Invest In BNB?
Binance Coin has several benefits and a range of applications. All of these are good reasons to take the step of inversion in this digital asset.
When Binance Coin was launched in 2017, its main use was just that of trading. Today, most experts agree that it’s the fourth most ranked coin according to market cap (an impression of $70 billion).
When you buy Binance Coin, you’re essentially investing in Binance. This is the largest exchange based on cryptocurrency in the whole world. On the Binance Smart Chain, Binance Coin is how you pay transaction fees as well as regular goods and services.
There are also many other projects in the near future that are related to Binance Coin. These will further increase their demand and hence their price as well. After the Binance Smart Chain, these projects will probably put BNB firmly in the category of top cryptocurrencies around the world. Its market cap might exceed $51 billion. Plus, there are several kinds of secure applications that make Binance Coin a good choice for investments.
What are the predictions for Binance Coin?
Coin Price Forecast has given us a long-term prediction for the future of Binance Coin. According to this source, BNB’s price might reach $500 by the end of 2021. By mid-2025, the price could very well go up to $1000. This means an increase of 170 percent. By the time 2030 rolls around, the price will have climbed to $1,800. This means a total increase of 331 percent with an average of 17.6 percent per year.
According to digitalcoinprice.com, Binance Coin will probably see a rise to $649 and then dip to $597 by the end of 2021. It will then steadily climb to $824, $1,287, and $1,821 in 2022, 2025, and 2028 respectively. Overall, the annualized return is about the same as Coin Price Forecast’s at 17.8 percent.
As for GOV Capital, the predictions are a bit more optimistic here. In a year, Binance Coin is expected to get to $556.63. However, a large dip might come about at the start of 2022. The five-year forecast is that of $1590.85, with an annualized return of 30.7 percent.
The GOV capital prediction might be significantly more optimistic than the rest. When we take all the three predictions together and average them out, the expected annual return for Binance Coin is around 22.03 percent.
5. Solana
For many investors, Solana SOL/USD is the cryptocurrency that makes sense for 2022. In the past month, it’s been up by an impressive 300 percent and has a YTD of 13,000 percent.
The market cap for Solana is now around $51.8 billion, ranking it at the 7th place in that category. For now, it is giving Ethereum and Cardano ADA/USD a tough competition for the top smart contract platform.
Why should we invest in Solana?
Solana’s unique move into the NFTs was marked by its Degenerate Apes. This is a digital collection consisting of apes in costume. Each ape has its own traits and varying levels of rarity.
The attraction of Solana is already apparent, as around 400 projects have expressed interest. Many of these are DeFi projects who want to do away with the bank and most middlemen.
Many consider Solana to be a viable alternative to Ethereum. Programmers have been in search of a competitive answer to ETH; while Solana might not be able to kill it off, the competition is good enough for now.
It is considered an ETH alternative, which programmers are looking for; it may not kill ETH but is possible for competition. Basically, Solana creates wormhole bridges among networks. This is a trait that’s very desirable, since it means that networks can easily work together. The next intended step for Solana is to connect the Binance Smart Chain and the Terra network.
Solana might also have the potential to process more than 50,000 transactions every second. What’s even more impressive is that the cost of each transaction is said to be less than one cent.
What are the productions for Solana?
In September 2021, this cryptocurrency was valued at $175.79. Coin Price Forecast has predicted that this might go up to $500 by the end of the year. 2022 might see the price up to $100 at some point. 2025 might see an increase of around 2224 percent, while 2030 could see a total price of $6,829. Overall, this brings us to an annual return of 50.01 percent.
Digitalcoinprice.com conservatively predicted that SOL will fall by the end of the year. It will go higher and reach around $346 in 2002, and perhaps, even $761 in 2028. The annualized return here is 23.29 percent.
On the other hand, GIV shows more optimism and predicts a 5-year annualized return of 65.6 percent. At the same time, it’s important to note here that J P Morgan has given its clients warnings about the recent price climb in SOL. On an average, the three main predictions show an annualized return of about 46.3 percent.
The Takeaway
Most of the largest cryptocurrencies right now might be reasonable places for one to start investing. In several cases, these currencies already have their own ecosystems, improving the chances of being viable investments for the long run.
However, it’s important to remember that all cryptocurrencies come with a lot of risks. If you’re considering an investment in this area, it’s essential to learn about the possible pitfalls along with the expected advantages.
By learning about the top 5 cryptocurrencies today, we can make a decision about investing in one or more of them. Understanding their differences is also a useful start; with this discernment, we can identify the opportunities in smaller cryptocurrencies as well. It’s evident that this is an investment field worth considering, so it might be time to select at least one cryptocurrency and add it to your portfolio.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
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