Among the more than 5,000 digital currencies offered in the global markets now, experts advise 10 digital currencies that they consider the best investment in the year 2021, led by "Bitcoin", based on the age of the currency, its price, the number of its investors and the network technology traded through it.
Cryptocurrency is digital money that is not managed by a central system, such as governments, but rather relies on “ blockchain ” technology, and it is becoming increasingly popular after these currencies can be used to complete purchases, while most people treat it as a long-term investment.
|Top 10 digital currencies to invest in 2022 and their risks|
However, investing in digital currencies may be risky if you do not know where to start, according to the service "Yahoo Finance", which classified ten (10) digital currencies as "worth investing in the year 2021", indicating, at the same time, the risks of hiring money in it.
1 - Bitcoin
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The existence of this currency preceded all others, and it is easy to see why it is the leader by its price, market capitalization and trading volume that far exceeds any other investment options. Even with thousands of cryptocurrencies, Bitcoin still represents 40% of the market capitalization of these currencies combined.
Many companies accept Bitcoin as a payment method, which makes it a smart investment. For example, Visa deals with it, and Tesla CEO Elon Musk recently invested $1.5 billion in it. Major banks have also started incorporating bitcoin transactions into their offerings.
Bitcoin investment risks
Its value tends to fluctuate so much that you may see the price go up or down by thousands of dollars over any given month, sometimes in a single day.
And if such wild fluctuations make you nervous, you may want to avoid this coin. But as long as you keep in mind that cryptocurrency is a smart long-term investment, these volatility shouldn't be a big concern.
There is another reason to reconsider investing in this currency, which is its exorbitant price, which recently exceeded 50 thousand dollars, so that most people cannot buy it.
2 - Ethereum
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Ethereum differs from Bitcoin in that it is not just a cryptocurrency, but also a network that allows developers to create their own cryptocurrency using the Ethereum network. While it lags far behind Bitcoin in terms of value, it is also far ahead of other competitors.
Although it entered trading years after some other cryptocurrency, it has surpassed its niche in the market due to its unique technology.
Risks of investing in Ethereum
While Ethereum uses blockchain technology, it has only one “lane” to conduct transactions, and this can result in transactions taking longer to process traffic when the network is overloaded.
Its hack in 2016 resulted in the loss of more than $60 million due to a flaw in the Ethereum wallet. Although the company has made great strides in increasing its security level, vulnerabilities are always a risk in any cryptocurrency investment.
3 - Binance Coin
It is one of the few cryptocurrencies that reached their peak after 2017. During that year, the market was bullish and the prices of all cryptocurrencies went up, reaching their peaks before stabilizing and dropping a bit.
Unlike the rest of the cryptocurrencies, Binance Coin continued a slow but steady upward trend after 2017. Due to its performance, this coin has proven to be one of the more stable investment options, which means less risk.
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Binance Coin Investment Risks
What sets it apart from its competition is that it is built by a company rather than a group of tech developers.
Although its commitment to maintaining the blockchain is strong and has captured many skeptics, some investors remain apprehensive about this cryptocurrency and its potential security issues.
4 - Tether
It is the most stable of all cryptocurrencies, as it is pegged to the US dollar. Each Tether unit has one dollar in the Federal Reserve (the US central bank), and this makes it a great opportunity for investors who want to deal with their cryptocurrency.
Tether investment risks
Investors raised questions about its actual reserve stock, as there are doubts that the Fed really has one dollar for each unit of it. If this is not proven, it may depreciate rapidly.
5 - Cardano
The Cardano network is smaller, which is attractive to investors for several reasons. It takes less energy to complete a transaction compared to a larger network like Bitcoin, which means that transactions are faster and cheaper.
It claims to be more adaptable as well as more secure, and is constantly improving its sophistication to stay ahead of hackers.
Risks of investing "Cardano"
Even with a better network, Cardano may not be able to compete with bigger cryptocurrencies. Less dealers means fewer developers, which doesn't attract most investors who want to see higher trading volumes.
Although the currency has big plans, there are doubts about whether it can live up to this potential.
6 - Polkadot
It was launched by the Ethereum pioneers after they split from their cryptocurrency to create a better network. Instead of having a single "lane" to complete transactions, this currency has many lanes.
This currency is designed to reward real investors and exclude people who only trade in the stock market to make money quickly. Investors involved in the company also help make decisions about such things as: network fees, updates, and the creation or removal of a "parachain".
Risks of investing "Polkadot"
Its founder, Gavin Wood, first introduced the cryptocurrency through a white paper in 2016. At the end of 2020, the cryptocurrency began trading in the stock market. In such a short period, this coin has not had a solid track record for comparison, making it a much riskier investment for potential buyers.
7 - Ripple
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This currency attracts investors because it differentiates itself from the rest of the cryptocurrencies by offering international transactions.
International money transfers through a bank can take up to 10 business days, while the same transaction takes a few seconds with Ripple.
In addition, Ripple has contracts with major banks around the world, and the more contracts you own, the more access you have to the currency.
Ripple investment risks
The currency looked promising in 2017 when its value jumped 36000%. However, given the fact that the percentage represents a growth of $2.4 per share, it is less impressive while you are researching cryptocurrencies, so don't get distracted by the high percentages but look at the real numbers to see what the growth really means.
8 - Litecoin
Initially created in 2011, it hit the market at the same time as Bitcoin, but it didn't take off in the same way, although it boasts of completing transactions 4 times faster than Bitcoin.
In 2017, it was the first cryptocurrency to be transacted over the Lightning Network, and the transfer was completed in less than a second. If the company expands the use of this network for faster transactions, the value of Litecoin could increase significantly.
The risks of investing in Litecoin
Since Litecoin and the rest of the cryptocurrencies are closely related to Bitcoin, its value generally fluctuates with it, and this means that its value will rise and fall just as it happens with Bitcoin, albeit at a lower rate. And if you consider Bitcoin's volatility a negative thing, Litecoin may not be a good option for you.
9 - Chainlink
It is unique with its attractive price. But while its shares can be purchased at reasonable prices, they are still high enough not to be considered small stocks. This is attractive to investors because it has proven that its value can rise with plenty of room for growth.
It is available to trade on Coinbase, one of the world's largest cryptocurrency applications, and the ease of access makes Chainlink attractive to investors.
Chainlink investment risks.
Although it is still higher than thousands of other cryptocurrencies, it has a lower volume and a lower market value than the rest of the more attractive currencies. Therefore, it ranks very low in the top ten list.
10 - Stellar
Launched to meet specialized needs in the cryptocurrency world, it is essentially a PayPal payment platform for cryptocurrency networks, and acts as a bridge between banks and blockchain networks.
As a decentralized network, it can convert and trade any currency through the available channels, making transactions cheaper and faster than through traditional banks.
Risks of investing "Stellar"
Since it serves the needs of a niche market, it is likely that other companies will compete with it. If another cryptocurrency network creates a better platform and takes traffic from Stellar, it could affect the value of the company's stock.