While 2021 may have been the year cryptocurrency went mainstream, 2022 looks even more promising for some of the biggest names in the crypto industry.
Crypto can be an intimidating investment as some cryptocurrencies have seen explosive growth that essentially collapses overnight. However, investing is not a tactic to get rich quick. If you want to maximize your earnings, your best bet is to buy solid cryptocurrencies and hold them for as long as possible.
Not all cryptocurrencies are created equal, so it is important to make sure that you are investing in the right places. These three cryptos have real uses and potential for long-term growth, which makes them smart buy-and-hold investments.
ether (CRYPTO: ETH) is currently one of the strongest players in the crypto market. Not only its native token Ether can be used as a means of payment, but the Ethereum blockchain itself houses a large number of decentralized applications (dApps).
These dApps include projects such as decentralized financial marketplaces (DeFi) and non-fungible tokens (NFT) and could potentially revolutionize a wide variety of industries. Because the network is open source, developers all over the world can create new projects on Ethereum. This creates almost unlimited growth potential.
The biggest hurdle Ethereum currently faces is its speed (or lack of it). It is currently one of the slowest cryptocurrencies on the market, with a transaction speed of around 15 transactions per second. (For reference, Visa can supposedly handle up to 24,000 transactions per second.)
However, Ethereum is currently in the process of upgrading its network. According to Ethereum co-founder Vitalik Buterin, once Ethereum 2.0 hits the market sometime this year, Ethereum 2.0 could potentially process up to 100,000 transactions per second. With this speed on top of its powerful blockchain, Ethereum could be a force to be reckoned with in the years to come.
The grandfather of all cryptocurrencies, Bitcoin (CRYPTO: BTC) is the most widely used form of crypto. It’s also the most expensive, hitting an all-time high of nearly $ 70,000 per token earlier this year.
While some of the bitcoin hype has subsided as more investors focus on newer competitors in the crypto space, the original cryptocurrency remains a strong investment. Bitcoin is still the most popular cryptocurrency with a market capitalization of nearly $ 900 billion – almost half of the total crypto market.
One of the strongest advantages of Bitcoin is its ability to hedge against inflation. Unlike fiat currencies like the US dollar, there is a limited amount of bitcoin tokens that can be created. This scarcity has led some investors to view Bitcoin as “digital gold” and, like gold, its value should increase over time.
However, whether Bitcoin can actually hedge against inflation is still up for debate. Since it’s so new (especially when compared to gold, which has been valuable for centuries), no one knows for sure how well Bitcoin will perform over time. If it is never widely accepted by the public, it is unlikely to be effective as an inflation hedge.
It’s not for nothing that Bitcoin is the most popular cryptocurrency. It’s the most widely used by merchants right now, and if there’s one cryptocurrency that could potentially become a mainstream form of payment, it’s likely Bitcoin.
Cardano (CRYPTO: NO) is a newer cryptocurrency, but already a powerhouse. Cardano was founded by one of the co-founders of Ethereum and aims to solve the most common problems facing the crypto industry.
For example, it uses a Proof of Stake (PoS) mining protocol, which is much faster and greener than the Proof of Work (PoW) protocol used by Bitcoin and Ethereum. While Ethereum is switching to a PoS system with its update, Cardano is already using PoS and is thus one step ahead of Ethereum in this regard.
In addition, unlike other cryptocurrencies, Cardano uses a peer review system when implementing changes. In theory, this should result in fewer errors as all updates must be approved by a group of peers before they can be rolled out. The downside, however, is that things are moving at a breakneck pace in the crypto world and this verification system makes it harder for Cardano to keep up with its competitors.
Because of this, Cardano is a long-term investment. Cryptocurrency isn’t necessarily a zero-sum game, and it is possible that Bitcoin, Ethereum, and Cardano coexist, filling separate niches. However, it could take Cardano longer to reach its full potential.
All cryptocurrencies are still highly speculative so no one is sure they will be successful in the long run – and even the best will still experience short-term volatility. But if you invest in the strongest cryptocurrencies and hold them for as long as you can, the more likely you are to make money over time.
This article represents the opinion of the author who may disagree with the “official” referral position of a premium advisory service from the Motley Fool. We are colorful! Questioning an investment thesis – even one of our own – helps us all think critically about investing and make decisions that will help us get smarter, happier, and richer.