I am a nerd; I just love anything tech-related. And as such, I am very much a crypto enthusiast. Despite the criticisms that crypto coins have received over the last few years I still think they are the future of money.
With increasing internet connectivity, I see no reason why money shouldn’t move online. In fact, a lot of already is just digits on a screen; it is estimated that only about 8% of the world’s total money supply is in cash, all the rest exists in hard drives.
However crypto coins aren’t just online money, they are much more than that. They are one of the truly decentralized currencies to be created. And that’s a huge thing. For better or worse a decentralized currency is a big transition from the normal FIAT currency whose value can be increased or decreased at will. It will democratize power from central banks to the people.
This quality alone makes cryptocurrencies quite an interesting phenomenon, perhaps the next big thing after social media.
That said, the popularity of bitcoins and a few other cryptocurrencies inspired more people to build coins for themselves. From betting coins to smart cities there are coins created for virtually everything. And the result has been an explosion in the number of cryptocurrencies all around the world.
Today there are more than 18000 currencies in circulation. If you are an investor such a huge number of options may make it hard to make a suitable crypto-investment portfolio, even for the most tech-savvy investor.
But I got you, here are my two cents on the few currencies you should look into in 2022.
Bitcoin (Market Cap – $846 Billion)
This one needs little introduction. Anyone with an internet connection has definitely heard of Bitcoin by now. It is the mother of all cryptocurrencies, the original digital coin. With a mystical creator named Satoshi Nakamoto, Bitcoin has risen from an experimental white paper to a household name. Bitcoin’s rise in value has been almost astronomical. It was, for instance, valued at only $500 in 2016 but has now risen to be worth $44,000 as of March 2022, a growth of about 7800%.
Bitcoin is however very secure, perhaps one of the most as it relies on blockchain technology or a ledger, logging transactions distributed across a network of thousands of computers. Because additions to the distributed ledgers must be verified by solving a cryptographic puzzle, a process called proof of work, Bitcoin is kept secure and safe from fraudsters.
Ethereum (Market Cap – $361 Billion)
Another household name, Ethereum has exploded in value over the years. It is perhaps Bitcoin’s only worthy competitor. This can be brought down to its wide range of applications as they take the concept of the blockchain to solve real-world problems.
Ethereum is much more than just a cryptocurrency. In addition to ethers (Ethereum digital coins), it also encompasses features such as smart contracts, Ethereum virtual machines, decentralized applications (Dapps) and decentralized autonomous organizations.
These ‘inventions’ all take advantage of blockchain’s central purpose of decentralization and applies it to a variety of situations. Ethereum has a variety of real-world applications such as voting and banking systems, shipping and also agreement.
With such numerous applications, I see Ethereum as one of the few currencies that will outlast an eventual crypto bubble-burst. Let’s face it, the cryptocurrency market is in a bubble, a rather large one. There is simply no way of justifying some of the ridiculous currencies that have popped around in recent years. Some even going as far as being called ‘meme currencies.’
There is no way such assets are going to last an eventual market downturn. And when that happens the dust settles, the real currencies will be clear to see. I reckon Ethereum will be one of the few. And the fact that it has been backed by tech behemoths such as Microsoft and Intel make it all the more likely.
Unlike its counterparts Bitcoin and Ethereum, tether is a stablecoin. This means that it is pegged to a ‘reserve asset’ like the US Dollar or gold. Now I know this goes against the mythic core mission of cryptocurrencies of independence from banks but stablecoins are, as the name suggests, designed to provide a little ‘stability’ in the market. This means that it is less susceptible to large swings in the market that have been the nature of coins like bitcoin and Ethereum since their conceptualization.
Thus, stablecoins by their nature, are safe bets. For all those cautious investors who don’t like big risks, tether is the perfect crypto-asset to invest in.
US Dollar Coin
Speaking of which, here is another stablecoin to invest in. As its name (heavily) suggests, the US Dollar Coin is heavily pegged to, well, the US Dollar. And by pegged, I mean the value of one US Dollar Coin is exactly the value of one US Dollar. This gives it a nice ‘stable’ value and makes the USDC a great option for traditional investors looking for a low-beta investment that can generate returns better than CDs.
And that’s it. These are the only ones that I can comfortably recommend to you. The other ones look a tad bit sketchy to me. I mean what is a serious investor supposed to think about something called a ‘meme currency.’ Is this supposed to last for more than five years? What does it even do exactly?
These are the core questions that many of these cryptocurrencies popping up every day fail to address. And this is why much as I am a crypto-enthusiast, I am also an investor and I choose to only involve in these five.