2021 was a standout year for cryptocurrency (crypto) investors. Many cryptos delivered spectacular gains. Gala rose by 32,570%, Solana by 11,634%, and Decentraland (a Metaverse project) by 4207%. The big daddy of crypto, Bitcoin, ended the year at $48,000, down from a high of $69,000, yet returned 70% over the year. Ethereum rose by 425%.
You may be planning to invest in crypto this year. There are over 8000 cryptocurrencies available today. Which ones should you invest in?
How to choose which cryptos to invest in
We will recommend some cryptos in which you can consider investing in 2022. But first, what factors should you consider for investing?
A cryptocurrency that has been around for some time provides historical data for evaluation. But this does not mean that you should totally rule out newer cryptos.
Stable prices are a favorable indicator. It is even better if the crypto’s price and usage are growing.
Consider buying crypto that runs on a secure platform, is usable, has high transaction speeds, and has low transaction costs.
The crypto should have real-life utility and support enticing use cases. You should be able to use cryptocurrency for purchases and bank transfers. In short, the crypto should solve a problem or fulfill a need.
Look for cryptos with a high adoption rate. They will be easier to trade.
So, which cryptocurrencies should you invest in?
From the many cryptocurrencies in existence, we have selected a few that are worth investing in by the criteria listed above. All these cryptocurrencies have a stable technology platform, have real-life use cases, and have a good or growing user base.
Bitcoin is everyone’s favorite cryptocurrency. It is totally independent of any government or bank. BTC has worldwide acceptance, is commonly used as a medium of payment, has low transaction fees, and fast peer-to-peer transactions.
Ethereum (ETH) ETH is second only to BTC in the crypto sphere. It supports applications like NFT (Non-Fungible Tokens), DeFi (Decentralised Finance), and smart contracts. It is also a platform based on which many other cryptos have been created. 2022 will see the release of Ethereum 2.0, which will solve its biggest problem – slow transaction speeds.
Binance is reputedly the most traded cryptocurrency. The BNB ecosystem supports services like the Binance Visa credit card and loans. You can use the Visa card at merchants worldwide to pay for your purchases with crypto (it currently supports around 30 cryptocurrencies).
A team led by Charles Hoskinson, who was also part of the Ethereum core development team, designed Cardano to be a “better Ethereum”. Cardano is quick-it processes 250 transactions per second today.
Solana is probably the fastest cryptocurrency by transaction speed. It supports smart contracts and charges no transaction fees. It is a highly scalable platform and maybe the most serious challenger to ETH.
Avalanche is a smart-contract platform. Hence, it is another challenger to Ethereum. It gets a lot of attention from developers (it is the third most active currency on GitHub) because it is faster, cheaper, and less energy-intensive than Bitcoin.
The Polkadot ecosystem bridges all kinds of blockchains. You can use the platform-provided tech to build your own blockchain and connect to the Polkadot network in a matter of hours. Gavin Wood, ex-CTO of Ethereum, created Polkadot. It is billed as the underpinning of Web3, a user-friendly, decentralized web.
The list above is not complete. Other cryptocurrencies which could make it big in 2022 include Tether, USD Coin (USDC), Qtum (QTUM), Stellar (XLM), Litecoin (LTC), and Nano (NANO).
Remember that cryptocurrencies are high-risk, high-reward. Crypto can generate life-changing returns, yet their volatility makes them a risky investment. If you invest in crypto, do so with your eyes wide open. Be prepared for wild market fluctuations and dramatic changes. Look at the big picture and not day-to-day variations. And only invest an amount that you are willing to write off.
Note: Please do not invest money or assets in the financial markets that you cannot afford to lose. This article should not be construed to be investment advice and is for information purposes only.