It has been a fantastic year for cryptocurrency investors and Bitcoin (CRYPTO: BTC) specifically. The market-leading cryptocurrency’s price per token has risen by around 113% year-to-date, even with a recent pullback after hitting a new lifetime high of around $ 67,000 per token.
Bitcoin appears to be gaining traction as âdigital goldâ and as a potential safe haven at a time when inflation and other factors are wreaking havoc on stock markets. As impressive as the crypto token’s performance is, a panel of Motley Fool contributors identified three cryptocurrencies that they believe are poised to perform better from here on out. Read on to see why they think Ethereum (CRYPTO: ETH), Cardano (CRYPTO: ADA), and Solana (CRYPTO: SOL) offer superior opportunities for investors.
Second Biggest Crypto Player Could Be A Better Bet
Keith Noonan (Ethereum): The Ethereum blockchain is rapidly gaining popularity as a network for smart contracts and decentralized application development. With a market capitalization of around $ 469 billion, Ethereum is the second largest cryptocurrency by market cap.
Many fast-growing cryptocurrencies, trading platforms, and smart contract services are built on Ethereum, and the network’s Ether token appears poised to benefit from the growing utility and surging valuations of crypto assets.
Like Bitcoin, Ether has recently gained attention as a speculative asset that could have an explosive rise and a potential hedge against inflation and other destabilizing economic and market factors. There is a seemingly unusual combination of market forces that are helping to generate rallies for both crypto tokens. However, I believe the Ethereum network’s long-term application-building potential makes Ether a more attractive option for investors looking to benefit from the evolution of blockchain technologies.
As Bitcoin has grown in popularity as a digital store of value, Ethereum’s blockchain network has gained attention as a launching ground for innovative new applications and services. The decentralized computing platform could be a starting point for revolutionary projects. Bitcoin’s price per token could very well continue to climb higher and higher, but the superior utility offered by the Ethereum blockchain and its network of developers leads me to think that the Ether token is a more promising forward bet.
The price of Ether per token jumped about 458% across all exchanges in 2021. While it significantly outpaced Bitcoin’s gains throughout the period, I still think Ethereum has good chance of outperforming Bitcoin in the long run.
This third-generation option solves previous crypto issues
James brumley (Cardano): While Bitcoin has clearly been the poster child of the cryptocurrency movement – especially now that it has its own ETF – the explosion of alternative digital currency has put a major problem in the spotlight. That is, “extracting” these things consumes a huge amount of electricity. Since the green / renewable energy movement is just as strong, this clearly creates a marketing problem.
Cardano is an exception to this standard, however.
It’s a bit complicated, but here’s the simple and condensed explanation: Bitcoin miners are using their computing platforms to compete for the right to produce a qualifying blockchain; this is the âminingâ process you hear about. This is very energy intensive, as a mining computer has to prove to all other miners that the calculations that identified a newly found Bitcoin are legitimate.
Cardano is different in that the energy-intensive extraction process doesn’t start by proving that the computational work has been done. Rather, Cardano mining begins with surprisingly simpler (though still sure) proof that the miner in question already has a stake in Cardano. This minor is then randomly assigned the right to create a new digital coin. Not only does this process require less than 1% of the electricity needed to mine a bitcoin, but Cardano’s underlying technology makes it more interoperable. It just means that it is more usable in several ways and that it is not blocked like the 24/7 networks of other cryptocurrencies.
If that’s too much technical jargon, here’s the quick and crass explanation: Cardano is a true third generation altcoin that was designed to work around the flaws seen with first and second generation cryptos.
The heart and the SOIL of DeFi
Daniel Foelber (Solane): Solana is arguably the most popular altcoin on the market today. In the past six months alone, its price has almost quintupled and is hovering around an all time high at the time of writing.
The triple constraint of blockchain is scalability, speed and decentralization. It is impossible to have all three, as each currency compromises the strengths of certain categories. For example, Bitcoin is very scalable and incredibly decentralized, but it is painfully slow. Its rigidity is its advantage, because its network is practically impenetrable.
Ethereum, by comparison, sits somewhat in the middle of the three categories. It is not the fastest, the most scalable, or the most decentralized; but it’s pretty good in all three categories.
Solana is lightning fast, incredibly scalable, yet fairly centralized. Similar to Ethereum, Solana has its own blockchain and is believed to have what is called a “layer 1” protocol. In comparison, tokens like Polygon are called “Layer 2” scaling, which means they are third-party integrations that run on top of a Layer 1 blockchain. Polygon relies on the Ethereum blockchain to verify transactions, taking advantage of its decentralization in the process.
The uniqueness of Solana is that it is the largest Layer 1 blockchain on the market, while having low transaction fees. Its blockchain currently processes between 1,000 and 2,000 transactions per second at an average cost per transaction of less than a tenth of a dime. One of the reasons the transaction fees are low is that there are only around 1,100 validators helping to run the Solana blockchain. This means that Solana is, theoretically, easier to hack. But it also means that processing and verifying transactions on its blockchain is much faster compared to the 10,000+ nodes that actively support the Bitcoin blockchain.
Like anything with cryptocurrency, it’s important to know what you’re getting into and why you’re getting into it. Solana is a much riskier investment than Ethereum and riskier than Bitcoin; but its growth is something that is sure to appeal to risk-tolerant investors.
This article represents the opinion of the author, who may disagree with the âofficialâ recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.