5 Cryptos That Will Survive

There are now thousands of cryptocurrencies currently trading with Bitcoin leading the pack. However, not all cryptocurrencies are created equally. If you’re wondering which cryptos will survive, here are the best bets.

Bitcoin

Think you’re too late to the Bitcoin party? Think again.

Bitcoin is still the leading cryptocurrency by market capitalization. Since it was launched, Bitcoin has exploded and declined in value multiple times.

In the early days, the argument in favor of Bitcoin was that it would overtake fiat currencies, like the U.S. dollar, to become the new standard. As time has gone on, investors have realized it’s more likely to act as a store of value that can hedge against inflation, and loose Federal Reserve monetary policy. 

How Bitcoin and Cryptocurrencies Work

Bitcoin is the perfect example for describing how cryptocurrencies work. They all rely on a new technology called the blockchain. Blockchain is a complex computer program that facilitates the creation and trading of a cryptocurrency, although it can be used for other things that are not cryptocurrencies. 

In a nutshell, blockchain connects computers on a single network where they talk directly to each other rather than using a central access point. Every computer on this network gets a copy of the master ledger where the record of transactions is kept, similar to a bank’s transaction ledgers. 

Each computer tries to solve a complex math problem, the first computer to solve the problem and decode that block is awarded a set of bitcoins. Then, all of the computers move to the next block in the chain (hence the name “blockchain”), reset with a new math problem and start the process over again. 

The changes in the math problem change the chances for any computer to successfully solve the problem first. Even if you do not have the strongest and fastest computer, you could be the one to solve it and receive Bitcoins. However, stronger purpose-built computers have a much better chance of winning.  

Every cryptocurrency operates using a version of C. Some require currency mining, which means they have to solve the math problem. Others just adopt the decentralized nature of blockchain, meaning every computer keeps the ledger and there is no centralized control or access point. It is these differences that help give the cryptocurrencies their value and benefits.

Analyzing Bitcoin

Bitcoin is a cryptocurrency and worldwide payment system. It is the first decentralized digital currency, as the system works without a central bank or single administrator. The network is peer-to-peer and transactions take place between users directly, without an intermediary. These transactions are verified by network nodes through the use of cryptography and recorded in a publicly distributed ledger called a blockchain. 

Advantages of Bitcoin

There are many advantages to using Bitcoin. Here are some of the most prominent benefits: 

1. Decentralization

Bitcoin is the first decentralized peer-to-peer payment network that is powered by its users with no central authority or middlemen. This means that there is no central bank or company that controls the currency. 

For investors, this means no one can artificially affect the value of bitcoin. No banks can charge fees for issuing currency, control the scarcity of the currency, or otherwise impose restrictions to it that change its value. It also means that previous problems, like bank runs in the Great Depression, can’t happen because “The Central Bank of Bitcoin” doesn’t exist. 

2. Transparency

Everyone who holds Bitcoin or mines Bitcoin has a copy of the ledger, so transparency is to the forefront. Everyone has a record of every Bitcoin transaction, so it is next to impossible to hide this from anyone else. 

All transactions and Bitcoins can be tracked in real-time by anyone. All payments can be made without reliance on a third party and the whole system is protected by heavily peer-reviewed cryptographic algorithms like those used for online banking.

3. Control

Bitcoin users hold the digital keys to their own money and transact directly with each other, with the help of specialized software. In the case of a transaction, all the information about that transaction, including the exchange rate, can be stored in a blockchain ledger without manually recording it from each participant’s position.

Having the system move and record transactions automatically means that no one can control the process. Banks usually place restrictions on transactions, limiting their customers’ ability to do transactions. This is not a problem with blockchain-based currencies.

4. Zero-Fee Transactions

Payments on the Bitcoin network do not cost any fees. This one of the most significant advantages of Bitcoin; there are almost no transaction fees for all users. Transactions can be made without any confirmations, allowing for instant payments.

5. Anonymity

Bitcoin is not a private system, meaning that there is no way to keep your Bitcoin holdings or transactions private because of its decentralized ledger. However, Bitcoin is pseudonymous.

Although everyone can see the ledger, your name or social security number are never recorded in it. All Bitcoin transactions are recorded using wallet addresses. Similar to how your computer is located on a network using its IP address, your Bitcoin wallet is found using its wallet address. If someone does not know your wallet number, they cannot find you in the ledger. 

6. Security

The Bitcoin network has never been robbed or hacked and there is no central point of failure in the system, allowing users to transact freely with each other without any intermediaries. Bitcoins are stored in a digital wallet which can be accessed from any Internet-connected device.

The decentralized ledger plays a major part in security. If a ledger changes and no longer matches the others, its changes won’t transfer to any other ledger. The way that blockchain updates means that all ledgers change simultaneously. Anyone trying to hack the system to steal bitcoin would have to successfully change every ledger at the same time. Even then, others can challenge the ledger changes and try to have them stopped if they seem fraudulent. 

Disadvantages of Bitcoin

Every currency, crypto or otherwise, has a downside. The disadvantages of Bitcoin include: 

1. It Is Still in Its Infancy

Bitcoin is a relatively new form of currency. It has only been around for 12 years. Many aspects, such as its value, are still in flux and ultimately based on speculation. There are also some features of the Bitcoin network that are still in development. For example, many parts of the network are not funded or developed because they are not essential for keeping the system running.

2. Investing in Bitcoin Can Be Risky

Investing or trading Bitcoins carries a high level of risk. Unlike most other recognized forms of currency, the value of Bitcoin has been extremely volatile in the past. The price of Bitcoin can rise and fall quickly, especially on a smaller scale, affecting traders who consider it a long-term investment.

3. Bitcoin Investors Are Pseudonymous

Bitcoin users do not have to disclose their identities because transactions are anonymous. This means that users can transfer funds to anyone without revealing their identity or location. Combined with the fact that there is no centralized entity checking to see what these transactions are used for, Bitcoin can be used to support crime and terrorism on a large scale with no oversight.

4. The Scarcity of Bitcoin Might Be an Issue for You

There will never be more than 21 million Bitcoins, which makes the currency potentially subject to supply issues. Also, while no one can withdraw Bitcoins from the system, there is a limit on how many coins are created every year. Having a limited supply of currency can be a problem if the currency is widespread since it will strictly limit how much you can acquire. 

5. Bitcoin is Not Accepted Everywhere

Although Bitcoin is not widely used yet, it is gaining recognition by some merchants and more businesses are accepting payments in Bitcoins. This makes the currency attractive for technology-savvy individuals, entrepreneurs and for venture capitalists looking to invest money in new business ideas that may generate high revenue.

Bitcoin Forecast

To predict the price of bitcoin, on-chain analytics are crucial. Are whales, those owning 100 or more bitcoin, transferring Bitcoin off exchanges or on exchanges. If Bitcoin is transferred off exchanges it means whales are not planning to sell their holdings anytime soon – a bullish sign.

In recent months that’s exactly what the data has shown, a positive sign that Bitcoin is still in a bullish cycle. And it’s not the only bullish tailwind. The launch of a Bitcoin ETF, flawed as it may be as it’s tethered to futures, is likely a precursor to a Bitcoin-backed ETF.

For those wondering how high can Bitcoin go? The top of this market cycle is likely going to be marked by the launch of that ETF – buy the rumor, sell the news.

According to the stock-to-flow model, the Bitcoin price forecast should reach $100,000 before the cycle ends.

Ethereum

Ethereum is the second most popular and valuable cryptocurrency behind Bitcoin. However, it is quickly becoming the top cryptocurrency for investors. Where Bitcoin is often mined and traded quickly for its high value, Ethereum is kept in investor portfolios to appreciate. This is because, like stocks, Ethereum is relatively stable in value and continues a steady increase. 

How Ethereum Works

Ethereum uses blockchain in a similar fashion as Bitcoin. It creates a decentralized network where all of the computers work directly with each other to prevent a single system from taking control.  

Ethereum is mined similar to Bitcoin as well. However, Ethereum’s blockchain is designed to stop stronger customized machines from having a major advantage over less capable machines. That means that everyone has a better chance of mining Ethereum.

Blockchain is used to facilitate smart contracts across the network. When transactions are made through these smart contracts, the system updates every ledger with the same information so that it is secure and recognized by other transaction systems. 

Advantages of Ethereum

There are several things about Ethereum that make it unique and special. Some of those features include:

1. Ethereum Has a Crypto Coin

Ethereum has its own crypto coin. It is called Ether, and you may see it traded in exchanges as ETH. Ethereum itself is not the unit of exchange, like dollars. It is the method of exchange, meaning it is the system used to facilitate exchanges. 

Ethereum facilitates smart contracts, small exchanges on the Ethereum network. This is a major difference between it and Bitcoin since Bitcoin is designed to be the unit of exchange (the currency itself). 

2. Ether Is Easily Exchangeable

Because Ethereum is the method of exchange, Ether is easily exchanged for other cryptocurrencies. These currencies can be used on the Ethereum network alongside Ether. It all depends on what the person on the other side of the transaction is willing to accept. 

3. Ether Supply Grows Infinitely

Ethereum is designed without a supply limit. As people mint Ether, the overall supply grows steadily every year. For a cryptocurrency that never reaches a maximum limit, widespread adoption is possible. Essentially, it can grow in supply size until there is no more demand for it. 

4. Ethereum Rewards Uncle Blocks

One of the problems that arises with cryptocurrency mining is when a computer solves the problem in a specific block after it has been solved. Since the first person gets ETH for solving the block, other miners can get coins too. These are called uncle blocks.

Uncle blocks get miners fewer coins, but it is an effective way to acquire coins. In other cryptocurrencies, only the first person to solve the problem is rewarded. Ethereum’s uncle blocks method means that more miners get coins without having to heavily invest in new technology to improve their mining rigs. 

5. Ethereum Smart Contract Accounts

Ethereum takes advantage of the fact that it has a separate platform and coin to create different types of accounts. Externally Owned Accounts (EOAs) serve as an Ether wallet. When transactions happen, you use the EOA as your destination wallet. This allows for anonymity in transactions. 

Your alternative is to use an account that holds smart contracts and ETH. The advantage of this is that you can use smart contracts to automate your transactions across the network. 

Disadvantages of Ethereum

While Ethereum provides a lot of advantages, there are several drawbacks to consider before investing. These disadvantages include:

1. Ethereum May Change

Ethereum is relatively new, which means it is still subject to change. Many companies are looking at ways to employ blockchain in their operations and that includes adopting Ethereum. Because of this, there is the potential that large entities will try to make changes to the way Ethereum works, which can change its inherent value. 

2. Susceptible to Quantum Computing

Ethereum is reportedly susceptible to attacks from quantum computers. These computers can process at extremely fast speeds that are orders of magnitude faster than regular computers. That means that a quantum computer could flood the network with transactions and changes that other computers cannot keep up with. Essentially, it can bring the market to a standstill while all of the other computers try to catch up and get their ledgers updated. 

Despite the potential issues surrounding Ethereum, developers are finding ways to make it work. It has been so well received that many think that it could change how companies operate. Admittedly, that has been said about many cryptocurrencies, but it may be true about Ethereum.

Ethereum is much more than another cryptocurrency, which acts as a unit of exchange. Ethereum provides a method for handling decentralized sharing and trading, which is potentially world-changing for businesses. It could greatly increase security and change the way that businesses interact in and out of the finance sector.

Ethereum Price Forecast

Ethereum and Bitcoin both benefited from network effects. Much like Google or Facebook, whose values rose exponentially as their networks grew so too are Bitcoin and Ethereum functions of network growth.

Interestingly, Ether’s price trajectory is following closely Bitcoin’s price, albeit with a lag of a few years – which makes sense because Ether launched a few years after Bitcoin. Should the pattern continue, it would be very reasonable to expect Ether price forecast to sit at $10,000 before this bull cycle is over.

Cardano

Cardano is another one of the leading cryptocurrency systems and is an example of what a business with positive intentions can do with blockchain. Cardano is developed using Ethereum combined with corporate sustainability goals. It is also more optimized for business use than the other options. 

Why Is Cardano Different?

The key difference between Cardono and other cryptocurrencies is that it had an ulterior motive from the beginning. The developers of Cardano are trying to make a sustainable cryptocurrency. 

Mining cryptocurrencies requires a lot of computing power. Miners often buy additional processing units, like CPUs or graphics cards, to increase the power of their computers. This leads to increased energy consumption, which also contributes to increases in pollution, costs and accessibility. 

All of these increases can prohibit the sustainability of Cardano, which is why the developers are looking for ways of reducing resource consumption related to cryptocurrencies. One way of doing this is reducing the demands for computing power to unlock parts of the blockchain. Lower computing power means lower energy demand, which has a ripple effect for all of the other sustainability factors. 

Advantages of Cardano

Like other cryptocurrencies, Cardano has its advantages and disadvantages. Some of its advantages are:

Cardano Is a Platform With a Currency

Like Ethereum, Cardano is the crypto platform, not the currency. Cardano can be deployed in ways that are separate from its cryptocurrency uses, making the underlying technology more useful and scalable. 

ADA is the cryptocurrency associated with Cardano. It is widely seen as one of the leading alternatives to Ethereum and continues to increase in value. 

Proof-of-Stake vs. Proof-of-Work

Cardano differs from other cryptocurrency systems in how it validates transactions. Most cryptos use a proof-of-work concept, where transactions are validated by showing the work that was done in different ways. Essentially, it tries to prove that a computer reporting the transaction, actually completed the transaction. 

Proof-of-stake is the method that Cardano uses and it is something that Ethereum plans to adopt soon. Essentially, it requires miners to perform actions to maintain their coins. With the coins put up as collateral, failing to meet the maintenance requirements means that those coins are removed from the ledgers. It prevents people from hoarding coins like they can in the proof-of-work concept and also reduces the environmental impact significantly. 

Disadvantages of Cardano

Cardano does have disadvantages as well that are worth considering. Here are the disadvantages:

1. Proof-of-Stake is Easier to Take Advantage Of

The proof-of-stake system is reportedly easier to take advantage of than proof-of-work. Having to use extensive mining machines means that fewer people can game the system for Bitcoins. With proof-of-stake, alternative security methods are needed to ensure that people are not taken advantage of. 

Cardano Forecast

Cardano is a much more early stage with fewer network effects than Bitcoin and Ethereum to support its price. Much of its current price is based on expectations that Cardano will seriously threaten the Ethereum eco-system at some point in time, and if so the price of ADA has the potential to rise up to $5 during a bullish cycle.

Polkadot

Polkadot is an open-source blockchain, an internet protocol and a network of blockchains. It is designed to make it possible for you to create customizable blockchains that allow different kinds of transactions. Polkadot is currently in development, but you can take part in the Polkadot testnet. Demand for new cryptocurrencies is high and Polkadot is expected to grow rapidly once launched.

What Makes Polkadot Special?

Polkadot is notably different from other cryptocurrency systems because it is designed to let you create your currency. This can be a major advantage when trying to manage transactions and set up systems for specific organizations or businesses. Having a unique currency gives you a measure of control over the system. You can set the rules however you want, which makes it possible to create purpose-built cryptocurrencies.

Advantages of Polkadot

Its unique design gives Polkadot a lot of advantages. Some of those advantages include:

1. Fast Transactions

Fast transactions are made possible because of the multiple blockchains that are linked together, the availability of multiple consensus algorithms and the possibility of scalability through sharding. From a security perspective, Polkadot has an innovative security mechanism that allows only authorized participants to update nodes.

2. Efficient Split-Brain Resolution

The primary goal of this project is to build a blockchain network for public networks where transactions can be recorded in one place and can settle in a different place. This makes the entire system mobile and also divides work between system components for faster transactions. 

4. Scalability

This project implements a novel mechanism to achieve scalability. Since each block is chained to the previous block, it is designed to allow for scalability with a growing number of computers. 

5. Smart Contract Platform

Smart Contracts are one of the most talked-about technologies today because of their unique feature of being Turing-complete, which means that they can do any computation that a person can think up at all. They are not secure, however. Trust-less execution is still the main issue facing this new technology, which is where Polkadot comes in.

Disadvantages of Polkadot

There are some disadvantages of Polkadot, such as:

1. Not Ready Yet

Polkadot is still in development and it will take some time before it can be used by public networks. We will need to wait for the Testnet and the Mainnet release before this platform can be used.

2. Security Issues

The security of Polkadot is still not very secure because it does not have a secure ledger system that allows the user to execute smart contracts easily.

3. High Transaction Fees

Smart contracts are not cheap. The projects that will be using Polkadot will pay the network for execution services. The high transaction fees may drive their costs up, which is a disadvantage for companies that rely on a large number of transactions per second.

Polkadot Forecast

Polkadot price has been on a tear but still has potential to run much higher before this bull cycle has completed. Sitting in the low $40s at the time of research, a high of $100 could be attained before the tide turns.

Cosmos

Cosmos is a network of independent and parallel blockchains that use BFT consensus algorithms. The network is decentralized, which adds to its security. Cosmos consists of “hubs”, which act as the way to link many independent blockchains that are all using the same protocol, Tendermint BFT. Hubs are like side chains. To validate transactions, your servers must run all day and night. 

Advantages of Cosmos

There are many advantages to Cosmos for cryptocurrency, including: 

1. Interoperability and Inter-Chain Communication (ICC)

Since blockchains are linked on hubs, they can communicate with each other easily. This means that multiple cryptocurrency systems can work interchangeably, opening much more of the market to users. 

2. Forward Compatibility

The way that Cosmos is set up makes it compatible with current and future blockchain-based systems. The method that validation happens is compatible with other systems. This lets them work together while having Cosmos validate any transactions. 

Disadvantages of Cosmos

Cosmos also has its disadvantages:

1. Cost

There is a cost of distribution. The cost of distribution means the amount that the company has to spend in order to get things from one place to another. The higher cost of Cosmos means that it is more expensive to use the platform.

2. Complex Sustainability

Cosmos is complex. It will be hard to maintain the security of the network, which means that it’s expensive to do so. It is more complex for those who are unfamiliar with Tendermint BFT to use it.

3. Bandwidth Requirements

It can be difficult to use Cosmos as a validating validator on your chain. You do not want to join the network as a hub, as you will need enough storage space and bandwidth to run a full node 24/7, which may be limited for some projects.

4. Privacy Concerns

There is a lack of consensus on what information is needed by Cosmos. This makes it hard to determine how the network will be broken up. There is also an unknown impact of security vulnerabilities in the protocol.

Cosmos Forecast

Cosmos serves a critical purpose but it remains early stage in terms of execution and network effect. Still, the price forecast for Cosmos (ATOM) is as high as $100 during this bull run.

How to Invest In Cryptocurrencies

As an investor, you can buy Bitcoin or other cryptocurrencies at their current price and then wait for their price to rise.

There are also some other ways that you can take advantage of the boom in cryptocurrency prices. Let’s discuss them all here:

1. Become a Cryptocurrency Miner

In order to ensure the safety of the network, cryptocurrencies have been designed to be mined. In simple terms, mining is a process where you run a computer program to solve mathematical problems. The first one who solves the problem adds a new block of transactions to the blockchain and is rewarded with some Bitcoins or other cryptocurrencies as an incentive. 

You can mine cryptocurrencies with virtually any computer, but most miners invest in stronger computers. Depending on the rules of the blockchain, only the first person or first few people to solve the problem receive the currency. That means you need to be near the top of people who resolve the math problems. This makes investing in a powerful computer a must-have first step. 

2. Crypto Hedge Fund

There is little capital invested in crypto hedge funds relative to other asset classes still. Just a few billion versus the trillions in real estate, bonds, and equities. For the entrepreneurially-minded, a crypto hedge fund would permit a savvy investor to attract capital from accredited investors and earn fees from managing a portfolio.

3. Invest in ICOs (Initial Coin Offerings) or NFTs

When new cryptocurrencies are launched, you can invest in them by buying their tokens or coins through ICOs (Initial Coin Offerings). You can buy them on an exchange or on some websites that are dedicated to ICOs. 

If you buy tokens, you get the right to use their services. But do not expect any income from them because they are still new and have not been launched yet. Therefore, it is very difficult for ICOs to have any value or profit that would meet your expectations. Invest in ICOs only if you can hold onto the currency until it appreciates. Similarly NFTs offer the potential for liquidity one day but the market is still nascent.

The Bottom Line

It is a great time to become an investor in cryptocurrencies. They are becoming more and more popular and you can easily buy them at a low price if you hurry. These five cryptocurrencies are a great place to start. 

Before investing in anything, do your due diligence. There are many cryptocurrencies out there, and not all of them are good investments.

Remember that cryptocurrencies can be lucrative, but they are like any other investment. There is risk involved, and they can be a great investment if you understand those risks. Always invest responsibly. 

 

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The author has no position in any of the stocks mentioned. Financhill has a disclosure policy. This post may contain affiliate links or links from our sponsors.