29 Jul What Cryptocurrency Is the Best to Buy if You Have $1000?
2021 is the year when cryptocurrencies get their moment in the spotlight. Thanks to Bitcoin surpassing the $50,000 mark for the first time since its launch, more people are interested in investing in the next Bitcoin. There are over 8,000 altcoins (i.e., Bitcoin alternatives) to pick from, and you may feel overwhelmed by their volume.
It’s hard to recommend a single altcoin to invest in. There are so many options, and some have distinct winning features. However, towards the end of the article, you will find suggestions on picking a good altcoin. For now, here are five great options you could invest in if you have $1000. Note, however, that you should not put all eggs in one basket.
Bitcoin is a pioneer in the industry and has over 50% cryptocurrency market dominance. However, there are design flaws that make its long-term viability questionable. Bitcoin uses more energy annually than Argentina! Unless it gets some significant upgrades, its high energy demands could burst its bubble.
On the other hand, Cardano has solved this high energy usage problem by shifting its blockchain from a proof-of-work consensus algorithm to a proof-of-stake consensus algorithm. This change alone makes ADA a cryptocurrency to watch out for.
It may be baffling why XRP made it to this list when one of the selling points with cryptocurrencies is decentralization. XRP’s practical value is what has earned it a spot on this list. The difference between XRP and other cryptocurrencies is that it is a centralized cryptocurrency.
Financial institutions have to pay exorbitant fees for cross-border money transfers. XRP solves this problem. Currently, XRP is the 7th cryptocurrency by market cap. According to the latest cryptocurrency prices, XRP is still relatively cheap — $0.56. It means you can invest more in this asset.
Polkadot is the 6th cryptocurrency by market cap. One of the most significant crypto-related issues that Polkadot could solve is interoperability. Most blockchains operate independently and cannot communicate with one another.
Thanks to Polkadot’s relay chain and parachains, connecting the existing and soon-to-exist blockchains into one extensive network will be possible. This interconnection, called the Internet of Blockchain, could enable cryptocurrencies to reach a wider audience. Polkadot’s potential to unify cryptocurrencies is the reason why you should consider investing in it.
When blockchains were introduced, their primary function was to help cryptocurrencies remain trustless. Blockchain acted as an open ledger where all transactions were recorded.
Now, blockchains are used for other functions as well. One of those functions is running smart contracts. Chainlink serves to make intelligent contracts better by allowing them to use real-world data.
For example, it could enable an agricultural insurance company to incorporate temperatures and rainfall levels to execute smart contracts. The increased utility value of smart contracts in everyday life makes Chainlink a cryptocurrency to keep a close eye on.
The inclusion of this cryptocurrency may come as a surprise to you. Initially, it started as an internet meme. Over the last few months, it has received many celebrity endorsements. For example, Elon Musk tweeted about it, leading to an increase in price. Also, recently, Snoop Dogg has changed his name to Snoop Doge.
Besides celebrity endorsements, it also has a faster blockchain time compared to Bitcoin. You should note that cryptocurrencies have no intrinsic value and heavily rely on speculation. As long as Dogecoin continues to get more endorsements, one can expect that its value will continue to rise as well.
How to Pick a Cryptocurrency
Cryptocurrencies are indeed very speculative. Still, you can use solid principles to base your decision on which cryptocurrency to invest in. Here are four principles you should consider:
- The community-You want to invest in a cryptocurrency with a strong community that believes in it and has a genuine interest
- Fundamental analysis– What is the actual value of the cryptocurrency? Look at the financial and economic foundations
- The underlying technology– Evaluate how the cryptocurrency technology will perform against its competitors
- The vision– You want to invest in a cryptocurrency that will still be around 5-10 years from now
If you have $1000 to invest in cryptocurrencies, you may be hard-pressed to pick the best cryptocurrency to invest in. However, this list will help you know where to start.
If you use the principles outlined to evaluate cryptocurrencies and decide which factors matter to you, you increase your chances of success. Don’t forget to diversify your portfolio and use a reliable cryptocurrency exchange platform.