Since cryptocurrency’s popularity is growing, several investors ask: what are the best cryptocurrencies in 2021?
Cryptocurrency is a relatively new investment idea. Although many countries have allowed crypto trading in exchanges, several others are yet to formulate regulatory status. If you already know what cryptocurrency is, good. But in case you are new to the concept, you have come to the right place. This article will enumerate cryptocurrency, how to invest, and the best crypto to invest in 2021.
What is cryptocurrency?
Cryptocurrencies are digital tokens or virtual money used like currencies for goods and services. You can buy cryptocurrencies by spending real money. It is managed by a technology called Blockchain – a decentralized ledger system spread across several computers to oversee and record transactions.
If you need an example of cryptocurrency, think of arcade tokens or casino chips. You can buy those for real money. However, it is secured by cryptography, which makes it nearly impossible to counterfeit or double spend.
Types of cryptocurrencies
Bitcoin is perhaps the most popular cryptocurrency. But other than that, 10,000 different cryptocurrencies are trading publicly, according to a report published by CoinMarketCap.com, a market research company. And, with the popularity, the number of new cryptocurrencies are also growing. Per the data available, in August 2021, the total worth of cryptocurrencies was USD 1.9 trillion.
Here is a list of the ten cryptocurrencies based on market capitalization.
|Cryptocurrency||Market Capitalization (approx value)|
|BTC||USD 598 billion|
|ETH||USD 223 billion|
|MATIC||USD 5.6 billion|
|LTC||USD 8.37 billion|
|BNB||USD 48 billion|
|DOT||USD 13 billion|
|ADA||USD 39 billion|
|SOL||USD 7.9 billion|
The reasons behind the popularity of cryptocurrency
There is no denying that cryptocurrencies are popular. There are several reasons behind its growing popularity. Here are some of the theories.
- Supporters of cryptocurrencies consider it as the currency of the future. They are heavily investing in cryptos before their value rises.
- Cryptocurrencies are decentralized, meaning the government or the central bank have no role in issuing cryptos. Some investors think it will prevent depreciation due to inflation.
- Several companies have started taking payments in cryptos, pushing its value upward.
- Supporters of cryptocurrencies think Blockchain technology makes cryptocurrency a safer payment option than traditional money.
Cryptocurrency trading is yet to gain steam in the Indian market, but it is slowly picking up. Obviously, the early birds will enjoy a hoard of benefits for investing in cryptocurrencies. Here are some of the alternatives available to Indian investors. However, always do your research before investing.
Bitcoin is perhaps the most popular crypto in the market with the highest value. It has almost become synonymous with cryptocurrency for many. However, in the market, it has experienced a fair share of volatility. Its value reached an all-time high in April 2021 when it crossed the mark of USD 65000. Similarly, Bitcoin’s price fell when Elon Musk announced that Tesla would not accept cryptocurrency as payment.
Ether, issued by Ethereum, is the second-largest cryptocurrency. But they circulate more currencies than Bitcoin. It uses open-chain Blockchain’s smart contract, which makes decentralized financial services (DeFi) possible. It gives Ethereum an undeniable advantage and makes it one of the highest circulated crypto.
Tether is backed by actual money stored in the banks and financial institutions. It has 829,541 coins in circulation and has its value pegged with USD. Currently, the value of a Tether coin is USD 1. It makes Tether relatively stable and fair valued than other cryptocurrencies.
It is the third-largest cryptocurrency in circulation, with 573,296 coins. Binance is a utility token, and its price varies with the cost of the underlying on the Binance exchange platform. Simply put, its value increases with the rise in the number of users. Investors see Binance as a potential investment option as the acceptance of crypto is rising.
Cardano is one of the highly circulated cryptocurrencies in India. It counts sustainability, scalability, and interoperability as its strengths. Currently, Cardano issuers are working on building smart contracts to improve visibility and acceptability among investors.
Dogecoin, endorsed by Elon Musk, is one of the fastest-growing crypto coins. Dogecoin has immense potential to grow in the future. Currently, it ranks in the sixth position based on market capitalization.
XRP has a market capitalization of USD 45.68 billion, ranks among the top ten best cryptos to invest in. It was introduced by Ripple, one of the original non-decentralized blockchain platforms. Compared to other crypto coins, XRP is cheaper, which makes more people interested in it.
It is pegged with the US dollar and hence, extremely stable. USD Coin allows investors to redeem one US dollar for one USD crypto coin, and its value will rise or fall according to the changes in the value of USD. The market expects the value of the currency to increase to USD1.2797 in December 2022.
Polkadot is different from other cryptocurrencies in the market, managed by crypto technology, like proof-of-stake. Because of the independent blockchain feature for sharing information and creating DApps, Polkadot has created a buzz among Indian investors.
Uniswap is another crypto coin that Indian investors can consider for investing. Uniswap was introduced only last year based on smart contracts used by Ethureum’s Blockchain. It offers high liquidity, which is also its main USP.
Besides the cryptos mentioned in the list, few others that need mentioning are the following.
- Polygon (MATIC)
- Litecoin (LTC)
- Solana (SOL)
Even though the country has yet to formulate regulation status for investing in cryptocurrencies, there is almost a 20,000% surge in its trading in India – taking the value from USD 200 million to USD 40 billion in the last year. It is a great option to diversify your portfolio. We hope you will find our article on the best cryptocurrency to invest in 2021 helpful in making an investment decision.
Disclaimer: Angel One Limited does not endorse investment and trade in cryptocurrencies. This article is only for education and information purposes. Discuss with your investment advisor before making such risky calls.