Best crypto to invest in
With the end of a decade drawing near, thoughts turn to investments. Could cryptocurrencies be worth your trouble?
The end of the year is approaching fast and with it the start of a brand-new decade. For many of us, this marks an appropriate point to reassess current investing strategies and rethink where to place our money. But could digital coins join your portfolio and if so, what would be the best crypto to invest in?
When we ponder which cryptocurrency to invest in, the first that comes to mind is undoubtedly the granddaddy of them all. With a market cap of $131.30bn and number one ranking, it is of course, Bitcoin.
Since its creation in the whitepaper by the mysterious Satoshi Nakamoto back in 2009, the decentralised digital currency has barely been out of the news, stirring up excitement, anxiety and controversy with investors and governments alike.
The digital coin, often hailed as the best currency to invest in, certainly hasn’t had a smooth ride over its decade of existence. Incredibly, whilst initially one Bitcoin was worth just a few cents, this rocketed up to nearly $20,000 (£15,550) at its peak in December 2017.
Indeed, buying $100 worth when the Bitcoin price value was just 30 cents a coin in 2011, would leave you sitting on a cool $2,310,000 (£1,796,048) today.
Of course, Bitcoin has also seen more than its fair share of price drops, peaking in the 2018 cryptocurrency crash, which saw the price plummet by 65 per cent between January and February. This level of volatility sent even experienced investors running for the hills. But while the price hasn’t reached such heady heights again, it has been on an upward trend in 2019, rising from around $4,000 in January to a July high of nearly $12,000 and many investors believe there is plenty of room for improvement.
However, two mysterious Bitcoin price crashes in recent days, rumoured to have been caused by Chinese authority crackdowns on unauthorised exchanges, sent the price nose-diving from $9,300 to a six-month low of under $7,000 and has wiped $20bn off Bitcoin’s market capitalisation. There are fears this could lead to the dreaded market pattern, known as the “Death Cross,” where the 50-day moving average falls below the 200-day moving average, which could foretell more losses.
Bitcoin has also suffered fallout from comments by both the Chinese and US presidents deeming unregulated cryptocurrencies to be untrustworthy.
But Bitcoin has longevity on its side and importantly, a lot of users. With over 18m Bitcoin already in existence, it is fast approaching its maximum of 21m coins and with scarcer coins comes more value. Some would even say the number of available Bitcoin is shrinking as not only are fewer coins being mined, but people are also losing coins in wallets and breaking them into smaller fragments, all of which helps to make the price rise. Indeed, many bullish predictions point towards Bitcoin’s price going higher in 2020 and it being the best crypto to invest in long term.
With a market cap of $16.18bn and a solid, second-place ranking, you can’t investigate which is the best crypto to invest in without considering Ethereum. The darling of the blockchain world has set developers’ minds on fire as not only does it offer online payments, but by using its coding languages Solidity and Vyper, programmers can utilise smart contracts and create blockchain-enabled websites using Ethereum’s dApps.
Most Initial Coin Offerings (ICOs) of new cryptocurrencies use Ethereum’s blockchain technology and its own coin, Ether, is becoming widely accepted as a currency in its own right.
However, in contrast Ethereum hasn't seen the roller coaster ride of a year that Bitcoin has experienced. January saw it begin the year at $153, which peaked in July to $300. However, today’s price, 11 months later, is a disappointing $144, partly dragged down by Bitcoin’s recent plummet. Ethereum has also not set a cap on the number of coins to be issued, which may affect its demand in the future.
That said, the long-awaited, brand-new version, Ethereum 2.0 is set to be launched in 2020. Rather than “mining” coins, “staking” will be used to verify blocks of the blockchain, which should make Ethereum apps run faster and thus cost less to run than on centralised networks.
Ethereum also benefits from having been around for a long time and having a lot of users. It is the blockchain platform of choice for many ICOs, which is a great source of revenue for the company and numerous industries are currently investigating how blockchain can be used to track goods and streamline supply chains. Many believe the future is bright for the blockchain platform, which could see a return to the highs of $1,223, seen in January 2018 and could make Ethereum the best crypto to invest in 2020.
With a more modest market cap of $3bn and ranking of six, Litecoin can be most readily compared to older brother Bitcoin. Litecoin is, in fact, a hard fork of the Bitcoin blockchain and both decentralised digital currencies allow us to send payments across the world safely, instantly and for very little cost.
However, Litecoin is also the annoying younger brother that you can’t believe can now outrun you. With a simpler algorithm, Litecoin can process a transaction four-times faster than Bitcoin, reducing verification times from 10 minutes to just 2.5 minutes. Faster processing not only makes it a better currency for spending, it could also make it safer as this prevents hackers from “double spending” coins.
With a transaction speed that is four-times faster, there will be four-times as many Litecoins mined in total than Bitcoin: 84m for Litecoin as compared to 21m for Bitcoin. Some believe this will be beneficial as digital coins become more readily accepted as we tend to prefer to spend whole coins, rather than parts of a coin.
Litecoin, too, has seen some ups and downs, rocketing up by an incredible 8,100 per cent in 2017, from $4.40 in January to $360.93 in December. Since then it has headed back down. January 2019 saw prices of $32.22 and while July saw a welcome rally to $134.22, today’s price is a more modest $47.23.
But Litecoin, too is reckoned by many cryptocurrency investors to have better times ahead. Not only has it been around since 2013, it has an established proven history, plenty of users and could be the best crypto to invest in.
What crypto to invest in 2020?
Geopolitical, regulatory and technological drivers could influence the way cryptocurrency prices head in the 2020. Bitcoin analyst Oliver Isaacs told the Independent: “I believe Bitcoin has the potential to hit $25,000 by the end of 2019, or early 2020” in June. He believes the net effect of the trade war between the US and China has made investors look to Bitcoin as a hedge on investments, considering the digital coin to be a safe haven.
Even more bullish is billionaire investor Tim Draper, who believes Bitcoin could reach $250,000 by 2023. What’s more, major organisations including Microsoft, Amazon, Starbucks and Whole Foods are now opening up to payments from virtual currencies.
How do I invest?
Buying and selling digital coins can be carried out quickly and easily through sites such as currency.com. But when considering what crypto to invest in it’s worth getting back to basics. What we hope for, when investing in any stocks at the simplest level is to not lose money. Effective research before investing can help us choose the right currency as well as protect us from being influenced by our emotions, a problem that even the most experienced investors can fall foul of.
But while many believe the cryptocurrency market outlook for 2020 to be bullish, we should remember such ventures are highly volatile and to only invest what we can afford to lose. That said, if you are happy to hop onto that roller coaster ride, you might just have some fun on the way.
FURTHER READING: Where is the cryptocurrency industry heading in 2020?
FURTHER READING: What is Ethereum?
FURTHER READING: Bitcoin vs Ethereum