- Are cryptocurrencies a good investment?
- Top three cryptocurrency to invest in 2021
- What is ethereum?
- What are smart contracts?
- Why are ETH transaction fees so high?
- Planned changes to ethereum
- What is litecoin?
- What is Dogecoin?
- What is britcoin?
- Is Cardano a good investment?
- Is there a better cryptocurrency than bitcoin?
- What other cryptocurrencies are there?
- What is Harvest Finance?
- Is Coinbase a good place to buy bitcoin?
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Bitcoin’s meteoric rise has made it one of the world’s best-performing assets over the past year.
See more: bitcoin dying out
But with more than 9,000 crypto projects live today, retail investors are now starting to see if there is more value in buying one of the many alternatives to bitcoin.
In this article, we explain:
- Top three cryptocurrency to invest in 2021
- Is there a better cryptocurrency than bitcoin?
- What is Rishi Sunak’s bitcoin alternative?
Find out: Should you invest in bitcoin?
Are cryptocurrencies a good investment?
Cryptocurrencies are volatile and investing in them is often compared to gambling.
We definitely don’t recommend investing your entire life savings in the crypto market. But if you have some disposable income left that you can afford to lose, you might want to dabble in bitcoin or its alternatives.
- Find out more: Should you invest in bitcoin?
Top three cryptocurrency to invest in 2021
The most important cryptocurrencies are the ones that are most widely used today.
- Find out more: What is cryptocurrency?
What is ethereum?
Ethereum is the second-largest cryptocurrency by market cap, with a total value of £273.43 in July 2021.
Together, bitcoin and ethereum make up about 70% of the crypto market. Ethereum is much newer than bitcoin.
- Released in 2015
- Fans like the myriad applications of its blockchain technology
- ETH is often traded back and forth like any other crypto
- Its primary use is not as a currency
- Ehereum enables the creation of new financial applications backed by smart contracts
What are smart contracts?
Smart contracts are bits of code that are automatically triggered when certain conditions are met.
- While not every country has determined the status of smart contracts, some big economies have given them legal certainty
- In November 2019 the UK Law Commission set out a landmark ruling noting that they were legally enforceable in courts in England and Wales.
At the end of March, payments giant Visa started using ethereum to record cryptocurrency-based transactions, removing the need to convert cryptos into national currencies in order to settle payments.
In this way, the ethereum network has become a singularly important as it bridges the gap between the worlds of traditional and crypto finance.
Find out how Anne Tinner, who invests in a wide variety of cryptocurrency, including ethereum, made $16,600.
Why are ETH transaction fees so high?
The sometimes extreme transaction fees required to use ethereum are a long-standing problem.
View more: 10 năm sóng gió từ khi ra đời của Bitcoin
Throughout the cryptocurrency bull market of 2017 to 2018, ethereum transaction fees averaged $5.70 apiece. In 2021, the cost of confirming transactions has leapt to an average of $10.
Planned changes to ethereum
Planned changes to the way in which the ethereum network functions could solve this thorny issue.
A network-wide update called ETH 2.0 will take place over several years. Ethereum will move away from the energy-intensive “proof of work” method of confirming blocks of transactions to something called “proof of stake”.
According to ethereum co-founder Vitalik Buterin, when ETH 2.0 is completed:
- Transaction times will fall from several minutes to just three seconds
- This would put ethereum’s smart-contract execution speed on a par as swiping a credit card or sending an email
The process would remove power-hungry miners from the equation, instead relying on those who already own a decent stake in the cryptocurrency – thereby ending the electricity-use arms race.
- Find out more: Everything you need to know about eco-friendly cryptocurrencies
What is litecoin?
Litecoin is a digital currency intended to be used as a payment mechanism without the need for conducting transactions through a middleman such as a bank.
- Created in 2011 by ex-Google developer Charlie Lee, who designed it to confirm transactions four times faster than bitcoin: once every 2.5 minutes compared to once every 10 minutes.
- Like bitcoin, its longevity and its security are its main features.
- Only two cryptocurrencies have never fallen out of the top 10 highest-value projects on the market since their launch: bitcoin and litecoin.
When payments giant PayPal announced in October 2020 that it would start supporting cryptocurrencies, it chose only the best-known ones: bitcoin, litecoin, ethereum and bitcoin cash.
- Find out more: Is a bitcoin crash coming?
What is Dogecoin?
A few facts about dogecoin:
- The “memecoin” was created in 2013 as a joke making fun of the rise in digital coins such as bitcoin
- The market rally pushed dogecoin’s overall value above $50bn, making it among the top five most valuable cryptocurrencies in the world.
- Less than a year ago, one dogecoin was worth just two tenths of a cent and its market cap was less than a quarter of a billion dollars.
- Dogecoin’s fans include Elon Musk, whose tweets often have a direct impact on the cryptocurrency’s value
What is britcoin?
In April, the Bank of England started looking at whether it should issue its own digital currency called britcoin. The Chancellor is said to favour the plan.
It could provide an alternative to the card payment system, cutting the time and cost of payments and transfers, but there is concern that Rishi Sunak’s crypto alternative could do more harm than good.
Is Cardano a good investment?
Launched in 2017, Cardano has outpaced Bitcoin’s return for investors during the same period putting it among the ten most valuable cryptocurrencies. It has a market value of about $70 billion.
Cardano is considered to be a as a third-generation cryptocurrency, learning from the previous generations of Bitcoin and Ethereum to improve on aspects like sustainability and security. It has low network fees, around 100 -150 developers working on future upgrades and has forged partnerships with universities and businesses.
While it looks likely that it could be around for some time, not everyone is sold on on the new cryptocurrency. Demand for space on the network is still low and it’s development teams is still much smaller than that of Ethereum.
Is there a better cryptocurrency than bitcoin?
It depends what you mean by “better”. As the original peer-to-peer digital currency, bitcoin has become a proxy for the market as a whole. It is the best-recognised crypto and the longest-lasting, mostly because it has never been hacked.
There are, however, many hundreds of crypto projects that claim to be quicker in terms of transactional speed and cheaper than bitcoin.
But as with any technology, ease of use and adoption is the key factor and not necessarily its raw prowess.
View more: Best Bitcoin Brokers in South Africa 2021
Find out: Is a bitcoin crash coming?
What other cryptocurrencies are there?
There are more than 9,000 crypto tokens in existence today, running the gamut of a dizzying array of uses.
- The vast majority are only lightly used and rarely traded, so selling them on to someone else can be difficult
- They can be even more volatile, e.g. the price of Adventure Gold crypto rose by over 1000% in the first week of September 2021
- It can be easy to get your money in, but almost impossible to get it out
In the main, asset managers and hedge funds spending billions on cryptocurrency have only been buying bitcoin.
Financial institutions are starting to broaden their scope of cryptocurrency holdings. For example, Silicon Valley venture capitalist firm Andreessen Horowitz currently holds 14 digital currencies. These include bitcoin and ethereum.
Find out more: Should you invest in bitcoin?
What is Harvest Finance?
Launched a year ago, Harvest Finance automatically moves money around the decentralised finance system to try to generate high yields from cryptocurrencies.
It was set up to try to save investors time so they don’t have to manage their positions themselves.
At the end of July, Harvest Finance listed its own crypto token called Farm on crypto exchange Coinbase. Farm is an ethereum-based token.
Is Coinbase a good place to buy bitcoin?
If you are new to the world of cryptocurrency, Coinbase* is a good place to go because it:
- Sells a number of popular cryptocurrencies
- Has a strong security track record
- Charges reasonable fees
It has over 43m verified users in over 100 countries, making it a popular choice for investors.
Coinbase* offers strong security through Coinbase* Vaults, two-factor authentication, and its use of offline storage for the vast majority of client assets.
Coinbase* charges several fees, including a flat per-transaction fee and a spread of about 0.50%. Fees vary based on the funding method going up to 3.99% when you use a debit card.
Serious investors may want to upgrade to Coinbase Pro, which has its own pricing model.
Other places to buy crytpocurrency include eToro, Robinhood, CoinMama and Bisq.
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