The cryptocurrency market has served the market as one of the most lucrative investment opportunities in 2017. This was courtesy of the thousands of percentage returns that the market rewarded its investors with over this period.
The market’s returns were initially driven by Bitcoin’s high returns – Bitcoin served as the forerunner to other cryptocurrencies – however, things changed when other cryptocurrencies began to come to market. Eventually, these currencies – alt coins or alternative coins – have begun taking over and dominating the market and continue to do so as days pass (as shown in the chart below):
CoinMarketCap chart on Bitcoin dominance
Given the above decline – therefore increase in the dominance of other coins – we found it important to look into the most lucrative investment options risky investors may have while trying to invest in the cryptocurrency market.
However, it is important to point out as early that this sector, as with many sectors with high returns, is a high-risk sector. Therefore, investors should be aware of the high volatility they will face courtesy of their investment within the cryptocurrency space.
Introduction to Cryptocurrencies
Cryptocurrencies are based on a concept brought to light by Satoshi Nakamoto.
The developer – back in October 2008 – released a paper dubbed ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ which was the first document that brought the cryptocurrency space to light (the document can be accessed here). The document highlighted a new system in which individuals would transact with each other digitally (peer-to-peer, proof-of-work based network) – with the help of blocks – thus eliminating third parties from the transaction. He also detailed how the above transaction would be secured as well as made public to disallow the recurrence of the crisis which had occurred during that time (the 2008/9 financial crisis).
The above system – which was based on blocks – led to the evolution of the blockchain technology.
For a long period, Bitcoin had been the only cryptocurrency with which people would trade. Back then, besides serving as the gold standard within this space, few people understood how the cryptocurrency space worked and even fewer knew the value of the cryptocurrency at all. Notable in this case was a transaction back in 2010 where about 10,000 Bitcoins were used to pay for two pizza deliveries. This, however, has changed with time as more and more people come to understand and appreciate the value derived from these currencies and people began regarding it as the holy grail within this space rather than merely a gold standard.
Over time, more and more developers begun finding either flaw within the Bitcoin architecture or new ways in which they could use this architecture to benefit a specific sector or industry within their space and this led to different coins being brought to market.
Coins such as Ethereum–a cryptocurrency which brought to market a different method of making applications through the use of dApps (decentralized applications) and allowed for the development of tokens based on its architecture – or IOTA – a cryptocurrency which was developed to serve as a platform which would harness the Internet of Things and which eventually came to enable the development of the Economy of Things through the same framework – or Ripple – which brought to market a frictionless system from which people, as well as businesses, could send money throughout the globe at near perfect exchange rates due to the reduction in transaction costs as well as in the transaction times, were brought to market and in turn brought these developments with them.
During this period, other systems such as proof-of-stake systems and Ethereum’s dApps systems came to play making this space even more exciting. With the excitement came two things, the increased interest by the financial community in these coins and shortly after, the money.
Returns from cryptocurrencies over the 2017 period outshone the market by record numbers.
Currencies such as Bitcoin, Litecoin, Ethereum, and Ripple went as far as making the return values to rise to the thousands of percentages. Cryptovoices goes as far as to chart some of these returns graphically and shows just how much the above numbers soared since inception. Furthermore, a review by Reddit went further to assess these returns over time and came up with the following chart:
Given that over the same period, the S&P returns oscillated at just about 15% – 20% and these were vibrant times for the economy, it goes as no surprise that the market jumped ship and begun investing heavily into the cryptocurrency space.
S&P returns over 2017
With the above in mind, it is important for us to analyze some of the major players within the space as we begin our analysis on which is the best cryptocurrency in the market.
The Big Three cryptocurrencies 2018
Despite the growth exhibited by different cryptocurrencies, dominance is still exuded by about three main players within the space.
These three coins have been seen to have the greatest impact on the market within which they operate with one especially having the highest implications on the overall performance of the market. These three are Bitcoin, Ethereum, and Ripple.
The dominance exuded by Bitcoin is accrued from the coin being the industry’s first mover. As such, the coin’s acceptance by nearly all players within the cryptocurrency space coupled with its continued growth in price over time – which postulates increased demand for the coin over time – has led to market participants having the belief that this is the market’s largest coin. Furthermore, a fall in this coin seems to have a snowball effect on other coins within the cryptocurrency space as was seen during the most recent crash that occurred in January 2018. Currently, Bitcoin still holds the largest dominance within the cryptocurrency market – although this has been falling as earlier presented – at 33.5% dominance of the cryptocurrency market.
Ethereum, on the other hand, brings to the table one main word –Ethereum tokens.
As earlier stated, Ethereum brought to the market the ability to build either decentralized applications or build tokens based on its platform (we will not go into the details of decentralized applications for now). The tokens enable developers to harness the power of the Ethereum infrastructure to develop their own network that is tailored to their needs rather than that of the entire Ethereum community. As such, practitioners within different fields, such as dentistry or finance, can come together and develop a product that would ensure that players within that field benefit from a specific aspect of the blockchain technology.
Through this, many tokens have been formed based on this framework all based on Ethereum. In order to obtain these tokens, most platforms require the use of Ethereum as the connective currency – this is especially so since most of these platforms do not accept fiat currency, therefore, use either Bitcoin or Ethereum as their link currency of choice. Over time, the demand for Ethereum has grown and so has its network and with more and more people taking up these tokens, the Ethereum network benefits from more miners, therefore, ensuring the security of the network in totality.
The above make Ethereum a force within the industry and place it on a pedestal among cryptocurrencies. The currency currently dominates about 20.2% of the market.
Finally, we have Ripple, the business currency that allows for the transfer of currency between different geographical locations at near perfect exchange rates. This allows for the reduction of frictions within the market thus lowering the cost of doing business for the entities engaging in transactions. Furthermore, due to the fast transaction speed, businesses can now transact within minutes, all clear benefits to businesses. The currency currently dominates about 9% of the market.
Having understood the above cryptocurrencies and their benefits, we can now move to discussing the specific preferences of investors within this space. Here, we will give our views on different cryptocurrency strategies taken and how investors can benefit especially from one of these strategies.
Best altcoin to invest in 2018 – Short Versus Long-Term
Cryptocurrencies have exuded very high volatility in the past. This has especially been so due to their susceptibility to new market information as well as their deregulated nature – which allows for different countries to impact their prices by setting up new regulations governing them.
Upon this backdrop, cryptocurrencies are therefore poor short-term investments. This is exemplified by Bitcoin whose price rose from $7,000 to over $19,000 between September and December then came crashing down to $10,000 in January. Such a twist in the price of the currency can be seen in other currencies which, in turn, move nearly in a similar fashion with Bitcoin as seen in the market capitalization chart below. Thus, investing in these cryptocurrencies over the short term may end up having dire implications for the investor.
As such, we advocate for long-term investment in the cryptocurrency space. Despite the high volatility surrounding the coins, their trend is quite visible therefore long-term investments move along with this trend. As such, investors would benefit more from holding either coins or tokens than from trading them over the short term as their probability of benefiting from gains is higher and more certain over the long term than in the short term.
The Best Cryptocurrency Investments
Here, we decided to focus our strengths on three main cryptocurrencies, two which have already been discussed and one which will be the current topic of discussion.
In our view, the cryptocurrencies which we expect to benefit buyers – this is specifically tailored to those adopting a buy and hold strategy as recommended in the previous section – are Bitcoin ($11,030), Ethereum ($1,146) and Ark ($6.4).
For the first two, the reasons have been given in previous sections of the article. These reasons ensure that these currencies maintain their dominance over time and therefore their stay on the market. However, the new entrant – Ark – brings a lot more to the table and this is discussed in the next section.
Ark is a new cryptocurrency trading on the premise of integration.
It is an open source network – its code is available on GitHub – built by experienced teams of developers – about 17 developer teams situated in over 11 different countries around the globe – and based on a modified proof-of-stake mechanism for network maintenance.
The currency promises to deliver to their users a unified platform from which they can interact with all available cryptocurrencies on one site. Furthermore, their advanced SmartBridge functionality has come to solve the scalability problems that accrued from Bitcoin and other cryptocurrencies in the market.
Through this function, the cryptocurrency can off-load most of its non-essential functions to side chains (which exist in the hundreds) thus ensuring that only the essential functions remain on the main chain. As such, the main chain can conduct its transactions at lightning speed – which according to Ark is about eight seconds (8 seconds) for any transaction. This, when compared to other major cryptocurrencies such as Bitcoin – which takes 30 or more minutes – or Ripple – which takes two minutes – is an amazing speed.
Their key advantage, however, will be the bridging effect – one which allows all the cryptocurrencies to communicate with each other therefore creating a global link between all cryptocurrencies. Through this, Ark will enable the convergence of different utilities on one network, boosting its own utility in the process. Their developers understand this and have been focused purely on the development of the platform rather than on marketing of the coin. Currently, the platform supports over 11 exchanges and is in synchrony with Ledger Nano, the world’s most secure cryptocurrency hardware wallet.
With the share price of the cryptocurrency currently trading at $6.4, the benefits of this currency will soon be felt by the industry. Then, courtesy of its low market price, a price surge for ark would mean significant gains for the coin holder. This is unlike other cryptocurrencies which already exhibit high market prices and will take longer to return even 50% in gains.
Given all the above, it would, therefore, be prudent for investors to consider this cryptocurrency as an investment in Ark is an investment into the future of cryptocurrencies. Ark is soon about to be the cryptocurrency of choice for all.
For more information on the currency, readers can view their whitepaper here.
This piece is meant to give light to investors on what to invest in and how they should go about making this decision. We expect that the above objective has been met and expect that the recommendations made will be taken into consideration.
On the overall, the above three cryptocurrencies, in our view, provide the best bet for investors looking to make the most gains in the long run. If invested in, they promise high rewards to investors over the long term. We look forward to seeing the above premise come to fruition into the future.