Yahoo Finance Which of the Top 5 Cryptocurrencies Is the Best to Buy?
Written by Daniel Da Costa at The Motley Fool Canada
There are a lot of potential cryptocurrencies that aren’t yet among the highest valued in the industry. However, many would agree that the largest and most dominant cryptocurrencies in the top five all deserve to be there and are all some of the best to buy for the long run.
Excluding stable coins, which are pegged to the U.S. dollar, the top five cryptocurrencies by market capitalization are Bitcoin (CRYPTO:BTC), Ethereum (CRYPTO:ETH), Binance Coin (CRYPTO:BNB), Cardano (CRYPTO:ADA), and Solana (CRYPTO:SOL).
And although each of these cryptocurrencies has a dominant position and each accounts for at least 2% of the US$2 trillion cryptocurrency industry market cap, there is still a massive difference between Bitcoin’s market cap of roughly US$800 billion and Solana or Cardano’s market cap, which are both around US$40 billion.
So how can you decide which is the best to buy and which cryptocurrency offers the most potential? The first step is to understand what each cryptocurrency does and why it’s one of the best to buy.
What does each of the top coins do?
Each of the top five cryptocurrencies operates on its own blockchain; it’s one of the reasons they are some of the best to buy. But Bitcoin is much different from the other four.
The Bitcoin blockchain can only be used for sending financial transactions. Furthermore, it’s slow, energy-intensive, and more costly than other alternatives. However, Bitcoin has value due to its popularity. It’s a main trading pair in the industry, and holders can even wrap their Bitcoin to use in decentralized finance (DeFi) protocols on blockchains like Ethereum.
Ethereum, as well as the other three top cryptocurrencies, like Bitcoin, are all native tokens of their own blockchains. However, unlike Bitcoin, each of these blockchain networks offers smart contract functionality, a major development in the blockchain sector.
So although Bitcoin could continue to be the most dominant cryptocurrency in the industry, out of the top five, I’d expect its long-term growth to be the slowest.
What is the best cryptocurrency to buy now?
Because of all the potential and all the consistent development going on in the cryptocurrency industry, some of the best cryptocurrencies to buy will be these blockchains that are smart contract compatible.
Ethereum is the biggest right now. It was the revolutionary blockchain that created this possibility, but because it was created so long ago, it has drawbacks that need fixing. Those fixesaren’t expected until later this year, but when they come online, Ethereum could once again see explosive growth.
Binance is one of the largest exchanges in the world. It also has a blockchain network of its own that’s compatible with Ethereum. However, it’s not very popular.
Solana and Cardano are both up-and-coming cryptocurrencies that have been deemed ‘Ethereum killers.’ Because of Ethereum’s drawbacks, it’s created the opportunity for other blockchains to excel as users look for alternatives while they wait for Ethereum 2.0. That’s why Solana and Cardano were some of the best cryptocurrencies to buy in 2021.
Neither of these is without its own issues, though. Cardano has had numerous delays with upgrades. And a common complaint with Solana is that it’s not decentralized enough. Plus, both aren’t that popular yet when it comes to dApps or DeFi.
Bottom line
Each of the top five cryptocurrencies has its own advantages and disadvantages. That’s why they are already at the top. They are all some of the best cryptocurrencies to buy and hold for the long run. But if I had to pick the top performers, I think Solana has a tonne of potential, but if Ethereum 2.0 can solve a lot of issues, it should continue to challenge Bitcoin for the most dominant in the industry.
The post Which of the Top 5 Cryptocurrencies Is the Best to Buy? appeared first on The Motley Fool Canada.
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Fool contributor Daniel Da Costa owns Binance Coin and Ethereum. The Motley Fool owns and recommends Bitcoin and Ethereum.
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