Currently, investing in long-term cryptocurrencies is very simple and profitable, but it is important that you know about the market before investing. Cryptocurrencies are a virtual form of money. Their issuance and operating rules do not depend on a central bank or other financial institutions; instead, they’re managed by programmed algorithms.
Many trending cryptocurrencies are currently on the market, and over the long term, many of these assets have appreciated in value radically. Some of these core assets have a market capitalization in the billions of dollars, and we will focus on the largest cryptocurrencies by market capitalization.
1. Ethereum (ETH)
Ethereum is the second biggest cryptocurrency by market cap and was the first crypto to introduce smart contracts. Smart contracts are tiny pieces of self-executing code that make it possible to build applications on the blockchain.
Ethereum has already grown over 150,000% since its launch in 2015, but right now the network is struggling with heavy congestion and high transaction fees. Even so, Ethereum still hosts the lion’s share of decentralized applications and it’s hard to underestimate its first mover advantage.
It is in the process of an upgrade to Eth2 to make the system more sustainable and scalable. Assuming it’s successful, we can expect Ethereum to continue to power a large swathe of the cryptocurrency industry.
2. Cardano (ADA)
Cardano is the brainchild of one of Ethereum’s co-founders, Charles Hoskinson. Rather than upgrading an existing blockchain to make it faster and more efficient, the Cardano team went back to the drawing board and built a new blockchain from scratch. Cardano’s research-driven approach means it has been much slower to develop its technology and only recently launched its smart contract capability.
Where Cardano stands out is that it already has a number of real-world partnerships, especially in Africa. For example, earlier this year it committed to work with the Ministry of Education in Ethiopia to store students’ academic records on the blockchain.
3. Aave (AAVE)
Aave is a decentralized finance (DeFi) protocol that’s focused on the borrowing and lending industry. DeFi takes the middleman — i.e. banks — out of a number of financial transactions. To borrow from a DeFi lender, people can skip the normal paperwork or credit checks. Instead they just need to put down a cryptocurrency deposit.
Be aware that DeFi lenders may be hit by increased regulation, especially in the U.S. However, Aave is a major player in this space and should be able to navigate any legislative changes successfully.
4. Solana (SOL)
Solana has seen extraordinary gains this year, rising more than 12,000% since Jan.1. It’s one of several cryptocurrencies that are viewed as potential Ethereum killers because of the speedy and low cost transaction processing.
I’m always cautious about buying coins at their highs, but so far Solana has shown no signs of stopping. It has a solid leadership and has attracted several reputable investors. Right now, Solana seems to be well positioned for the long term.
5. Polkadot (DOT)
Polkadot set out to solve another problem faced by Ethereum and other older blockchains — they don’t communicate well with each other. It isn’t quite the same, but it would be a bit like having a bank account and not being able to transfer money to a different bank. That’s why solutions like Polkadot’s are crucial for the future of the crypto industry.
There are a couple of players in this space, but Polkadot has a good reputation and already has a number of projects running on its system.
Do your own research
Cryptocurrencies are a relatively new and unregulated market, which makes them high-risk investments. Every investor has different priorities and a different tolerance for risk. But even if you’re comfortable with high-risk investments, it’s still better to put your money into coins that have real-world utility than speculative meme coins.
Make sure you thoroughly investigate any coins before you buy them. You need to be comfortable with the risk involved and ascertain how well the coin will fit into your overall investment portfolio. Pay attention to the coin’s leadership, how it fits in its competitive environment, what problem it plans to solve, and how many people it might impact.
Given crypto’s risk levels and volatility, it is important to only invest money you can afford to lose. That way if the price dips next week, you won’t be under pressure to sell at a loss to cover your other expenses. All the coins above are available from most top cryptocurrency exchanges, so you can buy from a platform that will offer reasonable fees and protect your security.