2017 has undoubtedly been the year of cryptocurrencies.
Bitcoin’s price jumped from $1000 to $8200. ICOs raised over $3 billion. The total market cap for all cryptocurrencies is north of $160 billion. And the year isn’t even over yet!
It’s only going to get crazier in 2018. In fact, it’s predicted that the total market cap for cryptocurrencies is going to hit $1 trillion the upcoming year. Don’t you think it’s time you jumped in and got your piece of the pie?
But that’s easier said than done, isn’t it? It was easy to invest in cryptocurrencies (if you had enough foresight to do so) back in 2009-2011 when Bitcoin was the only cryptocurrency out there. But now, there are hundreds of cryptocurrencies, and it can make your head spin.
Don’t worry, though. We are here for you. We will help you figure out which cryptocurrency you should invest in 2018.
So, to begin with, let’s take a look at the five biggest cryptocurrencies on the market...
Five biggest cryptocurrencies
These are the five cryptocurrencies with the largest market caps:
Bitcoin was created back in 2008 by an anonymous person (or a group of people) called Satoshi Nakamoto.
Since the very beginning, the aim was to create a peer-to-peer payment system that would allow people to make transactions without having to rely on third parties like banks.
For a few years, Bitcoin was nothing more than a curiosity, with its price hovering under $10, but it started picking up speed in 2012, and really accelerated in 2017, going from around $1000 at the beginning of the year to $8200 it’s sitting at now.
It has to be noted that Bitcoin is extremely volatile, though. For example, on November 8th it was at a then all-time high of $7458, but on November 13th it plummeted all the way down to $5857, only to bounce back to a new all-time high of $7843. This level of volatility is definitely not for the faint-hearted.
At the moment, Bitcoin is the biggest cryptocurrency out there, and has a market cap of $138,154,373,021.
Ethereum was dreamt up by a developer and a cryptocurrency enthusiast Vitalik Buterin in 2013, crowdfunded via Ethereum’s ICO in July 2014, and went live in July 2015.
Ethereum is a platform that offers smart contracts - contracts executed via blockchain that eliminate the risk usually inherent in making contracts.
It is also a cryptocurrency that is often used in ICOs or Initial Coin Offerings. These are fundraising events for startups where they issue their own tokens (coins) in exchange of cryptocurrencies. Usually, only Bitcoin and/or Ethereum are accepted in ICOs.
Ethereum is also a volatile cryptocurrency. For example, in June 13th it has reached an all-time high of $388, but by July 16th it has plummeted all the way down $167 (a staggering drop of more than 50%), only to come back to $369 by August 29th.
At the moment, Ethereum is priced at $367, and has a market cap of $35,272,687,407.
#3 Bitcoin cash
Bitcoin isn’t without problems of it’s own. One major one is transaction times. As Bitcoin grew, transaction times became longer and longer. Of course, there’s a way to “get in front of the queue”, but that involves paying high transaction fees.
Bitcoin enthusiasts were worried that these fees will deter ordinary people from adopting the currency. This led to what is called a hard fork - Bitcoin split into two currencies, Bitcoin (BTC) and Bitcoin Cash (BCH). What’s the difference between the two?
The main difference is priorities. The Bitcoin community wants to keep Bitcoin decentralized, meanwhile the Bitcoin Cash community is all about cheap and fast payments. This is a source of a lot of controversy and the debate on who is right is still raging in the cryptocurrency community.
At the moment, Bitcoin Cash has a price of $1189, and a market cap of $20,028,773,895.
Ripple is a network that allows fast and secure monetary transactions of any size.
Unlike most other cryptocurrencies, Ripple doesn’t use blockchain, which raises some concerns about its safety. Should you be worried?
It’s still unclear. Ripple says that these worries are ungrounded. Meanwhile, banks trust the network enough to work with it, and now Ripple powers Japan-Thailand bank transactions.
At the moment, Ripple is valued at $0.23, and its market cap is $9,077,919,461
Dash is a cryptocurrency that aims to be as liquid as cash and to become the most user friendly cryptocurrency of them all.
Another interesting thing about Dash is that it’s managed in a decentralized manner which makes it the first decentralized autonomous organization out there.
At the moment, Dash is valued at $578.41 and has a market cap of $4,408,456,650
So, as you see, you have a lot of intriguing choices when it comes to cryptocurrencies. But which one should you invest in?
Why Bitcoin is still the winner
We think that if you want to start investing in cryptocurrencies, then Bitcoin is the one to invest in.
“It might make sense just to get some Bitcoin in case it catches on. If enough people think the same way, that becomes a self-fulling prophecy” - said Satoshi Nakamoto back in 2009.
Now everyone who saw this message but didn’t listen to it are beating themselves up, bitter with regret. Bitcoin has gone from zero to $8200+. That means that if you had invested $1000 in 2010, you’d have had $35 million in 2017.
This makes a lot of people feel like it’s too late to jump on Bitcoin train. I mean, good for those who bought Bitcoin for less than $10 and then saw their portfolio grow astronomically, but what about the rest of us? Is it still worth it to buy Bitcoin at $8200 a pop?
A lot of people in business and technology think that yes, it’s still very much worth it, in fact, it might be one of the smartest things you can do with your money right now.
For example, PayPal director Wences Casares, predicts that bitcoin price will go over $1,000,000 per coin within 5-10 years.
However, Casares also cautions people not to be reckless with investing in volatile assets like that.
What do we think? Our guess is that Bitcoin is going to become the digital equivalent of gold. There will only ever be 21,000,000 bitcoins, which means that it’s a deflationary currency. It also means that it’s unlikely to ever become a widespread currency and replace fiat currencies - it’s limited nature means that it can’t adjust to expansions and contractions of the economy.
This limited nature makes it an excellent store of value, which means that people are most likely to buy and hold indefinitely or, at least, until it’s price reaches a certain point. For example, a survey of Bitcoin investors in the United States has shown that most investors are planning to “hodl” until the price hits 196,000. This trend means that, like gold, Bitcoin is likely to be an ever-appreciating asset.
However, it’s important to keep a cool head, and realize the potential risks that come with Bitcoin. It’s extreme volatility and astronomical growth might well be indicative of a bubble. Some people, like UBS chief economist Paul Donovan, are even comparing it to the infamous tulip bulb mania in 18th century Netherlands. What does this mean for you? It means that you have to be careful and not put any money in Bitcoin that you can’t afford to lose.
We think that Bitcoin is an excellent high-risk, high-reward investment opportunity, and that if you want to start investing in cryptocurrencies in 2018, Bitcoin is the way to go.
We suggest putting 1% - 10% of your net worth in Bitcoin, and then forgetting all about it for 5-10 years (just don’t forget your private key!). Don’t pay any attention to volatility and price swings.
As Bitcoin aficionados say...