Despite warning signs that speculation has reached unsustainable levels of absolute insanity, Bitcoin (CCC:BTC-USD) continues to brush aside those concerns — including those that I’ve written about in prior InvestorPlace publications. Don’t get me wrong — I’m a huge believer in cryptocurrencies. But even then, I’m a bigger believer in rationality. The original crypto token seems to stretch incredulity on a daily basis.
Whatever. At the end of the day, this is all about supply and demand. Right now, for whatever reason, people believe that Bitcoin at $60,000 is worthwhile. Of course, I shouldn’t sound so bewildered as I’ve discussed the case for $100,000 BTC… back in freaking November 2017. At the time, I stated the following for the remarkable crypto coin:
With growing recognition and integration, Bitcoin has a truly legitimate chance of becoming the “currency of the internet.” Thus, Bitcoin 10,000 is only the beginning, not the end. I genuinely would not be surprised if the virtual currency hit $100,000 a pop. The only gray area is the timing.
Ah yes. My past comes back to haunt me. Because while I’m on the cusp of being right, I didn’t anticipate the novel coronavirus pandemic and the craziness that ensued. So you’ll forgive me if my current hesitation sounds contradictory. I like where BTC is. I just don’t like the circumstances.
Still, if you’re a believer in virtual currencies, you may want to check out alternative crypto coins or altcoins. They’re riskier than Bitcoin, to be sure. Then again, if you’ve already made up your mind about this sector, that shouldn’t dissuade you as the reward potential is much higher. Here are seven crypto alternatives to consider.
- Ethereum (CCC:ETH-USD)
- Litecoin (CCC:LTC-USD)
- Cardano (CCC:ADA-USD)
- Polkadot (CCC:DOT-USD)
- Bitcoin Cash (CCC:BCH-USD)
- Uniswap (CCC:UNI-USD)
- Decentraland (CCC:MANA-USD)
Having been bitten by the addictive allure of crypto, I do want to provide a warning. Even if you’re risk tolerant, don’t invest more than you can afford to lose. Frankly, any and all reasons could see this sector evaporate into $0. Trade accordingly and you may come out of this with your mental health intact.
Ethereum (ETH)
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Although the most obvious crypto alternative to Bitcoin, Ethereum nevertheless is a blockchain reward token you should consider if you’re serious about this space. I don’t have exact statistics but anecdotally, I rarely come across Bitcoin investors who don’t own ETH coins. Basically, the two go together like burgers and fries.
More importantly, Ethereum represents the natural evolution of the crypto ecosystem. First, Bitcoin came along and provided a proof of concept that an economy comprised of virtual currencies can exist without a centralized intermediary (like a central bank). Later, Ethereum demonstrated that you can take this “intermediary-less” model and apply it to other transactions, such as legal or professional contracts; hence the term smart contract.
Better yet, the developers behind Ethereum are engineering a radical concept called proof of stake. This replaces the energy-intensive crypto-mining protocol and replaces it with a validation process. Long story short, proof of stake theoretically removes the incentive of buying tons of mining equipment and instead focuses on blockchain/community engagement.
I’m not doing this innovation justice with my description. But the takeaway is that Ethereum can potentially democratize virtual currencies. And with so many potential applications, the underlying ETH token could easily beat Bitcoin’s return over the long run.
Litecoin (LTC)
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Back when the crypto sector was in its infancy, Litecoin was the Bitcoin alternative. Just as it is today, the LTC token was a wild affair, often gyrating between valuation extremes. Of course, with the original number two commanding a three-digit price tag, LTC isn’t quite as wickedly unpredictable as when the coin could be had for pennies on the penny.
Oh, wouldn’t it be nice to have a flying DeLorean right about now?
Still, because each unit of LTC is only a fraction of the price of Bitcoin, speculators have room for significant upside. Indeed, as I’m writing this, I’m noticing that BTC’s 24-hour return is -0.60%. On the other hand, Litecoin is sitting pretty, up 4% over the past day.
Fundamentally, what makes Litecoin intriguing is its core focus as a peer-to-peer borderless and frictionless payment system. I don’t know about you but I’m tired of these crypto projects that claim they’re going to cure cancer or solve world hunger.
Folks, it’s a decentralized ledger. It’s an interesting technology but let’s get real. Anyway, the simple practicality element gives Litecoin its legs and I anticipate further relevance down the line as Bitcoin transitions to a digital store of value.
Cardano (ADA)
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While Bitcoin and Ethereum have long hogged the crypto spotlight, another altcoin has made its way up the ranks. You’ll be forgiven if you thought that Cardano came out of nowhere. After a remarkable debut, eventually leading to ADA breaching $1 in early January 2018, the virtual currency slipped to around 2 or 3 cents at the lowest. So, with the price back again above a buck, investors are wondering if there’s more magic ahead.
Fundamentally, it’s possible. While Cardano may come across as a “crap coin” — I use more direct language — it’s actually backed by true innovation. While Ethereum and other blockchain projects are transitioning to proof of stake, Cardano actually did it. Therefore, in a way, you can consider ADA as an environmental, social and governance (ESG) play because of its sustainable architecture.
Plus, according to crypto broker Voyager Digital’s survey, more retail investors are bullish on Cardano than they are on Bitcoin. That might have something to do with celebrities like Gene Simmons investing in ADA with some serious funds.
Polkadot (DOT)
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It may have a funny name but Polkadot means serious business. For starters, the crypto token launched from relative obscurity to ranking sixth in terms of market capitalization, boasting a time of writing valuation of over $34.3 billion. According to data from Coinmaketcap.com, the DOT token made its debut in August 2020.
Not bad for a crypto that’s less than a year old. However, don’t mistake Polkadot’s rise to merely latching onto the ridiculous Bitcoin rally.
As with the other altcoins, Polkadot represents an evolution in the blockchain ecosystem. While Ethereum took the Bitcoin concept and applied to other transactional formats, Polkadot does this too but in a more efficient manner via a sharded multichain network, meaning it has the ability to process many transactions on several chains in parallel.
Think of this as a multilane highway – you’ve got individual cars as data points running parallel with each other as opposed to sequentially along a single lane.
This prevents data backlogs that often stymie other blockchain architecture, subsequently leading to energy wastage. In addition, Polkadot lends itself to open-source communication with other infrastructures, hence its nickname the blockchain of blockchains.
Bitcoin Cash (BCH)
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Among crypto adherents, Bitcoin Cash is a binary topic — you either love it or you hate it. Not that anecdotal observations should be treated as gospel because they’re not but I haven’t come across too many balanced arguments about BCH and Bitcoin.
I imagine it’s a bit like what Cadillac drivers think of Chevy owners. Personally, I think they’re both crap but that’s besides the point. There’s an air of superiority when the Bitcoin-only crowd hears any whiff of the red-haired stepchild that is Bitcoin Cash.
However, BCH may be the most popular hardfork of the Bitcoin architecture — essentially the crypto version of a spinoff. Though, as another aside, I’ve got to imagine that tax agencies across the world must be having nightmares trying to quantify what a hardfork is, at least in the context of taxable income.
The important point about Bitcoin Cash is that technically, it’s a phenomenal platform for payment transactions, which occur very quickly and efficiently. True, it competes with many other payment-centric blockchains. However, its association with Bitcoin – albeit as a controversial hardfork – may give it a leg up in terms of branding, particularly for crypto newcomers.
Uniswap (UNI)
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Another one of those crypto projects that seemingly materialized out of thin air, Uniswap currently ranks eighth in terms of market capitalization, at $17 billion at the time of this writing.
To be blunt, about the only thing that initially appeals regarding UNI is its relatively cheap price tag at just under $33 from where I stand.
Nevertheless, if you look underneath the hood, the granularity is very intriguing. To make a long and complicated story short, Uniswap is attempting a paradigm shift in finance by building an automated market maker. As you know, “real” market makers provide liquidity to the stock market, facilitating purchase and sales solutions. In return for the risk of holding assets in this intermediary exchange, they profit off the bid-ask spread.
Well, this market maker process is decentralized under the Uniswap architecture, which has profound implications for decentralized finance or DeFi in crypto parlance. It’s one of the biggest innovations in the blockchain ecosystem, one that is worthy of extra consideration.
Decentraland (MANA)
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This is either going to be a brilliant idea or the first real sign of my devolving into mental illness. Hopefully, it’s the former but I’m risking the latter when I mention Decentraland. According to the description on Coinmarketcap.com, Decentraland is a “virtual reality platform powered by the Ethereum blockchain that allows users to create, experience, and monetize content and applications.” Sounds a bit like Roblox (NYSE:RBLX)
I’m not sure what to make of it. But if you go to its official website, you’ll find that Decentraland’s main distinction is that it’s a virtual world which is fully owned by its users. If I may use a football analogy, MANA is like the Green Bay Packers in that the NFL team is owned by its shareholders.
That was a bit of trivia that my former Cheesehead co-worker told me about. I don’t like the Packers but I did find that interesting.
Back to Decentraland — you might think that this is a crazy crypto concept in a sector full of bizarre offerings. You’d be right. However, keep in mind that kids these days are detached from reality.
In other words, it’s a nutty world. You might as well profit from it.
On the date of publication, Josh Enomoto held a long position in BTC, ETH, LTC, ADA, BCH, UNI, MANA.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.