I am very bullish on Fantom (CRYPTO:FTM) right now. It’s extremely volatile, jumping around from $3 a coin to $2 a coin and back again. Over the last several months, I’ve been adding to crypto positions like Solana (CRYPTO:SOL), Ankr (CRYPTO:ANKR), and The Sandbox (CRYPTO:SAND). Fantom is my newest crypto, and so I’m building up a position in it. That’s one reason I’m buying it: My position is too small and I want to add to it.
But I also think Fantom is the best buy in crypto right now. It’s similar to Solana, in that it has a superfast blockchain technology, and it can scale in a way that Ethereum (CRYPTO:ETH) currently cannot. But there are also some specific reasons that make Fantom the strongest buy in the crypto space today. So here are four reasons I’m buying the coin in 2022, and why I think you should consider the coin, too.
image source: Getty Images.
1. You want to own the platform technology that the crypto universe will sit on
Ethereum is the big whale of decentralized finance, or DeFi. If you want to stake your crypto and earn high yields, historically Ethereum is the level 1 blockchain that provides the platform for all this to happen. The total value locked on the Ethereum blockchain is $116 billion.
Over the years, people have built decentralized apps (dApps) on the Ethereum platform, and so the value of that network has gotten bigger and bigger. That’s why Ethereum’s coin has a market cap of $295 billion: The network is a validation of how important the blockchain is.
Bitcoin (CRYPTO:BTC) has never served that function; it’s too slow. Now, as interest in crypto has exploded, we’re discovering that Ethereum is too slow, too. It does not have the capacity for large numbers of transactions — it doesn’t scale. Its blockchain can handle about 15 transactions every second. While that seems like a lot, it’s not. As you have more and more people trying to get their transactions on the Ethereum blockchain, there’s a traffic jam. And so the fees to execute transactions on the Ethereum network have gone up, and up, and up.
At one point last year, Ethereum fees spiked to over $300 a transaction. Compare that ridiculous price with the Fantom and Solana networks, where a transaction costs far less than a penny. That’s because those chains have a huge capacity for speed. Fantom’s network can handle about 25,000 transactions a second, and Solana is twice as fast. And Fantom can validate a transaction in a second (about 12 times quicker than Solana, and 60 times faster than Ethereum).
Last year, the crypto value of Fantom and Solana jumped 14,000% and 11,000%, respectively. In my opinion, the crypto market is buying up these coins out of a belief that one of these networks will replace Ethereum as the primary level 0 blockchain in the crypto universe. We don’t know (yet) which coin will win, and Ethereum is addressing its lack of speed in a long-awaited network upgrade, but there are some reasons to think Fantom has an advantage.
2. $12 billion in DeFi apps are on the Fantom network
Fantom has come out of nowhere to be the third biggest dApps network in terms of the value of apps using the chain. Ethereum, as noted above, sits at $116 billion, a sizable position it has built up over a number of years.
Fantom, however, is spiking dramatically. Back in early December, it had $5 billion in value locked on its ecosystem. Now it’s up to $12 billion. There are now 129 protocols built on the Fantom network, twice as many protocols as Solana. This all happened incredibly quickly. Fantom went live in December 2019. Now it’s the third biggest crypto ecosystem in the world, as measured by the dollar value in its network.
What makes me even more excited about Fantom is how cheap it is compared to other cryptos. Ethereum’s market cap is almost $300 billion. The coin is valued at more than twice the value of the dApps on its network. Solana’s market cap (and its valuation is down substantially) is almost four times the value of the dApps on its network. Meanwhile, Fantom has a market cap under $6 billion. Its coin is trading at half the value of its ecosystem.
3. You can’t buy the coin on Coinbase
Coinbase Global (NASDAQ:COIN) is my favorite coin dealer and where most of my coins are held. But one thing I’ve noticed is how limited the selection is. While there are thousands of crypto coins in existence, at Coinbase you only have 152 choices. And Fantom is not one of them.
Why is Coinbase not listing Fantom yet? Well, the coin came out of nowhere last year, like Solana. And all of the coin dealers have a limited selection. Providing a crypto marketplace is not simple, like listing a stock for sale. Trading a cryptocurrency involves serious tech issues that have to be resolved. Given how limited the selection is, compared to the stock market, I’m assuming it might take several weeks or months for a coin to go live at a dealer.
To buy Fantom coin (or The Sandbox), I had to open up an account at another dealer, Gemini. When you see these coins with skyrocketing returns (Solana went up 11,000% last year, and Fantom soared 14,000%), one of the major reasons is that for much of that run, you couldn’t acquire the coin on a major exchange. You still can’t buy Fantom on Coinbase or purchase Solana on Gemini.
I suspect that Coinbase knows that people are abandoning it for competitors when it fails to provide high-demand altcoins on its website. And it can and will rectify this by adding Fantom to its list of available coins.
So, despite the remarkable run-up last year, it’s still very early in the Fantom story. Its market cap is under $6 billion. And the coin has yet to trade on the biggest crypto exchange in the U.S.
4. Fantom is compatible with Ethereum and Solana
My main reason for being bullish on Fantom is that it’s a superfast network (like Solana). I think one of these two networks will ultimately replace Ethereum as the platform for the crypto universe. What gives Fantom an edge over Solana is that Fantom is compatible with the old-guard network, Ethereum. (Solana is not). So it’s quite easy for Ethereum dApps to shift to this faster (and cheaper) ecosystem.
It might be a good idea to buy a mini-basket of all three coins: Ethereum, Solana, and Fantom. Or, like me, you can just buy the superfast coins where transactions cost far less than a penny (Solana and Fantom). But if you were just going to buy one coin in 2022, I would suggest buying the superfast coin that makes it easy for the Ethereum network to migrate: Fantom.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.