Top 9 Altcoins In 2021
Are you looking for the best altcoins to add to your portfolio in 2021? Whether you’re a crypto expert or a complete beginner, you’re in the right place. Read on for our guide to the top 9 altcoins to invest in 2021.
It’s no secret that 2020 was a rollercoaster year for the cryptocurrency market. Between the coronavirus crash that occurred in March and the bullish run that Bitcoin saw in December, it’s been a year of (extreme) highs and lows.
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The industry’s performance over the last few months has inspired many people to ask ‘should I invest in cryptocurrency 2021?’. If you’re one of them, the crypto that caught your eye was almost certainly Bitcoin. The so-called king of cryptocurrency has soared past its previous all-time high (ATH) of $20,000 to hit $39,377.60 at the time of writing. But although it’s the biggest, oldest, and most iconic digital asset, it’s by no means the only one on the market.
So without further ado…
The Top 9 Altcoins To Invest In 2021:
4. Bitcoin Cash
In this article, we’ll be sharing the best nine altcoins you should consider investing in for 2021. If Bitcoin is the king, then these can be thought of as the princes — some of them lying in wait for the crown! In fact, many analysts believe that some of the assets on this list are far stronger than Bitcoin, with the potential to outstrip its performance in the near future.
What are the Top Altcoins To Invest In 2021?
Read on to discover nine alternatives to Bitcoin that could prove smart additions to your portfolio in 2021.
1. Ethereum - ETH
As the world’s second-largest cryptocurrency (and consequently its largest altcoin), it’s no surprise that Ethereum should appear at the top of our list. First launched in 2014, the crypto currently has a market capitalization of $207.03B and price $1,799.03.
Ethereum is also one of the best-known assets on the market. According to a study by the Financial Conduct Authority (the UK’s financial regulator, more commonly known as the FCA), ETH is the fourth most widely-known crypto in the country. When asked to identify the cryptocurrencies they recognized, 17% of respondents reported that they had heard of the altcoin. This placed it just behind Bitcoin, Facebook’s Libra, and Bitcoin Cash.
So, what exactly is Ethereum and why has it made our list of the top 9 altcoins to invest in for 2021?
What Is Ethereum (ETH)?
Ethereum is an open-source blockchain platform that carries out secure crypto transactions. This open-source blockchain is known as a decentralized application, otherwise referred to as a dApp. Its native currency is the Ether, which appears on cryptocurrency exchanges as ETH.
In addition to Ether, the Ethereum platform has been built to support a range of other cryptocurrencies. A lot of these cryptos are active in the decentralized finance (DeFi) market — a fast-growing sector that provides services such as loans, insurance, and savings programs free from the control of big banks and other centralized businesses. Some of the cryptos that Ethereum powers in this space include Chainlink (LINK), Wrapped Bitcoin (WBTC), and Maker (MKR).
Why Might You Choose To Invest In Ethereum?
The Ethereum 2.0 Upgrade
Ethereum 2.0, otherwise known as Eth2 or ‘Serenity’, is the long-awaited upgrade to the original Ethereum blockchain platform. The full upgrade was initially due to be completed by 2021, with phase 0 scheduled to take place at some point during November 2020. However, after numerous setbacks, the Ethereum Foundation has only recently released phase 0 and is now turning its attention to the following stage.
One of the biggest bonuses of this update is the fact that the upgraded platform is designed to process more transactions than its predecessor, all while massively improving its energy efficiency. Before the update took place, a single Ethereum transaction required a staggering amount of energy — 22.65 kWh to be precise! Over the course of each year, this means Ethereum was using the same amount of power as Costa Rica.
Another key benefit is Ethereum’s decision to switch from a proof-of-work algorithm (PoW) to a proof-of-stake algorithm (PoS). In a PoW system, cryptocurrency miners have to solve complex equations using their computer in order to verify transactions and add them to the blockchain. This process requires huge amounts of energy. In a PoS system, however, users can simply ‘stake’ their cryptocurrency as collateral in order to verify transactions.
Popularity of DeFi
As we mentioned earlier, the Ethereum network can support other cryptocurrencies, known as ERC-tokens. At the time of writing, ETH hosts more than 280,000 of these tokens, more than 40 of which are in the top-100 cryptocurrencies by market capitalization.
A significant portion of ERC-tokens are active within the DeFi sector. As the demand for DeFi services continues to grow, Ethereum is perfectly placed to capitalize on this market and profit from its success. This should drive the adoption of ETH currency, hopefully causing its price to increase over the course of 2021. For existing investors, as well as first-time traders who play their cards right, this could potentially make it a smart addition to a diversified portfolio.
2. Litecoin - LTC
Litecoin currently has a market capitalization of $23.24b and a price of $202.35. After a sluggish few years, LTC has been a bit of a dark horse in 2020, its price skyrocketing from $47.82 in the space of just a few months.
Litecoin may not have been a top choice for investors last year, but its recent bullish run has drastically increased confidence in the altcoin. If you’re wondering ‘is Litecoin a good investment?’, let’s take a closer look at how exactly this cryptocurrency works and why it could be on the path to further growth.
What is Litecoin (LTC)?
Somewhat surprisingly for a cryptocurrency that, until recently, has been a bit of an underdog, Litecoin is often referred to as the digital silver to Bitcoin’s digital gold. It’s also been called ‘the cryptocurrency for payments’ (as opposed to trading or investing).
The main reason for this is the fact that Litecoin is much more practical than a lot of its competitors. Processing Litecoin transactions is both quick and economical, making it a practical cryptocurrency for everyday payments. In fact, it takes just 2 and a half minutes for the Litecoin network to process a new block. Compare this to the sluggishness of the Bitcoin network, which takes a staggering 10 minutes. That’s four times as long!
Bitcoin’s lack of speed was one of the main issues that prompted Charlie Lee, the founder of Litecoin, to launch his own cryptocurrency. Another was its lack of scalability. The number of Bitcoin tokens has always been capped at a maximum of 21 million, making the infamous ‘Bitcoin halving’ (or halvening) a necessary event every four years or so.
There are currently around 18.5 million Bitcoin tokens in circulation, and although it’s thought we won’t max out completely until 2140, many investors are rightly uncertain as to whether it’s a sustainable investment. To sidestep this problem, Lee gave his altcoin a much larger total supply of 84 million coins — four times more than that of Bitcoin.
Why Might You Choose To Invest In Litecoin?
Online gaming is one of the fastest-growing sectors in the world — and the Litecoin platform has managed to take advantage of its success. In 2020, the company launched the role-playing game (RPG) LiteBringer, which runs on the Litecoin network.
In-game transactions are made using the platform’s native currency, LTC. According to the Litecoin Foundation, the launch of LiteBringer caused the number of LTC transactions to triple in one week, with 75% of payments now driven by the game.
As the popularity of LiteBringer continues to increase, coupled with the potential for the network to release new games in the coming years, now could be a smart time to take a closer look at this altcoin.
The Bitcoin Effect
Litecoin may have significant differences from Bitcoin, but the fact it was originally launched as a Bitcoin hard fork means that many people have invested in both. As a result, the success of Bitcoin is often mirrored by Litecoin. We’ve seen evidence of this recently, as both BTC and LTC rocketed to a new ATH.
With many analysts predicting that Bitcoin will continue to grow in 2021, we could expect to see Litecoin follow a similar pattern.
3. Ripple - XRP
Ripple XRP is the seventh-largest cryptocurrency in the world, with a market capitalization of $22.09B and a price of $0.486 at the time of writing. Considering its low price, you may be wondering why Ripple could be considered a good investment for 2021. But this altcoin has many features which make it stand out from the rest of the market.
What Is Ripple (XRP)?
Although the notion of cryptocurrency was developed to offer traders and investors a way to make decentralized online payments, Ripple was designed to make it easier for centralized services (such as banks, financial bodies, and global businesses) to make cross-border payments.
Cross-border payments can be much slower than domestic transactions, resulting in high fees and a lot of wasted time. For businesses making thousands of these transactions a day, this can really add up over time.
RippleNet, the Ripple platform, enables businesses to send and receive payments in its native currency: Ripple XRP. This means that it’s a globalized currency that manages to keep cross-border transaction fees low — side-stepping some of the issues that make both fiat currency and decentralized cryptos unsuitable for their needs.
Why Might You Consider Investing In Ripple?
Ripple is well-known within the financial sector. Some of the businesses already using the payment solution include:
- Axis Bank
- Crédit Agricole
- Royal Bank of Canada
- American Express
- International Foreign Exchange
According to the analyst CryptoWhale, Ripple is well-placed to weather any regulatory crackdowns that happen to the cryptocurrency industry: “The only project in the entire market that is pushing for Crypto Regulations is XRP. They know that once these regulations are added, it will completely annihilate almost every other altcoin, and make XRP’s demand skyrocket.”
Because Ripple has been “quietly working with government agencies to ensure compliance” for years, CryptoWhale believes it’s far less likely to fall foul to new rules or taxation measures that could have a catastrophic effect on the rest of the industry.
Facilitating Digital Transformation
Another factor that could make Ripple a smart investment for 2021 is the fact that it facilitates digital transformation. According to recent surveys, digital transformation is one of the top priorities for many financial businesses going forwards.
In a bid to escape the high transaction fees and long processing times associated with fiat payments and legacy systems, more and more companies may make the switch over to Ripple. The fact that RippleNet started offering smart contracts in November 2020 could further drive this change.
4. Bitcoin Cash - BCH
Bitcoin Cash is a third-generation cryptocurrency that was launched as a Bitcoin hard fork in 2017. It’s a peer-to-peer electronic cash system that was developed as a more user-friendly, and more scalable, alternative to the original BTC. Its market capitalization is currently $10B and its price is $535.68.
What Is Bitcoin Cash (BCH)?
Compared to the original Bitcoin (also known as Bitcoin Core), Bitcoin Cash has much lower transaction fees, is able to process more transactions per minute, and was designed to make everyday crypto payments easy. BCH uses its own network, separate from the Bitcoin network, which has enabled it to increase the block size to 8MB. This means it’s much quicker to verify each new block.
Among the features of BTC that BCH has retained include its total supply. Both cryptos have a maximum total supply of 21 million tokens and undergo a halving process roughly every four years.
Why Might You Consider Investing In Bitcoin Cash?
If you’re wondering why Bitcoin Cash is a potential answer to the question ‘what altcoins should I invest in 2021?’, one of the main reasons is its scope for real-world application. Back in 2019, for example, the fantasy sports platform Fanduel announced that it would accept BCH payments via Bitpay, allowing its users to place the cryptocurrency into their digital wallets.
As global interest in the practicalities of cryptocurrency continues to grow, we could easily see the adoption of BCH increase. This would drive up the demand for the altcoin, which would have a positive effect on its price.
Another factor that could potentially cause the demand for Bitcoin Cash to increase is a growing awareness of the cryptocurrency sector. According to the FCA survey we mentioned in reference to the reputation of Ethereum, 20% of respondents had heard of Bitcoin Cash, making it one of the most well-known altcoins. (This is probably thanks to its connection with Bitcoin, with which, unsurprisingly, almost all of the respondents were familiar).
The fact that the general public is more aware of Bitcoin Cash than they are of other altcoins is a very positive sign. It could mean that potential investors are more likely to start trading it, when and if they choose to enter the world of cryptocurrency — especially if the number of use cases continues to increase throughout 2021.
5. TRON - TRX
With a market capitalization of $3.68B and a price of $0.0514 at the time of writing, TRON is hardly the most formidable altcoin on this list. However, if you’ve been wondering what are the best altcoins to invest in 2021, it would be a mistake to discount it from your considerations.
What Is TRON (TRX)?
TRON was launched as an ERC-token back in 2017 but now runs on its own platform. It’s a decentralized peer-to-peer system with a focus on powering the entertainment industry. Its native currency is known by various names — TRON coin, Tronix, or TRX — and functions as the basic unit of accounts within the blockchain. TRON was founded by a Singaporean non-profit foundation, the Tron Foundation and its CEO, Justin Sun, previously worked for Ripple.
The TRON ecosystem works differently from many other altcoins as it’s essentially a content-sharing platform. Users who create or share content are rewarded in TRX, creating a fairer and more transparent monetization system than those typically used by traditional social media networks. It also enables users to share their content without having to sell through a middleman service, such as the Google Play Store or Apple Store. As a result, TRON is able to cash in on the market for decentralized apps (dApps).
Why Might You Consider Investing In TRON?
The Popularity of dApps
Did you know the TRON platform is the biggest power of decentralized apps (dApps) in the world? This fact alone makes it a worthy contender for anyone asking ‘which altcoins should I invest in 2021?’. The demand for decentralized services has skyrocketed and according to analysts, this trend is unlikely to slow down during 2021.
Distrust for big businesses such as Google and Apple is also an emerging trend. As more and more creatives choose to share their content directly with their audience, as opposed to going through third parties, platforms such as TRON will emerge as the obvious alternative. This will drive up the demand for TRX and consequently its price, too.
As we mentioned in reference to Ripple, some investors fear that we’ll start to see increased regulation when it comes to cryptocurrency. Although cryptos were once considered practically ungovernable, many governments are starting to recognize the fact that these payment systems aren’t going anywhere — and in order to embrace them, they need to be able to control them. (President Xi Jinping recently hugely bolstered the Chinese cryptocurrency market by publicly praising the importance of blockchain technology).
Luckily, TRON is unlikely to be adversely affected by this global regulatory shift. This is because the Tron Foundation has been approved by the Accounting and Corporate Regulatory Authority and they are under the supervision of the Company Law of Singapore.
6. Cardano - ADA
Cardano (ADA) is the 5th cryptocurrency in the world, thanks to its market capitalization of $33.17 and its current price of $1.04. Like TRON, this cryptocurrency’s low price belies the size of its impact on the market. Let’s take a closer look at why Cardano could be considered a good investment for 2021.
What Is Cardano (ADA)?
Cardano is an open-source, proof-of-stake blockchain platform that supports the ADA, its native cryptocurrency. One of the most distinctive features of Cardano is its unique architecture. Its platform has been built in two layers: the first is called Cardano Settlement Layer (CSL), sometimes simply known as the cryptocurrency layer, and is where users can carry out crypto transactions. The second is called the Cardano Computation Layer (CCL). This enables developers to run apps such as dApps and smart contracts on the network.
Having two different layers within its ecosystem will make it much easier for potential hard forks to occur in the future, thus improving Cardano’s long-term scalability.
Why Might You Consider Investing In Cardano?
The Platform Powers dApps
One of the key answers to the question ‘is Cardano a good investment for 2021’ is the fact that its network supports the launch of dApps and smart contracts. Thanks to its dual-layer architecture, the altcoin isn’t just dependent on the success of its own native ADA. Instead, it will also be affected by the demand for the other cryptos built on its distributed ledger. With the demand for dApps increasing, this could have a positive impact on the price of ADA in the near future.
Another factor to consider when conducting your due diligence on Cardano is its scalability. As a cryptocurrency investor, one of your main concerns should be the long-term prospects of your chosen investment opportunity. While scalability has proved a potential stumbling block for investors in Bitcoin and other first-generation currencies, Cardano has been built as sustainably as possible.
The altcoin’s built-in scalability has been secured by the nature of its architecture, which enables developers to change the technology without having to overhaul the entire ecosystem and create a hard fork. (Hard forks are often hugely controversial and can drive many investors away).
7. Tezos - XTZ
The next altcoin on our list of the best altcoins to invest in 2021 is Tezos (XTZ). At the time of writing, this cryptocurrency has a market capitalization of $3.055B and a price of $4.02, which places it as the 34th largest crypto in the world.
What Is Tezos (XTZ)?
Tezos is a platform that supports the use of smart contracts. (Smart contracts automatically encode the specific terms of each transaction, including the amount of money you’re paying and the party you’re paying it to. According to the developers of the cryptocurrency, the name ‘Tezos’ actually comes from the Greek word for a smart contract).
Because the terms of each transaction are written into the technology that facilitates the payments, Tezos is completely transparent — a quality that has attracted many investors. Another defining feature of Tezos is its self-governing model. Its governance rules allow stakeholders to approve protocol upgrades that can then be deployed on the network straight away. This means that the network can adapt to (and facilitate) changes quickly, whilst ensuring that users are directly involved in the governance of the blockchain.
Upon its launch via an initial coin offering (ICO), Tezos broke records with its incredible $232 million investment.
Why Might You Consider Investing In Tezos?
The Popularity of Proof-of-Stake Networks
Tezos uses a proof-of-stake algorithm (Pos), as opposed to a proof-of-work (PoW). Today, many investors, traders, and crypto companies recognize that PoS has a number of advantages over PoW — including quicker processing times, lower energy consumption, and greater scalability.
Known as staking, this method became increasingly popular in 2019-20. This coincided with a significant increase in the total amount of money staked on Tezos, making it the most staked cryptocurrency at 79.42% according to Stakingrewards.com. Prior to this point, Tezos has received minimal attention from investors, so anyone wondering ‘should I invest in Tezos in 2021?’ may feel encouraged by this drive in popularity.
8. IOTA - MIOTA
At the time of writing, IOTA has a market capitalization of $3.718B and a price of $1.33. It’s the 26th largest cryptocurrency, making it the least major altcoin on this list so far. But that doesn’t mean you should discount it when wondering ‘which altcoins should I invest in 2021?’.
What is IOTA (MIOTA)?
IOTA is a distributed ledger that enables people to make transactions between devices in the Internet of Things ecosystem (IoT). Unlike the majority of other cryptocurrencies, IOTA doesn’t rely on a blockchain. Instead, it uses a decentralized Directed Acyclic Graph (DAG).
A DAG relies on nodes instead of blocks and are generally considered to be more secure than blockchains. This is because they allow for different chains of nodes to co-exist and connect with each other, creating a more secure (and less penetrable) system. This structure also means they are more scalable than most blockchain-based platforms.
Why Might You Choose To Invest In IOTA?
The Rise of IoT
IOTA is uniquely placed within the cryptocurrency industry. The Internet of Things is one of the most important and influential networks in the world, so much so that it’s even known as the Fourth Industrial Revolution (or Industry 4.0).
As every sector from marketing to manufacturing becomes increasingly reliant on IoT, IOTA is able to capitalize on this growth. In 2021, we could expect to see many companies turn to IOTA as a way to sidestep high transaction fees between different devices.
9. Zcash - ZEC
Zcash was launched in 2016 and is based on the Bitcoin codebase. Its current market capitalization is $1.544B and it costs $137.03. As the world’s 45th largest cryptocurrency, it’s officially the smallest on this list. So you may be wondering ‘why should I invest in Zcash in 2021?’. Well, read on to find out more.
What is Zcash (ZEC)?
Zcash’s main USP is the fact it aims to make digital payments more private. This is in stark contrast to traditional cryptos such as Bitcoin, which were designed to facilitate financial transparency. In order to shield the privacy of its users but still comply with the law, Zcash operates a policy of ‘selective transparency’. This enables authorized users to monitor transactions if necessary but prevents governments or corrupt agencies from interfering.
Why Might You Choose To Invest In Zcash?
The Zcash Halving
It’s well-known in the cryptocurrency industry that halvings (or halvenings) often drive up the price of an asset. This is certainly true for Bitcoin — and as recent events have shown, it is also the case for Zcash.
Zcash underwent its first-ever halving on November 18th, 2020, when the reward for mining new blocks was slashed from 6.25 ZEC to 3.125 ZEC. According to the historic price platform Nomics.com, the price of ZEC rose from $61.50 to $76.39 in the wake of the halving. Although the price has since fallen again to $65.34, it remains higher than its pre-halving value, suggesting that the event has ultimately caused its price to increase in the long-run. This could mean that 2021 will see the value of ZEC climb even further.
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Virtual currencies are highly volatile. Your capital is at risk.
There are many opportunities to invest in Altcoins in 2021, but what has become clear this year is that it is worth looking to the best possible projects and coins. Below are the top key points for Altcoins investment in 2021.
- The final weeks of 2020 saw the prices of many major cryptocurrencies skyrocket past their previous ATHs
- Factors such as the rise of DeFi, smart contracts, and proof-of-stake algorithms could all drive the demand for altcoins in 2021
- Ethereum, Litecoin, Ripple, Bitcoin Cash, Tron, Cardano, Tezos, IOTA, and Zcash are all potentially good investments for 2021, though it’s crucial to carry out your own due diligence first
- Many altcoins were created to solve the problems that may potentially hinder Bitcoin, such as its slow transactions speeds and lack of scalability
- Halvings often increase the price of an asset, as we saw with Zcash in November 2020
Remember, though, that even the best Altcoins aren’t guaranteed to make you a profit. This means it’s vital to do your due diligence and find a robust risk management strategy before you start trading on your chosen cryptocurrency exchange.
Disclaimer: Cryptocurrencies are highly volatile. Your capital is at risk
We hope our list of the top Altcoins to invest in 2021 has been helpful. Whatever your investing strategy, keeping track of the current trends and predictions is the best way to build a strong portfolio full of the best Altcoins.