How Many Cryptocurrencies Are There and Which Are the Best to Invest in?

El Salvador became the first country to allow the usage of Bitcoin as legal tender recently. While most countries are undecided on the future of cryptocurrencies even though they begrudgingly allow their usage, El Salvador’s move is a sign that crypto is here to stay. 

Starting as a response to the global financial crisis of 2008, cryptocurrencies have taken over the world today. There are a host of cryptocurrencies in the market today, all offering distinguished benefits, but which is the best to invest in?

Why Crypto?

It may have started as a favored mode of payment for niche traders, but today, cryptocurrency is as mainstream as can be. Digital currency is now featured in the long-term plans of the biggest corporations on the planet. Google, Apple, Facebook, Tesla, PayPal, and Samsung to name a few. Not to mention, with more and more traders and institutions eyeing digitization now, cryptocurrencies are seeing worldwide success. 

As a trader, you stand to gain a number of benefits by investing in cryptocurrencies beyond their potential to skyrocket in value over time. Simply see it as an investment that is highly likely to get you financial gain. Moreover, they are a great asset in your portfolio, holding great value in today’s market. They can be used as a mode of payment and are easier to store, making them highly liquid. 

How Many Cryptocurrencies Are There?

As of November 22nd, 2021, there are 14,636 listed cryptocurrencies in the market and the top five represent well over 70% of the market cap. 

Starting only in 2009, there were already over 50 cryptocurrencies as early as 2013. Interestingly, that number increased 10-fold by 2014. There were almost 500 cryptocurrencies by the end of 2014.

Today, there are all sorts of crypto with new releases coming every day. You have payment-focused ones in Bitcoin and Ethereum. Then there are the memecoins and ‘shitcoins’ that tend to not take themselves seriously. Stablecoins tie themselves to an asset. Privacy coins are meant to deliver anonymity between two parties. Utility tokens are meant to grant you access to particular services. So on, and so forth. 

It can get a bit confusing if you are looking to invest in crypto yourself. Here’s an overview of some of the most lucrative cryptocurrencies to invest in 2021:

1. Bitcoin (BTC)

The first cryptocurrency ever often called ‘the king of crypto’, Bitcoin has managed to create millionaires from all walks of life. The decentralized digital currency was first created in January 2009, though the real identity of its creators remains unknown. It doesn’t have a physical form, it only exists as balances on a public ledger. It holds above 60% of the market cap as of now. 

Bitcoin hit its highest value in February 2021, with a single bitcoin valued at over $50,000. It is predicted that it will go even higher with time. Being a coin and not a token, Bitcoin runs on its own blockchain. Instead of relying on a centralized bank to control money transactions and third parties to verify them, Bitcoin’s blockchain is a public ledger consisting of all the transactions in its history. 

Anyone making a payment needs to prove that they own the bitcoin, thus helping prevent fraud. It also makes peer-to-peer transactions faster and less expensive. Its network is spread over numerous computers all over the world, making it truly decentralized in nature that no one party can control. It does suffer from the limitation of being limited in number, which is why it has managed to reach such sky-high numbers in value in recent times. 

2. Dogecoin (DOGE)

Dogecoin has proved that we shouldn’t underestimate anyone and anything. The original ‘memecoin’ came to life as a joke on the wild speculations of the crypto market in 2013 by two software engineers. The coin uses the image of the dog Shiba Inu as its avatar. It has managed to take the market by storm in 2021 as its price hit an all-time high and has the backing of some influential celebrities.

Dogecoin is an accepted form of payment in companies such as Kronos, Dallas Maverick, and more notably, SpaceX — owned by American business magnate Elon Musk. He has been a vocal supporter of Doge. In fact, the price of Dogecoin hit its all-time high during the week he hosted Saturday Night Live. 

Doge aims to overcome Bitcoin’s limitation of being limited in number by having no limit on the number of coins that can be mined. This means that in order to maintain value and increase it over time, you will have to continuously invest into it as opposed to a one-time big investment as you may do for Bitcoin. Payments made with Doge are also recorded to be faster and easier. 

3. Litecoin (LTC) 

It may not be a stretch to say Litecoin is a light version of Bitcoin. It is indeed called ‘silver to Bitcoin’s gold. Created in 2011 by an ex-employee of Google, it was one of the first cryptocurrencies to follow Bitcoin’s model and technology. That is to say that it is a peer-to-peer cryptocurrency and its supply is also limited — capped at 84 million, with around 75% of it having been mined already. It is an open-source software project that was released under MIT/X11 license. 

Where it decidedly differs from Bitcoin, however, is that it is faster and lighter. It achieves this by generating blocks at a faster rate, and thus, reducing the transaction time. Despite being considered undervalued in the market, Litecoin saw a significant surge in its value in 2020, bringing its total market cap to $12 billion, further increasing it in 2021 to $14 billion. 

4. Ethereum (ETH) 

Ethereum is a decentralized blockchain. It is open-source software that enables smart contracts and decentralized applications to be made and run without any interference, control, and fraud from a third party. In simple words, anyone can build upon its blockchain. The idea behind Ethereum was to allow people from all walks of life access to financial products without discrimination. 

Founded in 2014, Ethereum is a pioneer in the DeFi i.e., decentralized finance revolution. The movement aims to orchestrate a paradigm shift in the economy and financial systems by enabling peer-to-peer finance on decentralized blockchains. It is also the second-largest cryptocurrency in the world and offers great value for money, making it a smart investment option. 

5. Cardano (ADA) 

One of the founders of Ethereum had issues with the direction it was taking and left to create Cardano. It was created with a research-based approach with the help of mathematicians, engineers, and cryptographers. Created after extensive research, it was first launched in 2017 and claims to be a more sustainable option in comparison to other cryptocurrencies. It reached its all-time high value in February 2021.

With supply capped at 45 billion, around 31 billion Cardano coins are already in circulation. It is currently the 6th largest in terms of market capitalization. Its overall value is only expected to go up, owing to its solid, research-based blockchain foundation. Users can find quick solutions for fraud, chain interoperability, and contract tracing among other things. 

Final thoughts

Now that you have a basic understanding of cryptocurrencies, you may want to invest in one or maybe more. For that, you first need to choose a crypto exchange. There are plenty of popular and reliable options in the market today. Once you register onto one and verify your identity, it will help you pick a wallet — something akin to a bank account to keep a track of the transactions you make. 

As you trade in cryptocurrencies, it is worth remembering that one needs to be well informed to make the right trading decisions in the market. Research about cryptocurrencies on your own, read up on concepts and ideas, draw comparisons, and keep yourself updated on the latest happening in the market.