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7 Cryptocurrencies to Buy as Blockchain Heats Up

Defying fears of a market bubble, bitcoin and other leading cryptocurrencies will likely continue moving higher

By Josh Enomoto, InvestorPlace Contributor

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At the turn of the decade, hardly anyone knew anything about cryptocurrencies. Aside from visiting obscure forums and chat rooms, the general public had few opportunities to learn about them. Even more startling, early proponents had no idea of the revolution digital tokens would spark, as evidenced by Laszlo Hanyecz’s first recorded crypto purchase: 10,000 Bitcoins for one pizza.

To commemorate that occasion, May 22 is known as “Bitcoin Pizza Day.” But rather than a mockery of an incredibly misfortunate soul, the milestone is observed to celebrate the blockchain revolution. The underlying architecture that drives virtual coins, the blockchain essentially automates the verification process in digital transactions. With this paradigm-shifting technology, people aren’t just looking for cryptocurrencies to buy; instead, they’re slowly waking up to its profound implications.

I recently laid out the case for $10,000 bitcoin and I’m still holding firm to my price target. First, highly-esteemed market analysts, such as our own Will Ashworth, view the lofty forecast as a probability, not a possibility. Second, cryptocurrencies finally caught the big banking cartel’s attention. While they’re hostile towards crypto investing, the fact that renowned bankers are thinking about the blockchain represents major progress.

But the biggest reason why I’m confident that all investors should consider cryptocurrencies to buy is the “inevitability” concept. Virtually every major industry evolved following digitalization advancements. The financial industry, though, is conspicuously archaic. Transactions can’t occur without third-party oversight — and big fees for their troubles. The stock market is still traded under a rigidly-defined schedule. Instead of open source, we get closed doors.

The rise of digital coins flips this anachronistic industry on its head. Here are seven cryptocurrencies to buy as the blockchain revolution heats up!

How to Invest In Cryptocurrency: Bitcoin

Bitcoin
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As the “original gangsta” as the kids like to say, no conversation about cryptocurrencies to buy is complete without bitcoin. Admittedly though, the conversation is getting rapidly more difficult to engage. It’s always tough to convince the average Joe to plunk down $1,000 for a single share of Amazon.com, Inc. (NASDAQ:AMZN) or Alphabet Inc (NASDAQ:GOOG,NASDAQ:GOOGL). But over $5,500 for a single bitcoin? Surely, this is crazy talk!

First, let me start with this: buying digital tokens like bitcoin is a surprisingly easy process. With the advent of crypto exchange Coinbase, diving into the blockchain revolution takes mere minutes. More importantly for newbies, buyers can take baby steps with “partial investments.” That is, you choose the percentage allocation, whether it be a whole unit (100%) or a fractional unit. And, you can do this 24/7, 365 days a year: try that at the New York Stock Exchange!

Immediately, most newcomers will price compare bitcoin to other, cheaper cryptocurrencies to buy. I completely understand — this is simply human nature. But bitcoin leverages the integration and the credibility that most digital tokens lack. It’ll take a few more years before the general public associates the term cryptocurrency with something other than bitcoin. Until then, bitcoin is the gold standard, a blue-chip stock in the digital markets.

Let’s also not forget that critics have blasted bitcoin at every turn. The most recent occurrence was when it first hit the $5,000 mark, only to drop briefly below $3,000. But rather than a cataclysmic drop, bitcoin is now chasing after $6,000! Keep doubting this gangsta at your own risk.

How to Invest In Cryptocurrency: Ethereum

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In auto racing, competitors often bemoan the second-place ranking as the “first loser.” While that description applies to a number of concepts, Ethereum at least is a wild outlier. When I first wrote about Ethereum as one of the key cryptocurrencies to buy, one unit traded hands for $10.55. At the time, the Dow Jones Industrial Average was struggling to hit 20,000 points.

Today, the Dow Jones briefly exceeded 23,000 points, or a 15% gain — not too shabby. But Ethereum, the number-two ranked cryptocurrency by market capitalization, gained a staggering 2,867%. Investing in the Dow can grow your wealth; Ethereum can send it into hyper-drive.

But what makes this “second-tier” blockchain different from bitcoin? At the heart of Ethereum is the “smart contract.” While bitcoin solves the third-party intermediary problem for financial transactions, Ethereum has a broader scope. Instead of just focusing on financial transactions, the currency’s originators used the blockchain to essentially secure the cloud. When data can be verified quickly and efficiently without third-party involvement, the internet can finally realize its potential!

Thanks to the geniuses at Equifax Inc. (NYSE:EFX), we know all too well that third-party intermediaries stink. Whenever humans are involved, data breaches, internal leaks, and other failures or frauds are inevitable. The Ethereum blockchain seeks to plug that hole — hence, it’s a “smart” contract.

Where some people get into trouble is that they over-think virtual currencies. My idea is simple: don’t! The Ethereum blockchain solves a critical problem within the internet. Again, recall Equifax’s woes. Just put Ethereum into your cryptocurrencies to buy list, and I’ll see you at $2,000 in a few years time!

How to Invest In Cryptocurrency: Litecoin

 

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It’s often said that imitation is the sincerest form of flattery. In my opinion, the adage describes Litecoin to a “T.” Likes its name suggests, the Litecoin blockchain borrows many elements from the original bitcoin. In fact, for a few years after its introduction, Litecoin was the second ranked digital token by market cap.

Former Alphabet engineer Charles Lee developed Litecoin to be the silver to bitcoin’s gold. Most folks view the analogy solely on the basis of valuation. That’s an important component, to be sure, but there’s more to the comparison.

The Litecoin blockchain improves upon the original architecture through faster verification speeds. The additional efficiency means that Litecoin can handle higher transaction volumes natively. For bitcoin to match Litecoin’s speed and efficiency would require majority-consensus protocol changes. As we know from prior proposals, alterations don’t come easy in the digital markets.

Similar to silver bullion, Litecoin’s substantially lower valuation, and higher scalability potential makes it ideal for everyday transactions. As a growing number of crypto users test the boundaries of the bitcoin blockchain, having a ready-made alternative is ideal.

Another factor to consider is that Litecoin is one of the three cryptocurrencies that Coinbase offers (bitcoin and ethereum being the others). Additionally, it’s the only digital token among the three that’s priced in double-digit territory. That’s a significant psychological incentive, especially if the broader blockchain rally drives higher. With momentum and engagement soaring, Litecoin has the potential to break $100 within a year from now.

How to Invest In Cryptocurrency: Bitcoin Cash

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The two aforementioned cryptocurrencies to buy developed from a desire to improve bitcoin’s foundation. Bitcoin Cash is what happens when developers seek to improve the currency itself. In crypto terminology, such upgrades are called “hard forks.” Essentially, a hard fork results in an offshoot cryptocurrency using the original coin’s blockchain architecture.

In a recent InvestorPlace article, I described a hard fork as follows:

“For any number of reasons, usually to address a security vulnerability, blockchain participants will propose a protocol change. Depending on the proposal’s magnitude, a fork could either be a “hard fork” or a “soft fork.” In short, hard forks are permanent changes to the blockchain architecture, and therefore they spark mainstream interest.”

Bitcoin Cash addresses the original currency’s scalability problem. When cryptocurrencies first launched, few imagined how popular they would become. Unfortunately, bitcoin “transactions were getting larger than the system could adequately handle. Initially, advocates proposed increasing the size of each (data) block. However, doing so would increase hacking vulnerability. Larger blocks would mean greater transactional value potentially compromised.” (Clarification added)

Personally, I didn’t understand the need to spark a “civil war” within cryptocurrencies. However, when the controversial Bitcoin Cash launched, it briefly exceeded $1,000 before settling into its current high-$300 range. The fact that Bitcoin Cash found strong user engagement, and that the original coin increased its market value proved that two currencies from the same blockchain could co-exist.

Admittedly, I’m not the biggest fan of Bitcoin Cash. However, it provides an alternative route for those who prefer faster transaction speeds. Watch this space as other cryptocurrencies rise.

How to Invest In Cryptocurrency: Ripple

 

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Virtual-currency proponents are quite pleased with the fact that major banking institutions hate bitcoin. Should digital markets take a substantive bite out of mainstream investor dollars, it’s possible that financial transactions would no longer require third-party intermediaries. That’s bad news for Wall Street leaches that currently rake in money via hegemonic dominance.

But what would happen if bankers embraced the blockchain? Enter Ripple, the “banker’s cryptocurrency.” Similar to bitcoin, Ripple seeks to streamline and accelerate global payments and transactions. The current platform for these functions was created prior to the internet’s advent.

But the Ripple blockchain takes a different approach to the same problem. Rather than having a contentious relationship with banks, Ripple works with them. Through cooperative networks, Ripple provides a “frictionless” pathway for international payments. This streamlining allows a “best of both worlds” alternative: low transaction fees, and the security and (data) integrity of a big-banking umbrella.

Ripple is also one of the best speculative cryptocurrencies to buy because it has internal scalability. Learning the hard lessons from bitcoin, the Ripple blockchain can be improved and expanded to accommodate higher transactional volume. You probably won’t hear about a Ripple hard fork anytime soon.

For explosive growth potential, Ripple stands alone. Unlike many of its leading peers, the banker’s crypto trades for less than a U.S. quarter. Unsurprisingly, it’s also one of the most volatile cryptocurrencies.

Still, unlike a junk penny stock, major institutions like Standard Chartered and UBS Group AG (USA) (NYSE:UBS) endorse Ripple. For that reason alone, I’d put the virtual asset into my cryptocurrencies to buy list.

How to Invest In Cryptocurrency: Factom

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Factom quickly gained traction among virtual-currency proponents thank to its promises of solving “real-life” problems. The digital coin’s website describes Factom as a “practical blockchain solution for those seeking a collaborative platform to preserve, ensure and validate digital assets.” In human language, Factom offers an incorruptible database while simultaneously providing the blockchain platform’s security, validation, and efficiency.

It may be easier to think of Factom as the “accountant’s bitcoin.” Rather than focusing on transfers of economic value, Factom is primarily retroactive. These blockchain users are concerned about data integrity and security. Under Factom’s unique protocol, information stored in its distributed ledger technology prevents data modification, deletion, and backdating.

Theoretically, Factom could very well eliminate the fraud, corruption, and forgery that imposes both emotional and financial tolls. Instead of human operators that could be bribed with certain incentives, Factom delivers data integrity through the completely disinterested blockchain.

The implications for government agencies, as well as corporations, are obvious and numerous. Occupational fraud costs billions of dollars. Government branches, such as the military or law enforcement, also have to worry about data leaks endangering lives. Factom plugs these gaps, which is why companies like Microsoft Corporation (NASDAQ:MSFT) integrate its distributed ledger technology in Microsoft applications.

How to Invest In Cryptocurrency: NEM

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In almost any industry, whoever is the first to market wins. Customers will often associate newly-invented products with their broader industry. Therefore, when deciding between being first or being the best, the former is usually the most profitable.

This is also the case for cryptocurrencies, but it may not be that way indefinitely. NEM is a perfect example. Currently, NEM is ranked in seventh place according to market cap. But with a unit price of just under 21 cents, the virtual currency appears incredibly speculative. Naturally, its potential ability to overtake bitcoin is laughable.

Still, don’t deny NEM a slot in the cryptocurrencies to buy list merely on superficial impressions alone. Underneath the hood is a blockchain architecture that was “designed and coded from the ground up for scale and speed.” As we mentioned before, bitcoin’s conspicuous flaw is scalability. Its limitations didn’t matter when no one was using the blockchain; a completely dissimilar story exists today.

Additionally, NEM is much more efficient than bitcoin. According to NEM Foundation vice president Jeff McDonald, bitcoin requires significant and costly upkeep. In contrast, NEM requires minimal maintenance, theoretically giving investors more bang for their buck.

For now, bitcoin’s public credibility makes it the undisputed champion. But as the blockchain concept integrates further into our everyday lives, look for NEM to potentially make a huge splash.

Josh Enomoto is long Bitcoin, Ethereum, and Litecoin, and intends to purchase Ripple and NEM.


Article printed from InvestorPlace Media, https://investorplace.com/2017/10/how-to-invest-in-cryptocurrency-blockchain-stocks/.

©2017 InvestorPlace Media, LLC