Interest in crypto is once again on the rise after Bitcoin’s (CCC:BTC) record-breaking 2020.
Crypto exchanges and online trading platforms have seen a spike in activity. The crypto rally is driven by record amounts of fiscal and monetary stimulus, as well as fears about currencies and inflation. With worldwide recessionary pressure, the novel coronavirus pandemic raging, and political chaos in the U.S., this is hardly surprising. The growing uncertainty is fueling the digital economy as new technology becomes more accessible.
Additionally, I want to touch upon the growing adoption of crypto as a payment method. Online payments system providers Paypal Holdings (NASDAQ:PYPL) and Square (NYSE:SQ) now allow their users and merchants to buy, sell, hold and accept Bitcoin and other cryptocurrencies as a form of payment. Much of Italy’s banking sector now uses Spunta, a blockchain network utilizing technology from New York-based firm R3. Meanwhile, big banks are figuring out how they can monetize from the blockchain. JPMorgan Chase recently went live with its in-house digital currency JPM Coin for the first time with a large technology client.
Ultimately, it looks like an excellent time to invest in crypto.
However, now that you have decided to take the plunge, your attention should turn to what options you have to play the market. Bitcoin’s record-breaking rally has led to a surge in retail investor interest in the cryptocurrency market.
That said, here are five crypto options that you can add to your portfolio that is not bitcoin:
- Ethereum (CCC:ETH-USD)
- Litecoin (CCC:LTC-USD)
- Tether (CCC:USDT-USD)
- Stellar (CCC:XLM-USD)
- Cardano (CCC:ADA-USD)
Non-Bitcoin Crypto to Watch: Ethereum (ETH)
One of the most commonly cited alternatives to Bitcoin is Ethereum, a decentralized, open-source blockchain featuring smart contract functionality. Through Ethereum, you can have free access to their cr no mater who you are. This makes it a very enticing prospect for citizens of countries lacking the state infrastructure to access bayptonk accounts, loans, insurance or other financial services.
Furthermore, the applications on Ethereum run on Ether, the cryptocurrency of the Ethereum network. It is the second-largest cryptocurrency by market capitalization, after Bitcoin. Ethereum now hopes to change its consensus algorithm from proof-of-work to proof-of-stake, allowing for faster transaction speeds. Proof-of-stake helps to secure the network and process the transactions faster.
In exchange, you get Ether similar to an interesting account. It differs from Bitcoin’s proof-of-work mechanism, where you get more Bitcoin for processing transactions. The cryptocurrency is trading at $1,627, leading to a $186.38 billion market cap.
Litecoin is an early bitcoin spinoff or altcoin, starting in October 2011. Technically the cryptocurrency is nearly identical to Bitcoin. Its often referred to as “silver to Bitcoin’s gold.” There is no central authority controlling it. And it uses “scrypt” as a proof of work, a sequential memory-hard function requiring asymptotically more memory than an algorithm that is not memory-hard. Consumer-grade CPUs can decode it.
Although there are few differences between Litecoin and Bitcoin, it aims to process a block every 2.5 minutes, rather than Bitcoin’s 10 minutes. Hence, it allows Litecoin to confirm transactions much faster than Bitcoin. There are advantages inherent to litecoin over bitcoin. It can handle more transactions, and it costs 1/1000 of a litecoin to process a transaction, regardless of its size.
The coin trades for $154.41 right now, leading to an $10.26 billion market cap.
Non-Bitcoin Crypto to Watch: Tether (USDT)
Tether is a blockchain-based cryptocurrency. Unlike the other relatively volatile crypto assets occupying top positions in the charts, Tether is a stablecoin.
Crypto coins are backed by equivalent traditional fiat currencies — government-issued currency that isn’t backed by a commodity such as gold. Most modern paper currencies, such as the dollar, the euro, or the Japanese yen, are fiat currencies. Tether tokens, the native tokens of the Tether network, are trading under the USDT symbol.
However, Tether is no stranger to controversy. The relationship between Tether and Bitcoin is a hot debate in the crypto world, and some argue that the correlation isn’t anything concerning. Nevertheless, several analysts argue that fraudulent trading occurs in Tether, leading to a negative influence on Bitcoin. Last year, New York Attorney General Letitia James claimed that iFinex Inc., which runs the Bitfinex trading platform, and the issuer behind Tether, hid a loss of approximately $800 million in commingled client and corporate funds. Bitfinex faces a Jan. 15 deadline to submit papers related to the case.
Lumen is the native cryptocurrency for Stellar, an open-source blockchain payment system. The purpose of Stellar is to connect financial institutions through blockchain and provide cheap transactions in emerging markets.
Usually, it takes several days for banks and investment firms to process large transactions, and it requires substantial transaction fees. However, through Stellar, you can perform these transactions nearly instantaneously at a minimal cost. In summary, if you are in a country that lacks financial infrastructure, then this is the coin for you.
Additionally, the system allows for cross-border transactions between any currencies and requires users to hold Lumens to transact on the network. Jed McCaleb, a founding member of Ripple Labs and developer of the Ripple protocol, founded Stellar. The crypto currently trades at 33 cents, with a market capitalization of $7.48 billion.
Non-Bitcoin Crypto to Watch: Cardano (ADA)
Cardano is a cryptocurrency network and open source project aiming to run a public blockchain platform for smart contracts. Cardano’s internal cryptocurrency is called Ada. It was created with a research-based approach by engineers, mathematicians, and cryptography experts.
Charles Hoskinson, a co-founder of Ethereum and BitShares, launched the platform in 2017. Cardano uses “Ouroboros,” a secure proof of stake system. In contrast to Bitcoin’s proof of work system, Cardano uses only the first blockchain entry, whereafter the honest chain is proven locally without the need of a trusted party.
The Cardano team created its blockchain through extensive experimentation and peer-reviewed research. Although still at a nascent stage, Cardano is commonly referred to as the ‘Ethereum killer.’ The platform aims to improve on the shortcomings present in Ethereum. Hence the name. Right now, Cardano has a $13.83 billion market capitalization, and one ADA trades for 44 cents.
On the date of publication, Faizan Farooque did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Faizan Farooque is a contributing author for InvestorPlace.com and numerous other financial sites. Faizan has several years of experience analyzing the stock market and was a former data journalist at S&P Global Market Intelligence. His passion is to help the average investor make more informed decisions regarding their portfolio.