The following 7 cryptos are the best ones to create a $1,000 portfolio. In other words, the cost for these 7 tokens will altogether be less than $1,000. This provides a unique opportunity for an investor to gain exposure to 7 different cryptos without having to spend a lot of money. In some cases, the investor will not own 1 full token of the crypto, as the token price might be well over $1,000.
Keep in mind by the time you read this the proposed number of tokens below could be insufficient to cover a total $1,000 cost. So you may have to make some adjustments. However, I always recommend that you buy a round number of tokens easy to keep track of, even if it is in decimal form.
The total number of tokens for each crypto is listed below after the symbol, then the proposed dollar cost of the investment, and lastly the percentage of the total
- Ethereum (CCC:ETH-USD), 0.1315 ETH $249.95, 25.0%
- Bitcoin (CCC:BTC-USD), 0.0063 BTC $200.45, 20.0%
- Cardano (CCC:ADA-USD), 105 ADA $124.95, 12.5%
- Stellar Lumens (CCC:XLM-USD), 517 XLM $124.91, 12.5%
- Polkadot (CCC:DOT-USD), 8.1 DOT $99.71, 10.0%
- Chainlink (CCC:LINK-USD), 6.5 LINK $100.23, 10.0%
- Polygon (CCC:MATIC-USD), 124.5 MATIC $100.04, 10.0%
Total Cost: $1,000.23 Total Allocation: 100%
Best Cryptos: Ethereum (ETH-USD)
Market Cap: $221.8 billion
Ethereum should have the highest allocation in your portfolio. Ethereum is the new Bitcoin. Why? It has the most uses today as a cryptocurrency, especially in smart contracts and decentralized apps (dapps), as by far it has the largest market share. What that means is that new apps with smart contracts in them, especially decentralized finance (defi) apps, tend to be written in Etherum. That makes the ETH token more valuable over time.
It also means that there are more addresses in Ethereum than any other crypto. I have argued in the past that Ethereum’s token price will eventually catch up to Bitcoin, so you want to have the largest allocation to ETH. My theoretical portfolio would put 25% of the $1,000 amount into ETH. That means purchasing 0.1315 ETH-USD tokens at roughly $1,901 per ETH (as of July 16).
Ethereum plans on changing from a proof-of-work validation system (i.e., mining) to a proof-of-stake reward system. Expectations are this will happen as a hard fork in the ETH blockchain later this year. It will be controversial but will allow the crypto to eventually move away from slow-moving and high-cost validation of transactions. Under a recent change set to go into effect in August, the blockchain will eventually reduce the total number of ETH tokens in its supply. That will also help push its price higher.
Ethereum is gaining steam. Over 80% of dapps (decentralized apps) are built on Ethereum today, according to Hackernoon.com. Mark Cuban has been pouring a lot of his own money into various Ethereum-based apps. One author recently postulated that Ethereum is going to replace every app on your phone. Given the control that corporations now have over your personal info, Ethereum will decentralize all of this through their blockchain technology. That will make ETH soar.
Market Cap: $596.8 billion
Bitcoin is the most well-known crypto worldwide. It also has the largest market cap in the world of cryptos. Bitcoin is now at $31,817 (July 16) and is likely to keep on climbing. One reason is there are only 21 million BTC token cryptos allowed. Of this, 18.758 million are already mined and owned, according to Coinmarketcap.com.
But everyone knows this. What is happening now is that Bitcoin has come well-off of its highs this year and is slowly forming a trough. It peaked at around $63,503 on April 12 and has moved down over 50% since then.
BTC bottomed out at $30,402 on Jan. 26 and is now heading back to that level. It could fall further than that given that BTC ended last year at $29,374. In other words, if the crypto moves below $30,000, look for it to reach a new trough. It could be worth accumulating at that point, especially given how fast it could rebound.
Barron’s magazine says there are several reasons why Bitcoin is so cheap: “looming government and regulatory crackdowns on Bitcoin, environmental concerns over mining crypto tokens, and waning appetite for highly volatile risk assets.”
They also think that lighter trading volume this summer has made the BTC crypto more volatile. They quote a strategist who says that it is in a period of “consolidation” after absorbing large gains in the past year. But others think that cryptos are getting “more entrenched” in the financial system and are here to stay. That could be a good reason to start accumulating Bitcoin, the most popular crypto, right now.
Best Cryptos: Cardano (ADA-USD)
Market Cap: $37.9 billion
I have written several articles on Cardano, the fifth largest crypto in the system. It is known as a third-generation crypto, after Bitcoin and Etheruem. For example, it is already using a proof-of-stake system to validate its transactions, which neither Ethereum nor Bitcoin have. They use a proof-of-work system (i.e., mining).
The goal of Cardano as a decentralized blockchain platform is to allow smart contracts to run smoother. Smart contracts are software-coded apps on a blockchain platform where no company holds data from the app. This is important since the Wall Street Journal recently wrote that defi (decentralized finance) apps, a form of smart contract, are “helping to fuel the crypto market boom.”
In short, Cardano hopes to gain market share in the smart contract world, especially now that its blockchain technology is able to begin coding them. Cardano is now very close to rolling out its next phase of software development called the Alonzo testnet. This is the third phase of its development known as the Goguen phase. That is when it will issue smart contracts and native blockchains.
The Alonzo smart contracts should begin in August 2021. This will make ADA tokens popular since Cardano can then compete against Ethereum with its smart contracts.
Stellar Lumens (XLM-USD)
Market Cap: $5.55 billion
Stellar Lumens is also a popular payments system blockchain. The goal of the blockchain is to ease global money transfers with a blockchain software platform. It wants to reach the world’s “unbanked” and to allow money to move across borders more easily. It also functions as a bridge currency and provides liquidity to assets issued by “anchors,” which are trusted entities on the network.
Stellar is trying to work with central banks to help them create cryptocurrencies. It has a working relationship with the central bank of Ukraine.
One difference between Bitcoin and Stellar is that XLM cannot be mined. There is no proof-of-work algorithm that has to be solved. Instead, XLM can be earned as rewards. The 100 billion XLM initially created have been slashed by half after a deflation mechanism was put in place to counter its 1% yearly inflation. This is designed to help XLM cryptos to rise through a slow deflationary supply mechanism.
Stellar’s success will depend on how well its payment system platform will be adopted around the world. So far, that’s been limited. But slowly yet surely it can offer an alternative to the world’s unbanked.
Best Cryptos: Polkadot (DOT-USD)
Market Cap: $12.0 billion
Polkadot is the ninth largest cryptocurrency in terms of market capitalization as of July 16 at $12 billion. Polkadot was started in late 2016 by Gavin Wood, who was also a co-founder of Ethereum. Later in 2017, on Oct. 27, the company that created Polkadot closed an initial coin offering (ICO) raising over 429,000 ETH (over $140 million at the time).
Polkadot acts as a bridge across all other blockchains including private, public and permissionless networks. It acts “like how HTML allows sites, browsers, and servers to interact with each other.”
It aims to connect multiple blockchains into one network. Polkadot also hopes to compete effectively against Ethereum as a smart contract platform, especially with defi apps. It is gaining acceptance due to its ease of use and scalability. For example, a Defi app called Acala that uses the Polkadot blockchain network signed a deal with a NY-based bank called Current. They want to reach the “unbanked” who don’t have traditional banking products.
If Polkadot becomes successful in its efforts, look for DOT to rise significantly over the next year.
Market Cap: $6.8 billion
Chainlink is a blockchain technology that specializes in assisting Ethereum contracts and other smart contracts with third-party data integration (i.e., an “oracle”). It bridges real-world data such as market stats, event outcomes, and even the weather to the blockchain.
Founded in 2017, Chainlink is an “oracle network” that focuses on smart contracts and connects blockchains with data from the real world. It bills itself as a “Defi” (decentralized finance) application. Right now it is the fifteenth largest crypto in the world with a $6.8 billion market cap.
LINK founder Sergey Nazarov is the father of smart contracts. He believes the defi market is already at $80 billion and poised for huge growth from here. His April 2021 whitepaper was about how Chainlink can produce “hybrid” smart contracts. Alphabet’s (NASDAQ:GOOG, NASDAQ:GOOGL) Google began using it in 2019 for smart contracts. This gave LINK crypto a huge boost.
Look for LINK tokens to pop if its smart contracts pick up clients. For example, Mark Cuban recently invested in a company that uses Chainlink. It is called dClimate and Chainlink will retrieve the real-time data that dClimate uses. If it continues to have wins like this, Chainlink will become very popular and the LINK token will move significantly higher.
Best Cryptos: Polygon (MATIC-USD)
Market Cap: $5.5 billion
Polygon is an Ethereum-compatible blockchain platform. Its goal is to fix Ethereum’s major issues. These are its high fees, congestion, and clogging risk, according to Altcoin Buzz.
Polygon is known as “Ethereum’s Internet of Blockchains.” It wants to be the framework for building Ethereum-compatible blockchains. The MATIC token allows its owners to participate in governance, staking and gas fees (transaction fees). Polygon’s goal is to provide for scalability, the root issue with Ethereum’s high fees and congestion.
In effect, Polygon wants to become the “one-stop-shop for everything Ethereum,” as this video explains. This is meant for developers and coders. The key to how Polygon works is that it builds “snapshots” of various chains and uses these snapshots in its blockchain system. In effect, it speeds up the transaction validation process.
In addition, Polygon uses a proof-of-stake validation system for its blockchain transactions. They are already ahead of Ethereum, which intends to migrate to this system. This system tends to act faster than proof-of-work (i.e., mining, such as at Ethereum and Bitcoin).
In the end, higher adoption of the Polygon network by developers will increase the value of Polygon’s MATIC crypto tokens.
On the date of publication, Mark R. Hake held a long position in Bitcoin and Ethereum but not any other security mentioned in the article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.