High volatility is the theme of the financial markets this year but disruptive cryptos making waves in the industry show signs of strong returns. The dominance of cryptocurrencies in recent years is hard to ignore. Amplified by the growth of blockchain, investors continue to see more use cases for this new-age currency come to light. But while its potential remains strong, the sheer number of traded coins (over 23,000 according to CoinMarketCap) leaves many with too many options to choose from.
There’s no doubt that this number will continue to go higher but investing in cryptos that offer real-world impact is key to long-term returns. In a constantly evolving market, one way to do this is to focus on companies that are capitalizing on current trends. This includes technologies such as blockchain, decentralized apps (dApps) and artificial intelligence that are shaping our financial ecosystem. Companies that are quick to get behind the right type of fintech platforms will thrive in the long-haul.
Ethereum (ETH-USD)
Widely considered to be the backbone of decentralized finance (DeFi) apps, Ethereum (ETH-USD) is a disruptive crypto with a massive opportunity for high returns. The second-largest cryptocurrency is more than just a currency and also serves as a platform for decentralized apps. This has resulted in an impressive market capitalization for Ether of $368 billion, making up 16% of the total market.
Given its prevailing fame, this crypto is unlikely to see a massive price hike any time soon. However, the release of Ethereum 2.0 and the continued success of its decentralized platform shows promise of long-term growth.
Ethereum’s migration to Ethereum 2.0 offers the potential for greater scalability, speed and efficiency with lower transaction fees. All without compromising on the decentralization and security of its platform. The new version will include features such as Proof of Work and Sharding to make this possible.
Ethereum’s second, and arguably most famous feature, is the smart contracts on its platform. These contracts allow users to initiate transactions with zero third-party interference and are less susceptible to fraud. As a result, the platform is now home to numerous dApps and serves as the birthplace of non-fungible tokens (NFTs).
Ethereum’s strong market position coupled with its potential for outsized returns, makes it one of the most disruptive cryptos on the market.
Cardano (ADA-USD)
Founded by Ethereum’s co-founder, Cardano’s (ADA-USD) focus on sustainability, efficiency and scalability make this crypto a viable contender to ETH. The high levels of energy consumed while transacting on the blockchain has always been a problem child for crypto companies. Cardano positions itself as a sustainable blockchain, thus aiming to solve a problem that has long plagued the industry.
The company does this by enabling a Proof of Stake (PoS) system on its platform. This mechanism is considered to be far more energy efficient than the traditional Proof of Work (PoW) protocol offered on blockchain platforms. According to a report by Forbes, Cardano’s PoS is 1.6 million times more energy efficient than Bitcoin (BTC-USD) transactions.
Cardano aims to use its efficiency and scalability perks to become home to more decentralized apps in the future. The crypto has a market cap of $16 billion and the circulation of its coins limited to 45 billion. Nearly 80% of these coins have already been mined, leaving less room for dilution.
Looking ahead, Cardano has several reasons to warrant investor confidence. The company is focused on developing a new programming language called Plutus to enhance the smart contracts on its platform. Coupled with its focus sustainability, disruptive cryptos like Cardano are poised for new heights.
Avalanche (AVAX-USD)
Another company capitalizing on the Proof of Stake mechanism is Avalanche (AVAX-USD). Much like its crypto counterparts, Avalanche aims to solve problems surrounding security, decentralization and scalability on its blockchain platform. The company does this with the help of its open-source network, which enables users to develop highly scalable apps on its platform.
One of the network’s most defining features is its subnets which lets app developers create their own independent blockchains on the platform. These mini-blockchains create more blockspace, allowing for indefinite app scalability.
However, it’s worth noting that Avalanche’s native altcoin, AVAX, is no stranger to the market volatility this year. While its prices remain speculative, at best, this crypto is a winner for its blockchain potential. Analysts predict that AVAX prices will stabilize by 2025, given the optimistic developments in its pipeline.
Investors bullish on the future of blockchain will find Avalanche a good long-term play.
On the date of publication, Divya Premkumar did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
