There are more than 2000 coins and altcoins; some are legitimate and some may not be. It is therefore vital that you do a proper research before investing in cryptocurrency.
What Makes Cryptocurrencies Ideal for Trading?
- The numerous cryptocurrencies available allows traders to easily diversify their investment portfolio.
- Cryptos are traded seven days a week and 24 hours a day which is much more convenient when compared to stocks and commodity trading times.
- Traders stand to benefit from a wide range of today’s top traded cryptocurrencies.
- Cryptocurrencies offer a new form of high-volatility investment.
Which cryptocurrencies are the best ones to trade?
The answer to this question is constantly changing because of the fluctuating nature of the markets. However, lets go deeper to get a more stable analysis of these coins and tokens: rather than just asking, what are some of the main cryptocurrency to trade? let us ask, what is the positive and negative sides to trading each cryptocurrency?
Let’s look at some examples of how one could assess each cryptocurrency:
At the time of writing, the cryptocurrencies listed below are the highest in ranking based on market capitalization, as per Cryptoporridge.com. They are in no particular order.
Bitcoin is undoubtedly the most famous and prominent cryptocurrency. It is the ﬁrst worldwide acknowledgment of the idea of digital cash. Bitcoin uses cryptography and mathematical equations for its creation and secure exchange, instead of a central authority. All transactions are carried out on the bitcoin network.
As per Coincentral:
There are currently close to 4.3 million Bitcoins left that aren’t in circulation yet. With only 21 million Bitcoins that will ever exist, this means that there are about 16.7 million Bitcoins currently available. Out of those 16.7 million, it’s estimated that 30% of those may be lost forever as a result of things like hard drive crashes and misplaced private keys.
Positive and negative sides to trading Bitcoin:
One major advantage that Bitcoin has over all other cryptocurrency is the fact it is the oldest. This means that bitcoin has more years of proof-of-concept than all the other cryptos. This could make investors more likely to invest in bitcoin as opposed to the other cryptocurrencies. Being the first cryptocurrency has also made bitcoin more popular, which could make it more adaptable when compared to other coins and tokens.
However, bitcoin is one of the slowest cryptocurrencies on the market right now, with an average of ten-minutes block creation time. The cryptocurrency also requires a lot power consumption to secure the network via “mining”, unlike many other cryptocurrencies that have switched to proof-of-stake that requires almost no additional power.
Ethereum is the second most popular cryptocurrency. It has scored itself the second place in the hierarchy of cryptocurrencies. This digital currency, launched in 2015, is anticipated to surpass Bitcoin and suspected by many to be the cryptocurrency of the future. Ethereum is a decentralized platform that runs smart contracts – applications that run precisely as programmed with no possibility of downtime, control, misrepresentation or third-party interference. With the Ethereum protocol, there is a cost for every operation. The cryptocurrency associated with the platform is called Ether and is used to pay for transaction verification by miners, as well as exchange charge.
Positive and negative sides to trading Ethereum:
The main advantage of Ethereum is its smart contrat feature, which affords the creation the countless number of DApps (Decentralized Applications) on the platform. The ethereum network also takes care of legal contracts online, thus dispensing middlemen that would otherwise require some form of payment for the service.
While the main disadvantages of Ethereum are:
- The platform has been unable to scale in speed, and as more DApps are built on the platform, the price of using the platform keeps increasing. Significant increase in Dapp users activity also slows down the platform drastically.
- The fact that there is no limit to the platforms ether supply does not help the platform’s reputation as an investment vehicle.
Ripple was launched in 2012 by Ripple Labs Inc., a US-based technology firm. This cryptocurrency is a technology that has a dual purpose: it can be used as a digital currency; and additionally, as digital payment network for financial exchanges. It is not compulsory for exchanges to be done directly on the network, as transactions can also be done via a sidechain.
Unlike most other cryptocurrencies, Ripple operates on an open-source platform that permits the transfer of money in any form – both fiat and cryptocurrency.
Positive and negative sides to trading Ripple:
- Ripple has a quick transaction speed, and this is why banks can use Ripple to make payments faster and less expensive both locally and internationally.
- The main disadvantage of Ripple is that is centrally controlled, so it is prone to manipulation.
Monero, which uses the CryptoNight proof-of-work algorithm, is thought to be the leading security-centered cryptocurrency. The technology solves the problem of privacy. People who might be under government surveillance can use Monero to carry out transactions while keeping their identity anonymous. Cryptocurrencies like this has a genuine function to help the underprivileged in the world – regardless of your creed, color, sex etc. – who might not be able to publicly use the traditional centralized systems.
Positive and negative sides to trading Monero:
- Monero is a security centered cryptocurrency. While it is possible to publicly share data on the network; there is also the capacity to keep each transaction private.
- The disadvantages of Monero are: it is relatively costly to transact; and there are limited user-friendly Monero wallets.
LiteCoin was created in 2011 by Charles Lee with support from the Bitcoin people group. Because it is based on the same decentralized protocol used by Bitcoin, it is often referred to as Bitcoin’s leading rival as it features upgrades to the initial Bitcoin network. When the cryptocurrency was first launched, it was perceived to be the ‘silver’ to Bitcoin’s ‘gold’ emulation. The primary reason of Litecoin’s creation is to fix the issues that Bitcoin had.
Positive and negative sides to trading Litecoin:
The main advantage of LiteCoin is its use of scripts as a proof-of-work algorithm and a significantly fast conﬁrmation time for transactions, when compare to cryptocurrencies like Bitcoin. This successfully enables a greater number of transactions to be processed by the network in a given time, decreasing potential bottlenecks, as observed with Bitcoin.
However, with Litecoin being the first fork of Bitcoin, it will still contain many the Bitcoin issues that were realized after the fork happen. Litecoin will still have scaling issues and transaction speed issues when compared to first generation cryptocurrencies like EOS and Cardano.
Disclaimer: This article is not investment advice, just an opinion on trading in the cryptocurrency market. It is the responsibility of the each trader to do proper research before making any trading division.
Featured image source: Pixabay.
Edited my Marc Johnson.
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