Due to the high volatility that the cryptocurrency market moves with in my opinion its best to take a hedge fund managers approach when investing in individual cryptocurrencies. I have listed below what I would call low, medium and high risk cryptocurrencies with explanations and details on each currency.
Low Risk:
–Bitcoin (BTC) is what started the whole cryptocurrency adoption, the inventor is unknown but goes by the pseudo name Satoshi Nakamoto. Bitcoin is the most known cryptocurrency in the world released in 2009 and at the time of writing 1 BTC is the equivalent to £32,450.
-Ethereum (ETH) was the brainchild of Vitalik Buterin with other notable founders including Gavin Wood (creator of Polkadot and Kusama), Charles Hoskinson (founder of Cardano) working alongside other programmers, developers and software engineers. The initial idea was thought up in 2013 with the goal of building decentralized applications within a huge computer network, released in 2015 its use of smart contracts has meant countless cryptocurrencies and NFT’s have been created and launched on the Ethereum network. To date 1 Ethereum is £2498 and its all time high (ath) was £3665, it’s ranked the second most bought cryptocurrency in the world after Bitcoin in terms of market cap. It has literally thousands of cryptocurrencies that have been built using the Ethereum network as ERC20 tokens.
–Tether (USDT) is a stablecoin which is pegged to the US dollar. USDT is backed by actual assets on Tether’s platform and each unit of USDT has a monetary value of one US dollar. Many users buy Tether its ranked within the top 5 cryptocurrencies held in the world as its value doesn’t follow the volatility of the rest of the cryptocurrency market.
Medium Risk:
-Cardano (ADA) is a proof-of-stake blockchain platform created by Charles Hoskinson in 2017 that like Ethereum uses smart contracts. It’s widely used by agricultural companies to track from field to fork.
-Solana (SOL) uses blockchain technology to provide decentralized finance solutions (DeFi) and was launched in 2020. Much like Ethereum offering the creation of tokens, used in gaming and for NFTs. It is praised for its high-speed transactions and performance
-Avalanche (AVAX) one of the fastest smart contract platforms that uses blockchain technology in the world. It’s also low cost and eco-friendly.
-Polkadot (DOT) connects and secures a network of specialized blockchains allowing the cross-chain transfer of data and any asset type. It provides a foundation to support the decentralised web 3.0.
-Polygon (MATIC) is a token used in cryptocurrency transactions as a cheaper alternative to transferring ETH. Its platform supports multiple types of applications. It transforms Ethereum into an Internet of Blockchains like Polkadot, Cosmos, Avalanche etc and makes use of Ethereum’s security, vibrant ecosystem and openness
High Risk:
-XRP (XRP) a token by the US company Ripple. For the past 2 years has been under investigation and in court with the US Securities and Exchanges Commission (SEC) over questions about whether it’s a security or not. A top ten ranked cryptocurrency used in transactions by banks, institutions, companies and individuals all over the world due to its high speed transaction times.
-Decentraland (MANA) another ERC-20 token allows users to invest in virtual property and land. With Mark Zuckerburg announcing in November 2021 that Facebook, WhatsApp, Instagram etc would be geared towards the new Metaverse or online virtual world this token has seen a sharp increase in value.
-Sandbox (SAND) again linked to the Metaverse is a virtual world where online gamers can create, own and monetize various things like weapons, characters, vehicles etc using SAND an ERC-20 token. Digital assets or NFTs can be uploaded to the marketplace and used to create gaming experiences with The Sandbox Game Maker.
-Derace (DERC) describe itself as a “complete NFT horseracing ecosystem” allows users to create virtual horses and even set up virtual horseracing competitions, which people can then bet on. This has seen a massive increase largely due to the COVID-19 pandemic and shutdown of horseracing events around the world, increasing its popularity amongst horseracing fans and also since the Metaverse announcement has increased in circulation.
-Dogecoin (DOGE) A meme coin that has been heavily endorsed by Elon Musk was initially invented as a joke but actually became used in forums like Reddit as a form of reward between users. Elon Musk’s Tesla is rumoured to be in the process of allowing payments in this highly volatile priced token with an extremely large circulation supply, but a year after this announcement this has still not happened and is extremely unlikely to happen given that Tesla was allowing transactions to be made in Bitcoin for a brief period of time in 2021.
-Shiba Inu (SHIB) Another meme coin with no real utility, came to prominence in 2021 after the success of other meme coins like Doge.
-Terra Classic (LUNC) originally called Terra (Luna) intended to combine the rise in blockchain technology and cryptocurrency with a focus on price stability and usability. Was ranked in the top ten cryptocurrencies in the world but since its huge crash in May 2022 it has forked into Terra Classic and currently ranked 35 by coinmarketcap.
