3 Easy Cryptocurrencies Forever – The Motley Fool | Jewelry Dukan

The process of determining whether a particular stock belongs in your portfolio should focus on a handful of things.

It turns out that the same strategy can be applied to one of the newest asset classes, cryptocurrencies.

Stocks and cryptocurrencies are not that different. Both offer investors the opportunity to earn passive income. Both fluctuate in value as demand rises and falls. Finally, both must offer something useful.

In general, cryptocurrency investors need to look for blockchains that offer real utility and purpose. To do this, we can look at statistics about the growth of a blockchain, the problem that cryptocurrency is designed to solve, and the long-term potential it holds.

Based on this, there are three cryptos that stand out from the crowd: Bitcoin (BTC 0.31%), ether (ETH 1.17%)and polygon (MATIK -0.02%).

The original cryptocurrency still has it

Bitcoin’s rise as the most valuable cryptocurrency has made it the most viable candidate for public companies and institutional investors looking to gain exposure to the asset class. In recent years, companies like Tesla, MicroStrategyand block have all added bitcoin to their balance sheets.

BlackRock, the world’s largest wealth management company, offers its high-profile clientele the opportunity to buy Bitcoin. As such, the cryptocurrency is directly exposed to amounts of wealth that no other cryptocurrency has access to. If Bitcoin continues to attract the attention of institutional investors, a price hike could follow.

In addition, the Bitcoin network has been steadily growing, a major sign of its increasing usage and value in the world. We can look at the number of transactions on the blockchain over the past 10 years to get an idea of ​​how much bitcoin is growing. Ten years ago, there were only about 30,000 transactions per day on the Bitcoin blockchain. Today that number is around 260,000; more than 750% increase.

As more and more national currencies devalue as the money supply grows, more and more investors are looking to Bitcoin as a hedge against devaluation. Due to its limited scarcity and advanced levels of security and decentralization, Bitcoin cannot be manipulated like government currencies or even some of its other cryptocurrency counterparts.

The DeFi champion is not stopping

Ethereum is the second most valuable cryptocurrency, but offers a completely different utility than Bitcoin. It’s a programmable blockchain. This means developers can build applications with pieces of code, known as smart contracts, that automatically enforce actions when certain conditions are met.

These smart contracts are the backbone of a sector known as decentralized finance, or DeFi. Since 2020, Ethereum’s DeFi ecosystem has grown from around $600 million to more than $30 billion today. At one point in 2021, Ethereum’s DeFi was worth more than $100 billion.

Although growth has slowed during the recent bear market, Ethereum continues to be the favorite of DeFi developers. As DeFi evolves and offers alternatives to traditional financial products like lending and borrowing, Ethereum should continue to dominate the burgeoning sector, especially with upgrades like The Merge.

A rising Web3 star

In just five years, Polygon has become one of the most popular and valuable Layer 2 blockchains.

Rather than trying to reinvent the wheel, Polygon has taken a different approach and instead works on the Ethereum blockchain. As Ethereum has become one of the most popular blockchains, the network has become slow, congested, and at times costly to use. To counter this, Polygon processes transactions cheaper and faster on its own blockchain and then adds them back to Ethereum.

As a result, Polygon’s potential is attracting the attention of some of the world’s most productive companies. Lately, Disney (DIS -2.23%) has selected Polygon as part of its 2022 class of accelerator program, a venture capital firm providing funding and resources to participants. Additionally, Meta announced that the blockchain will be one of four to be integrated into Facebook and Instagram’s new non-fungible token (NFT) functionality. Coke has even released a number of NFTs on the blockchain.

Perhaps most interesting is Polygon’s role in the development of Web3, a name given to the Internet’s next evolution that aims to be decentralized, permissionless, and fully open source.

Polygon co-founder Mihailo Bjelic envisions Polygon eventually becoming “the holy grail of Web3 infrastructure”. He believes that the ideal Web3 blockchain should have three main qualities: “scalability, security, and Ethereum compatibility” – criteria that Polygon easily meets.

Lucrative opportunities abound

It is becoming increasingly difficult to ignore the role cryptocurrencies could play in the future of finance. Heeding technological and societal trends is one of the most efficient ways to position your portfolio for long-term success. In hindsight it’s always 20/20, but imagine if you had invested in household names like Apple and Amazon years before.

As in the past, technology evolves to meet the needs of society. Investors can follow suit and realize that as trends evolve, there are similar opportunities that can be exploited in the world of crypto today.

John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister of Mark Zuckerberg, CEO of Meta Platforms, is a member of The Motley Fool’s board of directors. RJ Fulton has positions in Bitcoin and Ethereum. The Motley Fool has positions in and recommends Amazon, Apple, Bitcoin, Block, Inc., Ethereum, Meta Platforms, Inc., Polygon, Tesla, and Walt Disney. The Motley Fool recommends the following options: long January 2024 $145 calls on Walt Disney, long January 2024 $47.50 calls on Coca-Cola, long March 2023 $120 calls on Apple, short January 2024 $155 calls on Walt Disney, and short March 2023 $130 calls Calls on Apple. The Motley Fool has a disclosure policy.

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