With war at bay, cryptocurrencies are playing a major role in the finance industry
The most popular cryptocurrency, bitcoin, has had volatile price moves this year
The largest cryptocurrencies are facing high competition from newcomers like Solana
The cryptocurrency market is going through a rough patch, with the market’s value down 13% to $1.9 trillion so far this year. However, crypto has a track record of rebounding over time, and some assets will likely do better than others
Often dubbed an “Ethereum killer” because of its blazing fast speeds, Solana is the ninth-largest cryptocurrency with a market cap of $31 billion. The network can maintain its long-term edge with an exciting expansion into fintech and financial services.
According to data from coinbase.com, Solana can handle 50,000 transactions per second compared to Ethereum’s 15. And this makes it ideal for decentralized application (dApp) development. These are complex self-executing programs that dramatically increase the workload on a blockchain and will benefit from Solana’s high capacity.
So far, Solana hosts around 500 dApps, which is a far cry from rival Ethereum’s 3,000. But Solana looks poised to gain ground because of its technical prowess. And it isn’t limiting itself to just dApps.
In February, the platform’s developer Solana Labs announced Solana Pay, a payments system designed to help merchants accept cryptocurrency payments (including Solana’s native token SOL) directly from customers. Solana’s fintech expansion highlights its potential for real-world utility, which is excellent news for long-term investors.
Never underestimate the power of a strong brand. Ethereum’s staying power comes from its first-mover advantage as a platform for dApp development, offering this functionality back in 2015. And planned upgrades can help the platform stay relevant in the increasingly competitive blockchain industry.
As mentioned earlier, Ethereum is being challenged by new rivals like Solana in technical specs. This is because of its cumbersome proof-of-work (PoW) consensus mechanism where miners solve puzzles to verify transactions. To fix these drawbacks, Ethereum plans to implement what it calls the consensus layer upgrade to transition it to a proof-of-stake (PoS) system where miners verify transactions using existing coins.
It is unclear when Ethereum’s upgrades will go live. But the platform has a track record of implementing improvements, so changes like this are not unprecedented.
In the meantime, Ethereum continues to attract the majority of dApp development, with almost 3,000 of the roughly 4,000 total projects. And this means its shortcomings are not scaring away users. Ethereum’s reputation as an established and trustworthy blockchain will be key to its long-term success.
There is room for multiple similar blockchains
While Solana and Ethereum compete as a platform for dApp development, cryptocurrency isn’t a zero-sum game. History shows us there is room for many similar assets to benefit as the overall opportunity expands.
For example, Ethereum improved upon Bitcoin but didn’t kill it. Likewise, Solana won’t necessarily kill Ethereum, either — despite its technical advantages. Both assets look poised for long-term success because of their strong brands and active development teams.
3. Polygon (MATIC)
Polygon has a market cap just over $12 billion, making it about 1.5% the size of market leader Bitcoin. If you subscribe to the belief that industry giant Ethereum is going to be a long-term winner, Polygon could be a way to leverage its success. Polygon’s goal is to increase the scalability of Ethereum by allowing theoretically limitless apps to run on the network, the idea being that the more accessible Ethereum is, the more successful it will be in the long run.
Polygon is also part of a movement dubbed “Web3” and it aims to be a decentralized version of Amazon Web Services. Moves like this have drawn the attention of big players in the space, such as Sequoia Capital India, which recently led a $450 million investment into Polygon. According to Shailesh Lakhani, managing director of Sequoia India, “Thousands of developers across a range of applications are choosing Polygon and their complete set of scaling solutions for the Ethereum ecosystem,” making it a solid investment. Down about 36% YTD in 2022, long-term believers in Polygon could have an attractive entry point.Simple Ways To Start Investing for Any BudgetWondering how to start investing with minimal effort?Learn More
4. Algorand (ALGO)
With a market cap of just $5.7 billion, Algorand is among the smallest of the big-time players in the crypto world. Believers suggest that this relatively small market cap means that big gains could be awaiting the crypto in the future, as it plays catch-up to its largest brethren. However, with high potential reward comes high risk, and Algorand has seen its value essentially cut in the first two months of 2022 alone.
Algorand was launched in June 2019 by MIT professor Silvio Micali, and it’s designed as an open-source, permissionless blockchain network. Nitish Sharma, Global CEO of TP Global FX, said, “Algorand is designed to be a payments-focused network with rapid transactions and a strong focus on achieving near-instant finality — that means processing over 1,000 transactions per second (TPS) and achieving transaction finality in less than five seconds.” As speed draws investor attention in the crypto world, Algorand is a favorite of many crypto investors, who also like its developer support and real-world use cases.
5. Avalanche (AVAX)
Much like Solana, one of the main strengths of Avalanche is its speed, which at 4,500 transactions per second is nearly twice as fast as its competitor. Avalanche can reach its speed thanks to its structure, which reduces network congestion. The details are complex and fit for developers, but essentially Avalanche divides chains, execution environments and deployments, allowing them each to have their own avenue.
Avalanche is compatible with Ethereum, providing it with another edge over competitors, as developers can launch apps on the platform in the language of Ethereum. With over 170 existing projects on Avalanche and more to come in the future, additional investment is likely to follow. Co-founder and CEO of cryptocurrency exchange FTX Sam Bankman-Fried is a big believer in Avalanche, telling Decrypt, “I think that there’s a world in which it gets absolutely huge.” Raj A. Kapoor, founder of the India Blockchain Alliance, concurs, saying that Avalanche has “…several projects lined up for 2022, which can boost its prospects despite any dip. Its strategic partnership with Deloitte augurs well. It is also linking with Web3 accelerators. Mix this up and these make for a good long term buy.”