Nowadays, investors have numerous options to diversify their portfolios, including both traditional solutions that have been used for several years and newer ones that have recently emerged on the market. Investing in crypto is suitable for both the short-term and long-term, depending on each individual's needs and preferences. For instance, those who do not have a high risk tolerance in cryptocurrencies should consider a long-term approach, as this way, they will be less exposed to the volatility that digital coins are known for.
Plus, history has proven that the value of cryptocurrencies can appreciate over time, which is why a long-term investment can really help you build wealth. Certain cryptocurrencies are suitable for a long-term approach. In this article, we will analyze a list of them, so that you can discover the top cryptocurrency to add to your portfolio. Keep reading to learn more.
There are many reasons why a long-term approach is superior to the short-term option. Here are some of them.
When Bitcoin was first launched on the market, it was valued at only a couple of cents, but that is no longer the case, as its value has reached many highs. This cryptocurrency has become the largest by market capitalization. This means that if you had bought Bitcoin and hadn't sold it, then you would have ended with a great investment. Cryptocurrencies are characterized by high volatility, where prices can fluctuate frequently over a short period. This option is suitable for those who want to escape some of the volatility and minimize risk. However, there is a shortcoming to this approach, as you won't be able to take advantage of short-term profits.
When considering a long-term investment, you can also enjoy more peace of mind, as you won't need to change your strategy frequently. In the short term, you need to monitor the crypto price, as missing opportunities can be costly. However, that is not the case with cryptocurrencies, which have less active management, and you won't need to oversee the market that much.
Bitcoin is a pioneer and has grown the most in popularity, so it is, of course, one of the best options for long-term crypto investment. This cryptocurrency has earned the nickname "digital gold," and it is part of the portfolios of investors worldwide, who seek an alternative to fiat money and a means to hedge against inflation.
Bitcoin has a capped supply of 21 million tokens, which maintains scarcity and can even have a positive impact on the Bitcoin price, as it helps grow its value. Bitcoin is the oldest cryptocurrency, which means it has experienced many ups and downs yet still remains a stable presence in the market. This makes it a more suitable solution over the rest, and a more trusted choice.
Ethereum (ETH) is another important cryptocurrency for long-term investment, ranking as the second-largest digital coin in terms of market capitalization. Ethereum was launched in 2014 as an alternative to Bitcoin, and it managed to bring an improved solution by leveraging more innovations from blockchain technology. In this way, it integrated smart contracts, NFTs, and DeFi protocols, thereby introducing even more utility to the game.
This is why, at present, Ethereum is the largest blockchain where developers can leverage NFTs and decentralized applications. Ethereum continually seeks upgrades to enhance its offerings. This is why this project has introduced a layer-two solution to offer lower costs and faster transaction speeds.
Solana (SOL) has also been in the spotlight lately, and it is a direct competitor to Ethereum, with some even claiming that this project offers improved solutions over those of Ethereum. And indeed, it has some great features. For instance, Solana is fast, processing up to 2,600 transactions per second. This has led many to turn to Solana and make it a focus of their long-term investments.
Cardano has taken a different approach from the rest, in that it was centered on academic performance before getting launched on the market. In the development of Cardano, Charles Hoskinson, co-founder of Ethereum, also participated. He was disappointed with Ethereum’s approach and, as a result, sought to create a different blockchain that could leverage smart contracts. With its innovative alternative, Cardano has gained recognition for its peer-reviewed methodology, which distinguishes it from many other blockchain projects.
There are some main differences between Cardano and Ethereum. For instance, Cardano NFTs are created on the same architecture as Cardano, rather than using smart contracts. With this method, Cardano creates more secure transactions and lower trust fees.
XRP is also an innovative digital coin that the Ripple company created. XRP aimed to enable cross-border and faster transactions. XRP has become even more attractive as a long-term investment, as the lawsuit between Ripple and the SEC has finally been resolved. This has placed XRP into the spotlight and attracted even more attention to this digital coin.
The primary advantage of XRP is that it facilitates cross-border transactions. Over the years, XRP has also formed notable partnerships with prominent institutions, including the Bank of America and Santander.
If you want to adopt a more cautious approach, avoiding the volatility of cryptocurrencies, then a long-term investment may be the best solution for you. Additionally, a long-term investment also means that you can grow your wealth over time and won't need to be as engaged in the crypto market. Plus, there are a lot of digital coins to consider when you want to opt for a long-term approach.
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