What cryptocurrency to invest in 2023

Top cryptocurrencies in 2023

At the moment, the top cryptocurrencies by capitalization are as follows:

1. Bitcoin;
2. Ethereum;
3. Tether;
4. Binance Coin.

In the article, I analyzed whether it is worth considering as an investment in cryptocurrency both the most popular options, and promising and not so hyped coins:

Bitcoin

Bitcoin is the first and most popular cryptocurrency in the world. It was created in 2009 to offer an alternative to traditional fiat currencies and financial systems. One of the reasons for its popularity is that it is decentralized and not controlled by any single government or organization. In addition, Bitcoin has a limited supply (only 21 million coins), which makes it a deflationary asset and attractive to investors.

Despite the increasing complexity of mining, rising energy costs, huge competition and a price that has fallen compared to 2021, Bitcoin confidently takes first place in terms of capitalization. And many experts expect BTC to grow in 2024-2025.

Bitcoin advantages:

• Limited offer;
• High decentralization;
• Fame and high liquidity;
• The US regulator SEC considers bitcoin a commodity, not a stock.

Bitcoin disadvantages:

• Increasing mining difficulty;
• Big competition;
• Rising electricity costs when mining.

Ethereum

Ethereum is the second largest cryptocurrency in the world by capitalization and a platform for creating blockchain-based decentralized applications. It has become popular due to its smart contract technology, which allows developers to create complex and automated financial products and services. In addition, Ethereum has a large and active developer community and supports many other cryptocurrencies and tokens. All this makes it one of the best cryptocurrencies.

Ethereum advantages:

• Security level: Through the use of cryptographic methods and decentralization, the Ethereum platform provides a high level of security for its users;
• Contract management: Ethereum allows you to create and execute smart contracts that are automatically executed when certain conditions are met;
• Decentralized applications (DApps): thanks to blockchain technology and smart contracts, it is possible to create decentralized applications (DApps) on the Ethereum platform that work autonomously and do not depend on a central server;
• Recently moved away from non-green mining to “green” Proof-of-Stake.

Ethereum disadvantages:

• Rising transaction costs. The popularity of Ethereum has led to an increase in transaction costs. Ethereum transaction fees, also known as "gas", can fluctuate and be quite expensive. However, developers are actively working on it. Various solutions are appearing such as Arbitrum, Optimism and others. They are built on top of Ethereum and take over part of the transactions, thus reducing fees and increasing the speed of transactions;
• Potential for crypto inflation. Although Ethereum has an annual issuance limit of 18 million Ether per year, there is no lifetime limit on the potential number of coins;

Tether

The most popular stablecoin on the market is difficult to consider as an investment opportunity, because its essence is that its price is pegged to the US dollar. Tether is good for paying for goods and services or as a reserve place to store assets in case other coins start to fall. Even in the harshest crypto winter of 2022, Tether did not fall below $0.9959 - a stability worthy of respect.

Tether advantages:

• The longest track record among stablecoins;
• Widely used on a huge number of exchanges;
• According to the company, regular audits of internal reserves are carried out to check the provision of Tether

Tether disadvantages:

• Possibility to manipulate rates through incomplete decentralization - a significant part of Tether is focused on just 104 wallets;
• No US dollar collateral – in 2019, the company abandoned fiat exchange rate stability and moved to debt, funds and deposits.

Binance Coin

Binance Coin is the utility token of the largest crypto exchange in the world, Binance. In terms of capitalization, if you do not take into account the stablecoins USDT and USDC, Binance Coin (or BNB) ranks third in the world after BTC and ETH.

In order to better assess the growth prospects of BNB, you need to understand what utility tokens are.

In cryptocurrencies, there are three gradations of tokens - Asset tokens (they have value in themselves, a vivid example is bitcoin as the first and most famous cryptocurrency in the world), Payment Tokens (used in payments, a vivid example is XRP from Ripple) and Utility tokens.

Utility tokens are a type of token that is designed to gain access to certain products or services on a token platform. For example, if a person buys bitcoin, he invests in an investment token and waits for its price to rise on the wave of the market's supply/demand mechanism. In the case of service tokens, everything is different - a person receives from the owner of the service a certain right to a product or service, which is acquired through utility tokens.

BNB is the most popular utility token in the world. Initially, it was used simply as a means of paying fees on the Binance network. The coin was based on the ERC20 standard using the Ethereum blockchain. BNB powered the entire Binance ecosystem and provided a discount on exchange fees.

The BNB token was launched in 2017 - the exchange unlocked 100 million coins and offered to buy 1 Binance Coin for 11 cents. The peak price of the coin was reached on May 10, 2021 - then 686 dollars were given for 1 token.

The CEO of Binance said that the number of tokens is limited - there can be no more than 200 million of them. Binance regularly burns BNB tokens in order to keep the coin deflationary. Every 3 months, the crypto exchange takes 20% of its profits, buys back BNB tokens with this money to burn them. BNB will be burned exactly until exactly 100 million of them remain, that is, 50% of the original amount, and this allows the token not to lose value. Therefore, BNB supporters say that in the long term, the price of the token will rise - due to the fact that there are fewer and fewer coins.

BNB advantages:

• Trading fee discounts when using BNB on the Binance platform;
• Wide scope: BNB token can be used in DeFi, liquidity pools, DEX trading, as payment on NFT marketplaces, to pay fees within Binance, or just deposit and wait for profits to grow;
• The ability to use Binance crypto loans - the exchange lends BTC, ETH, BUSD and USDT for BNB tokens for a period of 7 to 180 days.

BNB disadvantages:

• Lack of true decentralization - BNB belongs to Binance, and the exchange is able to control it, and therefore easily manipulated;
• The BNB token is strong only inside the Binance ecosystem - outside the exchange, it loses almost all of its functionality;
• The BNB coin rate directly depends on the development of the Binance exchange. Will Binance be able to keep the lead in the race with other crypto exchanges? In the case of investing in BNB, you are actually betting on the development of Binance and its victory in the crypto exchange competition;
• Due to the manipulative nature of the asset, the US regulator SEC may give a red light to BNB.

Promising cryptocurrencies

Solana

An extremely promising project with a high transaction speed, focused on launching smart contracts and interacting with decentralized financial systems.

Solana can process thousands of transactions per second and the developer and user fees remain below $0.01. In addition, thanks to the Proof of Stake system and other innovations, Solana does not require high mining costs and is not so harmful to the environment.

Solana advantages:

• Extremely high transaction speed;

• Low transaction costs;

• Ability to support smart contracts and NFTs;

• Low carbon footprint;

• Low mining costs.

Solana disadvantages: 

• The main investor was the FTX exchange and its affiliates;

• Instability – the network periodically have “breaks” for several hours;

• Many dapp developers are moving to other blockchains.

Litecoin (LTC)

Litecoin (LTC) is a project created in 2011 designed to provide fast, secure and low-cost payments using the unique properties of blockchain technology and open source.

Litecoin advantages:

• Almost instant transactions (4 times faster) compared to Bitcoin (BTC);

• Low transaction costs;

• Decentralization;

• User data protection, anonymity;

• The project has existed for more than 10 years.

Litecoin disadvantages:

• May encounter regulation;

• The token is actively used in the dark web;

• PoW tokens other than bitcoin may not be able to compete with the emerging DeFi (decentralized finance) segment, where most projects operate on more modern PoS (Proof-of-Stake).

History of LTC price, over 10 years of trading

Cardano (ADA)

Cardano is a blockchain platform that uses a proof-of-stake consensus protocol (called Ouroboros) to validate transactions without high energy costs. The project is great for launching smart contracts for cryptocurrency transactions while maintaining the transparency principle.

Cardano advantages:

• Environmental friendliness: low energy consumption;
• Blockchain with a scientific approach: the project actively interacts with scientists to create peer-reviewed scientific papers that guide the development of the blockchain;
• Strong technical team led by former Ethereum developers;
• Scalability: Through the implementation of settlement and computational layers, Cardano guarantees unlimited scalability and fast transactions.

Cardano disadvantages: 

• Cardano is still under development;
• High competition.

Сosmos (ATOM)

Cosmos is a blockchain platform that differs from other blockchain solutions in that it allows the creation of interoperable blockchains. This means that blockchains built on Cosmos can work together in a single ecosystem, exchange data and transfer digital assets among themselves. This approach solves the problem of isolated blockchains and expands the possibilities of using blockchain technology.

The native ATOM token is used in the Cosmos ecosystem as a means of payment, as well as for voting and decision-making in the ecosystem. Owning ATOM also gives you the opportunity to become a validator of the Cosmos network and receive rewards for supporting the blockchain. This makes ATOM not only a means of payment, but also a tool for participating in the ecosystem and generating income.

Cosmos advantages:

• Rapidly developing ecosystem;
• Many blockchains are based on Cosmos, such as OKC Chain and others;
• High profitability for staking;
• Leader in its niche of interoperable blockchains.

Cosmos disadvantages: 

• May not be competitive;
• Some users complain about staking issues