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3 Cryptocurrencies You Need To Know


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We are in the midst of an extraordinary situation in the financial markets. Situations like this only occur a few times in every investor's lifetime, and bring with them a tremendous opportunity for wealth creation.

Over the last 20 years, there have been three main chances for anyone to exponentially increase their wealth. The first one was the dot-com boom, followed by the aftermath of the financial crash of 2008 to 2009, and now a third is looming ahead.

The nature of special situations is that most investors doubt their validity until it is too late. Traditional investors react with cynicism, mockery, and uncertainty during these exciting periods. Convinced that the move will soon fizzle out, most investors remain very fearful and miss their chance to join the ranks of the newly wealthy.

Today's biggest opportunity for wealth creation is the cryptocurrency explosion of 2017. Called a bubble by many in the financial establishment, the speed and power of crypto's price moves have surprised even its most ardent bulls. While most investors remain frozen on the sidelines in a combination of fear and amazement, outsiders, risk takers, and a fortunate few are quietly amassing massive wealth.

I have personally met and had conversations with several freshly minted crypto multi-millionaires. They are the last folks you would suspect of earning great wealth in the financial markets. All of them were very young, counter-cultural, punk rock-type rebels with a passion for improving the world. Unlike their predecessors, these crypto rebels do not believe in destroying the existing order and harbor no plans of building a better tomorrow. Instead, they believe in creating a bright future and shifting power back to the individual.

To answer those who claim that cryptocurrencies will be a short-lived bubble, one fact says differently. Professional traders are not short bitcoin. The Bitcoin Investment Trust (an over-the-counter fund designed to track the price of bitcoin) only has 2.5% short interest, indicating that those in the know do not believe prices are going to drop anytime soon.

There is no doubt we are in the nascent stages of the most significant transfer of wealth in history. It's not too late to participate in this sea-change and grab some of this wealth for yourself!

Here are my three favorite cryptocurrencies and why I think they are going higher -- much higher.

Here Are 3 Cryptocurrencies You Need To Know

1. Bitcoin
By far the most popular and (so far) lucrative of all the cryptocurrencies, bitcoin boasts a market cap of nearly $168 billion. Individual bitcoin surpassed the $10,000 price barrier just last week. Both in value and in media interest, bitcoin is the undisputed leader in the world of cryptocurrencies.

Brilliantly designed by its unknown creator, with a limited supply of just 21 million coins, it is well on its way to being accepted as the first truly global, digital currency.

Bitcoin's parabolic move higher is extraordinary. The cypto is up over 1,250% in 2017, nearly 70% over the last 30 days, and 22% just in the previous week. In fact, these number may be out of date by the time you read this.

These ridiculous gains are being powered by a variety of drivers...

Institutional Acceptance: Major banks and financial institutions are exploring ways of adding bitcoin to their platforms. Amazon may soon accept the digital currency. Also, the Chicago Mercantile Exchange, the principal financial futures exchange, will soon be launching bitcoin futures. Futures should help settle the volatility and make bitcoin widely trusted across the board.

Market Domination: A market cap of $168 billion makes bitcoin larger than 95% of the stocks on the S&P 500. In fact, another 80% increase will place it solidly in the running with the top 10 highest capitalized firms on the S&P 500. The market domination and full acceptance provide bitcoin a substantial first-mover advantage merely unavailable to its competitors.

Limited Supply: The mysterious creator of bitcoin must have had some economic training. With great foresight, the creator limited the supply to 21 million bitcoin. Just under 17 million have been mined so far, meaning that demand can easily outstrip supply, sending prices into the stratosphere.

2. Ethereum
Ethereum is the second-most popular cryptocurrency in the world. Rather than being a peer-to-peer electronic cash system on the blockchain like Bitcoin, Ethereum focuses on running the code of the distributed public network itself. The currency of the system, ether, is the crypto-token that powers the system. In other words, Ethereum has a much broader appeal than Bitcoin.

Massive Real-World Applications: Ethereum's blockchain is much more advanced and capable than Bitcoin. It is written in Turing-complete code, meaning it is capable of running any algorithm ever created. It can support any program or business with an unrivaled perfection. Ethereum's smart contract ability, which can provide blockchain security to a wide range of applications, will be world-changing.

Transactional Speed: While it takes Bitcoin's blockchain 20 minutes to record a transaction, Ethereum's does it in 12 seconds.

Fortune 500 Company Acceptance: Intel, Microsoft, J.P. Morgan and Thomson Reuters are but a handful of the major global companies that are working on Ethereum-based applications. The early widespread acceptance among the most significant enterprises on earth proves Ethereum's long-term value.

3. Litecoin
This leading currency was launched in 2011 with the goal of being the silver to bitcoin's gold.

Compliments Rather Than Competes With Bitcoin: Litecoin was formed as a complementary currency to Bitcoin. While Bitcoin leads the pack, litecoin follows in its footsteps.

Price: Bitcoin's $10,000-plus price may seem dramatically overvalued, and might scare off many interested in cryptocurrency. Litecoin's $100 per coin cost, on the other hand, is much more palatable.

Scalability: Litecoin is the only dominant cryptocurrency that can be used on a vast enough scale to replace fiat currency (like dollars).

Risks To Consider: The primary threats in the above three cryptocurrencies are broker/dealer and hacker risk. Brokers can commit fraud or just close down for a variety of business reasons despite the cryptocurrency remaining solvent. Also, hackers are becoming more and more sophisticated and remain a risk to even the most secure investors.

Action To Take: Consider adding one or more of the above cryptocurrencies to your well-diversified portfolio. Coinbase.com is an excellent place to start investing in cryptocurrency.

Editor's Note: Prediction #5: A new way to cash in on digital currency is likely to make early investors rich . This is an opportunity of enormous proportions, similar to buying Bitcoin at just 8¢ before it surged to over $8,000. Read on to see why some observers are calling this the "opportunity of the century." Plus, get 11 more shocking investment predictions for 2018. Click here to learn more .

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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This article appears in: Investing , Stocks


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