Missed Bitcoin and Ethereum? No problem. Next-generation cryptocurrencies like Avalanche (AVAX 0.24%) and The Sandbox (SAND +0.02%) offer potentially better growth prospects as they push the limits of blockchain technology. Let's explore the reasons why these under-the-radar cryptocurrencies look poised for explosive long-term growth.
1. Avalanche
Launched in 2020, Avalanche is an Ethereum rival focused on creating a platform for decentralized application (DApp) development. With a market cap of $19 billion, Avalanche is dirt cheap compared to Ethereum (which is worth $563 billion), and it can rapidly gain ground because of its advantages in transaction speed.
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DApps are self-executing programs allowing users to interact on a blockchain without a centralized intermediary. But while DApps expand a blockchain's potential use cases, they also increase its transaction volume -- overloading legacy platforms like Ethereum, which struggles with slow transaction speed (13 per second) and soaring fees.
Ethereum uses a cumbersome proof-of-work mechanism where miners solve puzzles to validate transactions. Developers plan to change this with an upgrade called Ethereum 2.0, but it is unclear when that will go live.
In the meantime, Avalanche uses a faster and less energy-intensive proof-of-stake validation system. Miners verify transactions using tokens they own, helping process an impressive 4,500 transactions per second. The Avalanche network is also naturally deflationary. According to its website, all transaction fees are burned (sent to an inaccessible wallet) to promote the scarcity of its native token, AVAX.
So far, nearly 374,000 coins worth almost $34 million have been removed from circulation.
2. The Sandbox
The metaverse is a potential iteration of the internet that could support a 3D virtual world. And the concept is spawning a whole generation of cryptocurrencies designed to facilitate transactions within the simulation. The Sandbox can set itself apart through its focus on interactive gaming.
Image source: Getty Images.
According to its whitepaper, the Sandbox is building a virtual world where players can "build, own, and monetize their gaming experiences." Similar to publicly traded video game company Roblox, it features a game creation engine that allows users to make their own digital assets.
The assets are created and traded as non-fungible tokens (NFTS) which are digital proof of ownership stored on the blockchain.
The Sandbox boasts a strong development team with real-world intellectual property and experience creating games. According to its developers, the game is part of a larger Sandbox Franchise, which has helped develop world-creation games on Android and Apple's iOS since 2012, boasting over 40,000,000 downloads across its portfolio.
According to its development roadmap, The Sandbox plans to open its metaverse to select users in the second quarter of 2022. But as with all cryptocurrencies, everything should be taken with a grain of salt until the developers actually deliver a finished working product.
Betting on the next big thing
Everyone wants to get in on the ground floor of a long-term growth opportunity. And with their relatively small market caps, Avalanche and The Sandbox offer that potential. That said, Avalanche looks like the safer bet because it is essentially a finished product. The Sandbox's use cases are more unique and exciting, but it is at a much earlier stage in its development, making it more uncertain for investors.
