With just nine days to go before we turn the page on 2021, it's fair to say that cryptocurrency investors have enjoyed another above-average year. Through Dec. 18, the aggregate value of all digital currencies has risen by 185%. Further, the market value of all cryptocurrencies is up by more than 1,400% since the March 2020 low.
While throwing a dart at many of the most-popular cryptocurrencies over the past year would have worked out for investors, there are five cryptocurrencies that have really stood out. So much so, that they're a sure thing to be on Santa's nice list this holiday season.
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Solana
Want to know an easy way to get on Santa's nice list? Provide a greater than 11,000% year-to-date gain for investors. That's precisely what Solana (SOL +3.04%) has done for investors that had the luck, stomach, and wherewithal to buy it at midnight on Jan. 1.
Since old Saint Nick's entire job is based on delivering presents to households worldwide in one night, he's bound to appreciate Solana's need for speed. According to its developers, Solana is capable of 50,000 transactions per second (TPS). For comparison, the two most-popular blockchain networks on the planet, Bitcoin and Ethereum (ETH 1.26%), process a respective 7 TPS and 13 TPS. In fact, Solana's advertised TPS is more than double that of payment processing kingpin Visa (24,000 TPS).
What makes Solana so special is its unique proof-of-history protocol. Instead of validators wasting precious time by having to talk to each other to confirm the amount of time that's lapsed between events, the proof-of-history protocol establishes a record of an event. This expedites network processing and allows for rapid scaling.
Although Solana remains a bit rough around the edges, its sheer speed gives it true long-term potential and staying power.
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Algorand
Another cryptocurrency sure to bring some holiday cheer is Algorand (ALGO +1.15%). This lesser-followed digital coin is up by close to 300% this year and looks to have a bright future.
Like Solana, Algorand is going to catch Santa's eye because of the efficiency of its blockchain network. As of this past weekend, Algorand was processing at 1,162 TPS, and it offered a block finality of 4.36 seconds. What this means is transactions are being validated and settled in just a little over four seconds. Comparatively, cross-border payments with existing financial infrastructure can take up to a week to be verified and settle.
Yet, what's more exciting about Algorand is the project's focus on blockchain interoperability. With so many unique blockchain projects in development, many are at risk of not being compatible with one another, and therefore being unable to exchange files, data, or money. Algorand's developers are focused on bridging these gaps, especially in the business world.
The icing on the cake here is Algorand also has a special consensus mechanism, known as pure proof of stake (PPoS). With PPoS, users are chosen secretly and at random to propose blocks and vote on proposals. Thus, PPoS ensures that bad actors holding small amounts of ALGO can't disrupt the network.
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Axie Infinity
Santa is also sure to put Axie Infinity (AXS +0.00%) on his nice list, especially considering how much joy it's brought to investors this year. The AXS token has skyrocketed higher by 18,600% in 2021.
Axie Infinity is a play-to earn game built on the Ethereum blockchain. It allows users to collect, raise, breed, and battle monsters, which are known as Axies. At least three Axies are needed to go to battle, with the winner earning experience points that they can use to improve their Axies.
While there are no shortage of games or gaming platforms to choose from, what makes Axie Infinity so intriguing is that each Axie is a non-fungible token (NFT). This means users own their Axies as digital assets that can be used in gameplay or monetized in a marketplace (i.e., they can be bought or sold to other users).
What's really allowed Axie Infinity to stand is the real-world revenue the game is bringing in. According to TokenTerminal.com, Axie Infinity has generated $1.24 billion in trailing 180-day protocol revenue. That makes it the second-largest decentralized application (dApp) by revenue over that span, behind only Ethereum ($4.73 billion). These dollar figures demonstrate real-world appeal.
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Avalanche
A fourth cryptocurrency that's been a true present under the tree for investors this year is Avalanche (AVAX +0.81%). After beginning the year around $3 per AVAX token, Avalanche has moonshot over 3,500% higher to $116.
Similar to Solana and Algorand, the good tidings Avalanche provides come in the form of a very fast and highly efficient network. The Avalanche development team claims its smart contract-based network can process more than 4,500 TPS and finalize transactions in under two seconds. Smart contracts are protocols that help to enforce, verify, and facilitate the negotiation of a contract between two parties. They can be particularly useful in nonfinancial applications, such as managing supply chains.
But what might be most responsible for getting Avalanche on Santa's nice list is its ability to play well with others. You see, the Ethereum Virtual Machine is already running on Avalanche's blockchain. Even though Ethereum is the preferred destination to build dApps, Avalanche offers one heck of a dangling carrot considering its faster execution, lower transaction costs, and clear-cut competitive advantages, relative to the Ethereum network.
Suffice it to say, Avalanche looks to have plenty of momentum heading into 2022.
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Cardano
The fifth and final cryptocurrency to find its way onto Santa's nice list is Cardano (ADA +2.42%). Gaining 625% through Dec. 18 is more than enough to send investors caroling through the streets.
The reason Santa would think so highly of Cardano has to do with the "milk and cookies" the development team has been leaving out for investors. In other words, Cardano's developers are providing transparent updates as to the direction the network will head next.
For example, in July 2020, the Shelley upgrade went live. This upgrade increased the number of nodes that users could run on the network. In the wake of this upgrade, the average number of daily transactions on Cardano's blockchain catapulted from around 2,000 to more than 100,000.
In September 2021, the much-anticipated Goguen update made its debut. Goguen brings smart-contract capability to the Cardano blockchain, which in turn allows for more complex transactions. Goguen is Cardano's ticket to becoming a serious threat to Ethereum.
Looking ahead, the Hydra upgrade is what'll make the most noise. Hydra will maneuver transactions to off-chain staking pools (i.e., hydra nodes), which'll allow for rapid scaling without adversely impacting the processing efficiency of the main blockchain. In short, it means Cardano could eventually blow Visa's 24,000 TPS out of the water.
