There are now believed to be more than 8,000 cryptocurrencies in existence since digital assets that trade on the distributed ledger blockchain technology have gained traction in recent years. With so many out there, it can be difficult to know which ones are legitimate. While more than a few are worthy, it shouldn't come as a surprise that the two cryptocurrencies we believe you should buy and hold forever are the two most popular: Bitcoin (BTC 2.93%) and Ethereum (ETH 2.08%). Here's why.
1. Bitcoin is here to stay -- for real
Bram Berkowitz: Hearing that Bitcoin is here to stay is nothing new for those in the crypto world, but I'm not saying this for the reasons you might think. Yes, Bitcoin has the largest market cap by far of any cryptocurrency. Yes, it was the pioneer of blockchain and cryptocurrency, and yes, it has made a lot of investors very wealthy.
But the real reason I think Bitcoin is here to say is its international impact. Not only do an estimated 1.7 billion people in the world not have a bank account, but there are also lots of countries with extremely volatile currencies, where citizens don't really trust their governments due to corruption and instability. It's helpful to have access to something like Bitcoin that can be accessed without a bank account and through the internet, and that is linked to the U.S. dollar, the world's reserve currency.
Image source: Getty Images.
Just a few months ago, El Salvador became the first country to adopt Bitcoin as legal tender, which means the digital currency can be used for any kind of payment of goods or services and for things like paying taxes. Now, it's unclear how this experiment will work out, as El Salvador is not exactly the most stable of countries, but the stated goal of President Nayib Bukele is to help the roughly 70% of people in the country that don't have bank accounts get access to the financial system.
In the U.S., there are other reasons that the world's most popular cryptocurrency is here to stay. For one, investors are starting to view it as digital gold that can hedge inflation because there is a finite amount of only 21 million tokens that can be mined. It is becoming more ingrained in our financial system every day. Custodians are now willing to hold and transfer Bitcoin, wealth managers are offering clients exposure to Bitcoin through formal investing, and even a few banks are collateralizing loans with Bitcoin. If you couldn't tell, Bitcoin already has a big role in our society.
2. Ethereum is out of this world
Rick Munarriz: Ethereum didn't plant the blockchain flag on the moon. It's just there to colonize it. Ethereum has elevated blockchain functionality beyond its original role as a decentralized ledger to track Bitcoin financial transactions. Ethereum made smart contracts possible, and now they are at the heart of most of the leading decentralized apps (dApps). From NFTs to digital marketplaces to in-game virtual currency, Ethereum's platform is raising the bar as the smart contracts solution of choice for roughly 3,000 dApps.
We're just getting started. Ethereum has a promising future in disrupting real-world platforms covering everything from healthcare to ID management. Your bearish friend -- the one that is brutally bearish on cryptocurrency -- loves to say that digital currencies are just vaporware. How will that friend feel when Ethereum fuels more everyday businesses?
Ethereum is a winner. For those that weathered through the rocky volatility inherent in the cryptocurrency space, Ethereum has appreciated sixfold over the past year. It's even easier to see the potential for bigger gains in the year ahead. Ethereum is in the process of making its already useful platform even more of a game-changer. At some point in the next few months, Ethereum will migrate from a proof-of-work model to proof-of-stake protocols. This transition will silence concerns about the energy-draining nature of mining for proof-of-work denominations. The Ethereum 2.0 migration will also mean that the platform can handle more transactions at a lower cost for its users.
Will it go to the moon? Ethereum's already there. Welcome to the party.
The 2 go-to cryptos
There are plenty of great cryptocurrencies out there, but none of them can match Bitcoin and Ethereum. Bitcoin is used by people all over the world to gain access to the financial system while also gaining more traction on Wall Street every day. Ethereum has made smart contracts possible and allowed people and businesses to deploy blockchain technology to make many industries more efficient. Buy and hold Bitcoin and Ethereum forever because they aren't going anywhere.
