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2 Cryptocurrencies I'd Buy in a Heartbeat in 2022

By Keith Speights – Dec 30, 2021 at 12:52AM

Key Points

  • Ethereum is the second-biggest cryptocurrency based on market cap, with growth drivers on the way.
  • Avalanche has tremendous momentum, thanks to its fast processing speed and low costs.

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They're not just cryptocurrencies -- they're decentralized ecosystems.

There are thousands of cryptocurrencies on the market today. Exactly how many depends on which source you use. For example, CoinMarketCap pegs the number at more than 15,000. Statista, meanwhile, estimates that the total is closer to 8,000.

The more important number to know is how many cryptocurrencies are worth buying. You'll hear different views on this topic, as well. Regardless of what the correct answer is, here are two cryptocurrencies I'd buy in a heartbeat in 2022.

A person holding index finger on a smartphone with images of dollar signs around the phone.

Image source: Getty Images.

1. Ethereum

You'll hear many people talk about real-world utility when they discuss cryptocurrencies. Ethereum (ETH 0.20%) belongs near the top of the list in such conversations.

Launched in 2015, Ethereum's blockchain made smart contracts possible. And those smart contracts enabled a wide range of applications, notably including non-fungible tokens (NFTs). Ethereum's platform is so popular that more than 40 of the top 100 cryptocurrencies, based on market cap, are built on top of it.

Sure, Ethereum has now reached a size where it's not likely to deliver 10 times or more gains in a year, like some smaller cryptocurrencies might. However, it still managed to soar more than 450% in 2021, despite ranking as the second-largest cryptocurrency behind only Bitcoin, according to CoinMarketCap. 

I think there's a pretty good chance that Ethereum will add to this momentum in 2022. The second phase of the major Ethereum 2.0 upgrade is scheduled to be completed in the new year. The final phase of the upgrade is planned for 2023.

When the upgrade is fully in place, Ethereum's blockchain should be able to process up to 100,000 transactions per second. Its transaction fees will be reduced drastically. This should make Ethereum even more attractive to developers.

Ethereum faces some risks, though. A massive sell-off of cryptocurrencies, in general, would likely bring Ethereum down, also. If there are delays or problems with the Ethereum 2.0 upgrade, developers could turn to rival blockchains. But the overall prospects for Ethereum appear to be solid over the long term.

2. Avalanche

In my view, Avalanche (AVAX 0.46%) takes the prize as the best up-and-coming cryptocurrency. It currently holds the No. 11 spot, based on market cap, on CoinMarketCap's ranking after skyrocketing more than 3,600% this year.

An old song from the musical Annie Get Your Gun comes to mind when I think about Avalanche -- "Anything You Can Do (I Can Do Better)." It's pretty much the case that anything Ethereum can do, Avalanche can do better -- or at least as well.

Like Ethereum, Avalanche supports smart contracts. But Avalanche doesn't need an upgrade to be fast and cost-effective. It already can handle more than 4,500 transactions per second. Its transaction fees are already very low.

Even better, Avalanche's blockchain is the fastest at processing smart contracts based on time to finality. The platform can finalize the addition of a transaction in less than two seconds.

Unsurprisingly, developers have flocked to Avalanche. Nearly 160 projects are part of its ecosystem so far. That number will undoubtedly continue to grow. I especially like that large accounting and consulting firm Deloitte chose the Avalanche blockchain in building a new disaster-recovery platform.

Avalanche isn't without risks, though. A big pullback for cryptocurrencies overall would likely drag its price down. There's always a possibility that a security issue could crop up.

However, I think that the Avalanche blockchain is here to stay. And I don't expect it to remain outside the top 10 for much longer.

Keith Speights has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.

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