I'll admit to not having a lot of faith in most cryptocurrencies as a long-term store of value. When the number of coins and tokens seemingly grows by the hundreds on a daily basis, you start to get the feeling that maybe someone, somewhere is trying to get one over on you to capitalize on the buzz, excitement, and trendiness of the moment.
When even the creator of Dogecoin says most cryptos have no value and hurt the people who buy them, it's hard for many outside observers to get enthused about the "future of money."
Yet just because many, even most, cryptos aren't worth giving a second glance, it doesn't mean all of them are. There are over 17,500 cryptos on the market and some of them can be a serious bet to help your portfolio grow. Here are three of the best to consider.
You can't dismiss the oldest and biggest crypto out of hand. Bitcoin (BTC 1.18%) blazed the trail that others follow today and as of this writing remains within striking distance of a trillion-dollar valuation, a level it exceeded more than once last year.
More importantly, Bitcoin is the most valuable cryptocurrency and has gained acceptance by wide swaths of investors, consumers, and merchants as the most viable alternative to a cash-based society. Virtually every other coin hopes to gain the status that Bitcoin has earned, and because it's accepted by more merchants globally than any of its rivals, it has the best chance of achieving the goal of being the go-to alternative for cash.
Bitcoin also has the best chance of adding wealth to your portfolio because it is accepted by or denominated in more wallets, exchanges, payment services, and gaming platforms than any other crypto. Its widespread acceptance, constraints on its supply, and the cost of mining it will help sustain its rising value over time.
Even by simply being the one coin that could become the primary substitute for gold or government debt, Bitcoin is likely to reclaim a $1 trillion valuation and more.
If Bitcoin is the gold standard of cryptocurrency, then Litecoin (LTC -2.40%) is its "silver standard," something even Litecoin itself acknowledges.
It was created from a modified version of Bitcoin's source code and was designed to be a "light version of Bitcoin." And like the precious metal it's associated with, it is far more accessible to the everyday person than gold or its crypto rival. While there eventually will be 21 million Bitcoin tokens, Litecoin will top out at 84 million. New blocks on the Litecoin network are being generated every 2 1/2 minutes versus about 10 minutes for new coins on Bitcoin.
Another advantage of Litecoin is it doesn't require the serious computer and processing power that other cryptos need because it was designed specifically to be mined through consumer-level computers. Regulators and activists have raised environmental concerns over crypto mining's vast energy consumption, but Litecoin sidesteps many of those worries.
One of the catalysts for Litecoin growing in value is the halving that will occur in 2023. The supply of tokens is controlled by halving the number available whenever a certain amount is mined. When 840,000 blocks are mined -- expected to happen next year -- the number of blocks miners are rewarded with are halved. It's built right into Litecoin's algorithm and it occurs approximately every four years.
When Litecoin launched, the block reward was 50 Litecoin. Now that two halvings have already occurred, the reward is 12.5 Litecoin, and next year's halving will lower it to 6.24 Litecoin.
That should reduce the number of miners mining Litecoin as they turn to more lucrative coins, thus it limits inflation and makes Litecoins scare. Since supply and demand probably impact a coin's price more than anything, this should have the effect over time of increasing Litecoin's value.
Not a crypto itself, but rather a marketplace for their exchange, Coinbase Global (COIN 1.37%) should also be on your radar.
Coinbase is the largest and best-known marketplace where more than 73 million verified users, 185,000 ecosystem partners (developers, creators, merchants, and others building decentralized applications, products, and services for the crypto economy), and 10,000 institutions use its platform for investing in and holding about 120 different cryptocurrencies.
With some $255 billion in assets on its platform and $327 billion in traded volume every quarter, Coinbase is the premier crypto exchange. Think of it as the picks-and-shovels play of cryptocurrencies. It doesn't care which coin or token you prefer, it provides the tools you need to engage with it.
I'm not sure I was the only one baffled by Coinbase paying up to $7 million for a Super Bowl ad of a QR code bouncing around your television screen for 30 seconds like some Microsoft screensaver, but apparently it was so popular that when people scanned the code it crashed the Coinbase app.
Because cryptocurrencies and the cryptoeconomy are still in their infancy, Coinbase is one large crypto exchange set to grow even larger.