A handful of large tokens make up the vast majority of the cryptocurrency market. Bitcoin, for example, has a market cap of $826 billion and accounts for 35% of the entire crypto market. Ethereum, the second-largest token, has 15% of the total market, making these two cryptocurrencies cover fully half of all cryptocurrency's value of about $2.3 trillion. The rest of the 10 highest-valued cryptocurrencies make up a large percentage of the other half. But there are more than 10,000 cryptocurrencies now on the market, more than half of which were only developed in the last year. Some of the smaller ones out there will end up being great investments, but it may not be simple to identify which ones.

Some of them, however, are demonstrating strong real-world utility, and you can still buy them before they become the next big thing. That's the case for Stellar (XLM -0.84%), and at this time next year, it could be worth a lot more than it is today.

Two people sitting next to each other with coffee cups looking at a mobile phone.

Image source: Getty Images.

The best decentralized finance platform today?

Decentralized finance, or DeFi, has become a popular way to move money without government regulation. There are a number of advantages to this, such as greater opportunities for the underbanked population. Ethereum hosts several decentralized applications, or dApps, that offer DeFi services. As popular and useful as Ethereum is, one of the chief complaints users have is the speed of transactions, which the platform is seeking to rectify with its Eth2.0 upgrade

Stellar, though, is way ahead of it.

Stellar's goal is to be a global financial gateway connecting all of the world's financial systems. It allows people to transfer any kind of currency through its native token, the Lumen coin, and it's platform has been developed with an open API, or customizable system to be able to communicate with every payment network. It's about as fast as cryptocurrency platforms come, and it's cheap to operate.

It sees itself as the internet of money -- just as the internet connects individuals all over the world and supports the free flow of information, Stellar is aiming to connect all individuals and support the free movement of money. But unlike many other DeFi networks that circumvent traditional financial applications, "Stellar ... has always been intended to enhance rather than undermine or replace the existing financial system," its website claims.

To make this happen, Stellar allows users to convert any kind of currency into Lumens to make a transaction on its blockchain. Those Lumens can then be sent or used in a different currency, quickly and without fees, with the transaction recorded and secured on the blockchain, or the financial ledger that underpins the system.

Stellar is secured through what it calls the Stellar Consensus Protocol (SCP), which is different than the proof-of-work or proof-of-stake protocols that are more widely used for other cryptocurrency systems. Hundreds of computers, or nodes, are connected to SCP, which updates across the network every five seconds to resolve all balances and secure the blockchain.

While this theory has particular application to stablecoins, or cryptocurrencies whose value is attached to a tradable commodity (think USDC, the stablecoin connected to the value of the U.S. dollar), it functions with any kind of asset that can be represented with a digital value and then traded. And the beauty of the model is that any of these digital assets can be converted to Lumens and traded, and then converted to any other asset on the platform.

International Business Machines recently identified Stellar as an effective partner to power its cross-border payment system, demonstrating the crypto platform's real-world utility and opportunity to grow.

Still underrated

Stellar is far from small. It's the 23rd-largest cryptocurrency with a market cap of $5 billion. It's lost more than 50% of its value over the past year, and each token trades for $0.20. That's likely due to general global volatility, especially concerning macroeconomic trends like inflation and interest rates. But it has tremendous potential to connect global payments and gain value over the next year.

It would have to quadruple in price to reach the highs of last May, certainly a viable possibility. Its utility for financial transactions makes it a competitive buy. The cryptocurrency market has fallen, and coins that aren't useful may not rebound. But cryptos that provide value will likely recover and grow at some point. By this time next year, this underrated cryptocurrency could rise 300% or even higher.