How could anyone be bullish on cryptocurrencies right now, after FTX collapsed and crypto went into freefall last week? The answer comes down to what we may be using the blockchain for a decade from now, not the hype cycle that has driven a lot of trading since 2022.
With this in mind, I'm bullish on cryptocurrencies that are attracting users and developers to build real, innovative products on the blockchain. Not every founder or builder will get their product right, but the blockchain with the most innovation is likely to be the biggest winner for investors long-term. Here's why Solana (SOL -0.47%) and Polygon (MATIC 1.99%) are the two best growth cryptocurrencies today.
Solana has speed and low costs as a foundation
The Solana blockchain is one of the younger blockchains in the industry, but it's also been extremely active over the last 18 months. Decentralized finance protocols have been built, its NFTs have grown to rival Ethereum (ETH 1.66%), and new business models have been born. In fact, there are about as many users on Solana today as there are on Ethereum.
According to Solscan blockchain data from Solana, there are over half a million active wallets on Solana and over 1,000 active programs. For perspective, there were 31 active programs on April 1, 2021, so the community is building fast.
While Solana is caught in the FTX bankruptcy because Alameda Research had a large stake in the cryptocurrency, which likely needs to be liquidated, that doesn't stop what's being built. And if you think cryptocurrency's value will be in building a digital ecosystem with hundreds of programs and developers adding utility every day, this is a great cryptocurrency to own. And it has the advantage of being faster and cheaper than almost any other blockchain available, which may ultimately be what allows it to surpass blockchains like Ethereum long-term.
Polygon is where big business is going
The cryptocurrency that's done the most to attract corporate partners is Polygon, and that's a differentiation that could last for a long time. We have seen Disney (DIS -1.01%), Reddit, Starbucks (SBUX -1.02%), Meta (META -10.56%), and many others build on the Polygon blockchain, which likely means they'll be there for years.
Polygon is what's known as a Layer 2 blockchain, which means that it runs on top of the Ethereum blockchain, bundling together multiple transactions into one block on Ethereum. This lowers the cost of the network compared to Ethereum, making it more "scalable." The Polygon token itself is used to make transactions on the blockchain. When Ethereum gets expensive, this is a great place to build because it uses the same EVM (Ethereum Virtual Machine) framework at a much lower cost than Ethereum's gas fees.
What investors may not realize is that a lot of activity on Polygon is happening behind the scenes, meaning users aren't interacting directly with the blockchain. Reddit's NFTs, Coinbase's (COIN -0.34%) USDC token transfers, and more are happening on the Polygon, but using credit cards or U.S. dollar stablecoins. This may be how we use the blockchain in the future.
Where to invest in crypto from here
Given the turmoil in crypto today, I think investors should only buy cryptocurrencies related to underlying blockchains that are being used by thousands of people and developers. A digital future with the blockchain at the center won't rely on one company (see Luna and FTX's collapse), so value will need to be built by many people on blockchains like Solana and Polygon.
