In small doses, cryptocurrencies can be a good addition to your retirement savings. Although they're volatile, some of the top coins have outperformed the stock market by a wide margin. A reasonable crypto allocation (no more than 5% of your portfolio) could potentially help you build a bigger nest egg.
You do need to be careful about which cryptocurrencies you choose, though, as it's easy to lose money on poor investments. Here are three that you're better off avoiding.
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1. Dogecoin
Dogecoin (DOGE +0.12%) was the first meme coin, a term for cryptocurrencies with humorous characteristics. The creators of Dogecoin based it on the doge meme and launched it in 2013 because they believed cryptocurrency was being taken too seriously.
Dogecoin has experienced brief moments of success, mostly because Elon Musk took an interest in it. The cryptocurrency's all-time high of $0.74 occurred in 2021, coinciding with Musk's appearance on Saturday Night Live. Since then, it has lost over 80% of its value.
CRYPTO: DOGE
Key Data Points
The problem with Dogecoin and other meme coins is that they offer little beyond amusement. The best cryptocurrencies have legitimate uses and unique features, neither of which you'll find from Dogecoin.
2. Ethereum Classic
In 2016, the Ethereum (ETH 0.73%) blockchain suffered a major hack, resulting in the theft of $50 million in tokens. The Ethereum Foundation elected to reverse the results of the hack, starting a new blockchain with an altered history, but not everyone agreed with the decision. Some felt the blockchain should be inalterable and chose to stick with the original version, which became Ethereum Classic (ETC 1.35%).
Whichever side of the debate you fall on, Ethereum has significantly outperformed Ethereum Classic. Ethereum is worth $362 billion (as of Dec. 28); Ethereum Classic is worth $2 billion. Since their inception, Ethereum has gained an incredible 21,200%, while Ethereum Classic has increased by 662%.
CRYPTO: ETC
Key Data Points
There's little reason to invest in Ethereum Classic over Ethereum, as the latter has much more activity. The total value locked (TVL) into Ethereum protocols is $70 billion, which accounts for 64% of the TVL locked into all blockchains, according to DeFiLlama. Ethereum Classic has about $208,000 of TVL.
3. Worldcoin
Worldcoin (WLD 0.41%) is a cryptocurrency project founded by Sam Altman, CEO of OpenAI. It's part of World, an ID service designed to authenticate humans online and distinguish them from artificial intelligence (AI) bots. The process involves using a device called an Orb to scan your iris and verify yourself. Once you're verified, you receive WLD tokens.
It's an interesting idea, but there are privacy concerns, which have caused many countries to investigate or ban Worldcoin, including Spain, Brazil, and Kenya. Worldcoin has also done poorly as an investment. Since launching in 2023, it's down nearly 70%.
CRYPTO: WLD
Key Data Points
The World ID system hasn't caught on like the creators hoped, either. World's early goal was to verify 50 million people by the end of 2025. The current total, according to World's website, is less than 18 million.
If you plan to invest part of your retirement savings in cryptocurrency, it's essential to look for projects with genuine value. Dogecoin, Ethereum Classic, and Worldcoin are all highly speculative investments, carrying a significant risk of financial loss.
