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Are These Cryptos the Next Bitcoin or Ethereum?

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Are These Cryptos the Next Bitcoin or Ethereum?

While there are literally thousands of cryptocurrencies, when it comes to the big dogs, there are really only two: Bitcoin and Ethereum. Bitcoin is the original crypto, created in 2009, and Ethereum was created as a “Bitcoin killer” in 2015. Together, the two comprise nearly two-thirds of crypto’s $1.3 trillion global market cap, with Bitcoin alone comprising nearly one-half.

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Although their prices have been volatile, both cryptos have provided exceptional long-term returns since their respective inception dates. That is part of the reason why investors have been piling into alternative cryptocurrencies, in the hopes of picking out “the next Bitcoin or Ethereum.” But how likely is it that another crypto can rise in prominence like the two market leaders?

Here are three cryptocurrencies that various experts and market analysts think have a shot at being contenders.

Solana

Solana quickly became a favorite among traders to become “the next” Ethereum in late 2021, when its price shot up to over $260. Since then, it has fallen dramatically to less than $40 as of June 2022. However, the crypto market in general has been hammered in 2022, and Solana still maintains a market cap of about $13.5 billion, good enough to rank it as the ninth-largest cryptocurrency.

One of the reasons that Solana has often been hyped as a crypto of the future is that it is the only major cryptocurrency blockchain that uses proof-of-history. Proof-of-history is meant to be extremely fast when compared with the proof-of-work protocol used by cryptos like Ethereum, and it also has lower fees.

Solana claims it can process about 50,000 transactions per second, compared with the 15 to 45 transactions per second handled by Ethereum. This can allow Solana to scale up rapidly, one of the major requirements for a coin to catch or even surpass industry leaders Bitcoin and/or Ethereum.

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These characteristics have helped Solana win over the confidence of large institutions like JPMorgan Chase and Bank of America, which once said that Solana could become the “Visa of the digital asset ecosystem.”

Currently, Solana runs over 400 projects on its ecosystem, including decentralized exchanges, wallets and other defi projects. Stablecoins like Circle’s USD Coin also run on the platform. Given its low cost and scalability, the future may still be bright for Solana.

Cardano

Whereas Solana has gained popularity for being faster and cheaper than Ethereum, Cardano aims to beat the top cryptos by being a more environmentally sustainable alternative.  Cardano was actually developed by one of Ethereum’s creators, Charles Hoskinson, suggesting that Ethereum may be based on older technology and principles than Cardano.

Indeed, Cardano was designed as the first proof-of-stake cryptocurrency, designed to provide a faster, cheaper, more secure blockchain.

Cardano’s approach is more research-intensive than Ethereum’s, with each stage of its development peer-reviewed and thoroughly tested before implementation. The third-generation crypto is also launching smart contract capabilities, which will help make Cardano more sustainable and scalable. As some analysts describe it, Bitcoin is Crypto 1.0, Ethereum is Crypto 2.0, and Cardano is Crypto 3.0.

Cardano actually sits as the sixth-largest cryptocurrency, with a current market cap of about $30.5 billion. Like most other cryptos, Cardano’s price has been hammered. After peaking at about $3.10 in September 2021, Cardano now sits at just $0.58, demonstrating the immense risk of investing even in market-leading cryptocurrencies.

Polkadot

Polkadot is the 11th-largest cryptocurrency, with a current market cap of about $9.3 billion. Polkadot’s “special talent” is its interoperability, or its ability to connect multiple blockchains together into one network. As part of a single network, these numerous blockchains can exchange information without compromising security by leaving the network. This type of secure protocol is viewed by some as essential to the future of Web3, or the decentralized digital ecosystem.

As with Cardano and Solana, Polkadot aims to perform better than Ethereum when it comes to cost and scalability. But what may differentiate Polkadot from either of these other cryptos is its interoperability.

Unlike many other cryptocurrencies, many investors buy Polkadot not just to speculate on the currency itself but to bet on the success of its underlying technology. If this trend gains momentum, it could help Polkadot’s price remain less volatile than other cryptos, which in turn might attract additional long-term investors.

However, Polkadot still remains quite volatile, falling from a 2021 high of $55 to its current level below $10.

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About the Author

After earning a B.A. in English with a Specialization in Business from UCLA, John Csiszar worked in the financial services industry as a registered representative for 18 years. Along the way, Csiszar earned both Certified Financial Planner and Registered Investment Adviser designations, in addition to being licensed as a life agent, while working for both a major Wall Street wirehouse and for his own investment advisory firm. During his time as an advisor, Csiszar managed over $100 million in client assets while providing individualized investment plans for hundreds of clients.


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