In the last month, a number of cryptocurrencies have taken a big hit. Most of these are off their highs for the year. But they are also still above where they started in 2021. This article is about 7 alternative cryptos (altcoins) to Bitcoin (CCC:BTC-USD) that could last long after the crypto bubble bursts.
The reason these altcoins will survive is their underlying protocols or technology works for most people. People will use the altcoins since the blockchain they support will be part of their lives. Some examples of these applications are payment transfers, digital data transfer or storage, supply chain management, and large digital file management.
The investment thesis here is simple. These altcoins are likely to survive given their underlying technology usefulness. This will make them good investments. The prices will dip along with other cryptocurrencies. But they will rebound back over the long term and probably become quite worthwhile. In fact, some of these altcoins have already started to rebound.
Let’s dive in and take a look at these altcoins. The altcoins that are likely to last long after the crypto bubble bursts are:
Altcoins That Should Last After the Bubble Bursts: Ethereum (ETH-USD)
Market Cap: $391.9 Billion
Ethereum is the second-largest crypto. It has done much better than Bitcoin this year. As of May 14, ETH is up 400% since the beginning of the year when it was at $737.15. Bitcoin is up just 72% year-to-date.
A year ago, Ethereum was at $202.95. Today it is at $3,395. This is 16.7 times the price a year ago. This means Ethereum has risen 1,800% (Remember, math requires the subtraction of 100% when describing a % rise or % gain). Bitcoin is up just 482% the past year.
Ethereum’s blockchain technology seems to be gaining more acceptance. It can be used to power tamper-proof decentralized financial contracts and applications. It’s more useful than Bitcoin.
NFTs (non-fungible tokens) use Ethereum as a platform technology. As The Verge points out Ethereum’s blockchain technology supports many NFTs. NFTs are popular in the sale of digital assets.
Ethereum’s supply has no cap, like Bitcoin’s supply. As The Wall Street Journal points out, it’s determined by members of Ethereum’s community. Bitcoin has a limit of 21 million coins, period. As a result, Ethereum can be both a store-of-value (SOV) and also a medium-of-exchange (MOE).
Ethereum is transitioning to Ethereum 2.0. This uses a proof-of-stake system to validate blockchain transactions. There will be no more mining of Ether coins. This could also make it last longer than other mining or proof of work coins like Bitcoin.
Recently Ethereum has had more active blockchain addresses than Bitcoin. As of April 14, Ethereum had 598,476 active addresses, whereas Bitcoin was at 552,747.
Ethereum is in more smart contracts, data storage, NFTs and other blockchain applications than Bitcoin. That will be a major factor in giving Ethereum long-lasting performance.
Market Cap: $64.9 Billion
Cardano is a crypto that does not use mining and a proof-of-work reward to validate blockchain transactions. Cardano’s system, called Ouroboros, is based on a proof-of-stake validation.
It is possible for all Cardano owners to stake their ADA coins. This will validate a blockchain set and provide rewards. Staking doesn’t use electricity like crypto mining. This is the future of the blockchain. In fact, even Ethereum is transitioning to this system within the next year. Cardano is already doing this. As the largest proof-of-stake validation blockchain it gives Cardano a unique crypto angle.
Another use is its peer-to-peer settlement in payment transactions. The Cardano platform facilitates smart contracts and other apps. Nevertheless, Cardano is still looking to book large companies that use its platform.
Cardano bills itself as a third-generation crypto (behind Bitcoin and Ethereum) designed to get around their problems. Bitcoin is too rigid, only being applicable for payments, and Ethereum, although less rigid and more useful, has high fees and has had congestion. Cardano gets around this by having a two-layer computational structure in order to avoid congestion and keep fees low. One computational level is for transaction settlements and the other is for computations.
In short, Cardano is seen as an “Ethereum killer.” Whether that will really happen is an open question, but ADA has been moving higher on the possibility. At the end of 2020, ADA-USD was at 17.53 cents. Today, May 14 it’s at $2.22. That is a huge 11.66 times gains in the space of 4 and half months. Look for Cardano to continue to do well as it gains acceptance as a third-generation crypto.
Altcoins That Should Last After the Bubble Bursts: LiteCoin (LTC-USD)
Market Cap: $19.5 Billion
Litecoin is seen as a more streamlined alternative than Bitcoin for merchants. Litecoin is the first successful “alternative currency,” or altcoin.
The altcoin has had limited performance gains this year, in crypto terms, of “only” about 130%. Of course, for any other type of security that would be a fantastic return. It is an older coin, and people are not as excited about it. But it will last long after the crypto bubble bursts.
Litecoin bills as “the cryptocurrency for payments.” Its network allows instant, near-zero cost payments around the world. Started in 2011 by a former Google and Coinbase engineer, Charlie Lee, the ADA coin has shown itself to have staying power.
Litecoin uses a scrypt-based proof-of-work validation system. This means it requires miners to validate blockchain transactions. That’s old school, like Bitcoin. Nevertheless, the Litecoin community likes its payments transfer system is complementary to Bitcoin.
In addition, because of its general acceptance in the crypto community, Litecoin often lists on new exchanges. This gives it access to many investors. For example, you can buy Litecoin ADA coins on both Robinhood and Webull. Recently PayPal allowed Venmo to accept Litecoin as one of the four tradeable cryptos tradeable, including Bitcoin, Ethereum, and Bitcoin Cash.
This access to investors might allow the coin, and its payment transfer system to remain popular with investors.
Market Cap: $18.4 Billion
Chainlink aims to connect smart contracts with data from the real world. It bills itself as a “defi” (decentralized finance) application. These are apps in cryptocurrency and blockchain which aim to disrupt traditional finance.
Chainlink was founded in 2017 by Sergey Nazarov. He wrote a “white paper”, along with a Cornell professor, focused on Chainlink as a decentralized smart contract or “oracle.” Chainlink got a big boost when Google began using Chainlink in 2019. Forbes described Chainlink as “a company that provides on ramps and off ramps for information necessary to run self-executing code called smart contracts.”
For example, according to Forbes, Chainlink offers a service called an oracle to integrate data. An example is linking finance information from well-known sites into smart contracts. Sergey Nazarov is also known as the founder of the smart contracts concept. He believes the Defi market is already at $80 billion and poised for huge growth from here.
Look for Chainlink to take off this year if his thesis about Defi continues to pan out. LINK-USD is already up 250% so far this year as of May 14 to $41.50.
Altcoins That Should Last After the Bubble Bursts: Stellar Lumens (XLM-USD)
Market Cap: $15 Billion
The Stellar Lumens coin, XLM, called Lumens, is up 383% so far this year. So it is worth looking at as an altcoin to Bitcoin.
Stellar Lumens is the token cryptocurrency for Stellar, a blockchain protocol for payments systems. Stellar is a crypto for the people who do not have banking accounts. Stellar’s goal is to give them access to financial products.
Jed McCaleb started it is 2014. He was the founder of Mt. Gox and co-founder of Ripple (CCC:XRP-USD). It now has a market cap of around $15 billion, putting it in the rank of the top 20 cryptos.
Stellar is trying to work with a number of central banks, including a working relationship with the central bank of Ukraine. A number of projects were announced with Deloitte and IBM (NYSE:IBM) in 2016 and 2017.
One difference between Bitcoin and Stellar is that XLM cannot be mined. There is no proof-of-work algorithm that has to be solved and in which XLM can be earned as rewards.
Of a total 50 billion Lumens, 20 billion have been sold into the market. The Stellar Development Foundation (SDF) has the remaining balance. That balance is directed under SDF’s mandate to spend or promote Stellar. So its float is lower than the total fully diluted market cap. This puts a constraint on its supply.
Recently Stellar got a boost when Elon Musk put down cryptos that require mining. He suspended the payment of Bitcoin for the purchase of Tesla (NASDAQ:TSLA) vehicles. Stellar’s proof-of-stake system is a viable alternative to proof of work coins like Bitcoin. It uses a small number of trusted nodes to validate transactions and rewards the nodes in Lumens. This avoids hashing transactions and electricity intense mining. Look for Stellar to continue to do well as a result of this aspect to the altcoin.
Market Cap: $10.5 Billion
VeChain’s coin is up 826% so far this year as of May 15 and has a $10 billion market cap. This altcoin has a good chance of doing well the rest of the year.
VeChain is a blockchain and cryptocurrency that is focused on improving corporate supply chains and logistics. Its platform helps supply chain management and business processes. A number of large enterprises are using it for inventory tracking purposes.
VeChain’s study in 2020 reported that it can track $300 billion worth of food on the blockchain by 2027. Walmart has partnered with IBM and created the Food Trust Blockchain with nine other food companies to track food supplies.
A Norwegian classification company called DNV has partnered with VeChain. It provides tracking services for 13,175 vessels and mobile offshore units.
Existing VeChain partnerships and large businesses that use VeChain are tracked on a site called Vechaininsider.com. This lists 5 strategic partnerships, including DNV, PriceWaterhouseCoopers, and several Chinese companies.
Recently Decrypt.co wrote about an LA-based vaping company called PuffBar that used VeChain to track counterfeits. In order to tell whether a vape is a knock-off, users take a picture of the UPC code and product. Uploaded to the crypto site it can tell if it is a knock-off.
An interesting facet of VeChain is that it pays a dividend. An “offshoot coin” called THOR, or VeThor (CCC:VTHO-USD) token is paid to every holder of VET tokens.
VeChain has a proof-of-authority protocol system. This is an offshoot of the proof-of-stake system. As a result of its dual token supply structure, the total supply of tokens is slightly inflationary as a result. VeChain is here to stay. Look for the token to do very well this year as its blockchain popularity rises.
Altcoins That Should Last After the Bubble Bursts: BitTorrent (BTT-USD)
Market Cap: $3.6 Billion
The BitTorrent crypto is up 1600% since the beginning of the year, even though the currency is off of its highs. There seems every reason for the altcoin to continue to do well this year.
BitTorrent was started by Bram Cohen and later sold to Tron. The platform seeks to enhance users’ ability to distribute and data and large electronic files using a decentralized protocol.
Initially, illegal movie and related media used BitTorrent to download on a decentralized basis. BitTorrent later cut deals with the largest seven movie studios to rid itself of illegal copyright issues.
Recently BitTorrent has received licenses from a number of these film studios to distribute their content. This makes its cryptocurrency quite valuable.
Recently BitTorrent was added to a new exchange, Poliniex, allowing it to be staked by validators. Justin Sun, who bought BitTorrent in 2018 for $120 million, and owns Tron (CCC:TRX-USD), also owns the exchange with other investors. Look for BitTorrent to continue to do well as its adoption rate grows.
BitTorrent technology and Tron are both peer-to-peer decentralized protocols. BitTorrent uses the Tron blockchain network to function as a cryptocurrency (the token currency is called a BTT). Most other altcoins use the Ethereum protocol.
As of April 2021, BitTorrent, based in San Francisco, has over 100 million monthly active users (MAUs), according to CoinGape. Its BitTorrent File System (BTFS) technology allows the desktop creation of smart contracts and decentralized file-sharing. The MAUs also lower the value of its BitTorrent token.
Watch out if the BTFS system continues to gain acceptance throughout the blockchain and for companies that want to transfer large files. The BitTorrent coin could continue to rise as a result.
Summary: Altcoins That Can Last
These 7 cryptos (actually eight, if you include VTHO-USD), all have valid and useful applications that can be used in the real world. Many companies are starting to adopt these platforms.
Moreover, many of these altcoins are now using or will soon use the proof-of-stake system, rather than mining, which has huge computation power needs. This will also make these altcoins more popular over the long term given a bubble collapse in other cryptocurrencies.
On the date of publication, Mark R. Hake held a long position in Bitcoin, Ethereum, and BitTorrent. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
Mark Hake writes about personal finance on mrhake.medium.com and runs the Total Yield Value Guide which you can review here.