Opinion

Top 5 Altcoins to Invest in 2021

Snapshot:

-What is an altcoin?

-Types of Altcoins

-Top altcoins to invest in 2021 


 

A significant rise in demand for altcoins in 2021 is no surprise to us. The altcoin prices have risen significantly this year given the new upgrades, and more acceptance around cryptocurrencies.

The explosion of decentralized finance (DeFi) and the enormous usage of smart contracts have led to the increased demand for altcoins. The altcoin prices depend upon the projects and companies they belong to. The better the blockchain technology the higher the altcoin price. These DeFi tokens have more to offer than just speculative value. There are great utilities as well as real revenue generated by these altcoins within the DeFi industry. Don’t understand what is DeFi? Get your doubts cleared about DeFi and the top DeFi projects. 

Before we move straight into the top 5 altcoins to invest in 2021 let us first understand what is an altcoin? 

What is Altcoin? 

cryptocurrencies other than Bitcoin are called altcoins. The characteristics of these cryptocurrencies are similar to that of Bitcoin but they have their unique attributes too. For instance, few altcoins use a consensus mechanism to validate as well as produce the block transactions while a few run on smart contracts and have other additional capabilities. 

As of March 2021, the altcoins accounted for more than 40% of the total cryptocurrency market according to CoinMarketCap. Since these altcoins are derived from Bitcoin, the altcoin price movements often tend to follow the trajectory taken by Bitcoin. However, experts believe that these movements in the altcoin prices will become independent of Bitcoin as the cryptocurrency market starts to mature. 

Some of the major types of altcoins include mining-based cryptocurrencies, security tokens, utility tokens as well as stable coins. Ethereum and Binance coins are the two largest altcoins by market capitalization as of August 2021. 

Most blockchain companies issue their cryptocurrency tokens for the smooth interaction of the users with the ecosystem. If the platform is value-adding more people wish to use them and thus, need to buy their respective altcoin which drives up the altcoin price. Based on these utilities, the altcoins derive their value. Let’s have a look at the top altcoins to invest in 2021. 

Altcoins based on their types 

There are different types of altcoins based on their usage. The different types of altcoins and their examples are: 

Type of Altcoin  Name of Altcoin 
Mining-Based Ethereum 
Stablecoins   Tether 
Security tokens  Stellar 
Utility tokens  Chainlink 
Exchange tokens  Uniswap

 

Read about the top cryptocurrencies to invest in 2021

The top altcoins to invest in 2021 

The top altcoins to invest in 2021 according to experts are: 

Ethereum (ETH)
Chainlink (LINK)
Uniswap (UNI)
Aave (AAVE)
Stellar Lumens (XLM)

 

Ethereum (ETH) 

Ethereum is an open-source decentralized blockchain network with its native token Ether, ETH. Ethereum works as the platform for various cryptocurrencies and was also the pioneer of decentralized execution of smart contracts. 

Ethereum currently serves as the backend network for numerous decentralized apps (Dapps) such as Axie infinity, openSea, etc. In addition to smart contracts, ethereum is also able to host different cryptocurrencies also known as tokens through its different ERC standards. One of the most famous standards of ethereum is ERC20. Don’t know what is ERC20 standard is? Read about ERC20 in detail. 

There are different standards such as ERC-20, ERC-1155, etc used by different tokens based on their utilities. Ethereum is a mining-based altcoin that requires a lot of energy. However, the new upgrade in the network called the London Hard Fork network which will make ethereum mining obsolete. Learn about ethereum mining and its London update. 

Ether is the second-largest cryptocurrency by market capitalization. It is also the largest altcoin by market capitalization ranking in position 2 of CoinMarketCap. 

Chainlink (LINK)

A blockchain abstraction layer that also enables the smart contracts connected universally is the Chainlink blockchain network. This network has its native token called LINK. The blockchains have a secured interaction with external events, payment methods, and data feeds through a decentralized oracle network. The drivers of chainlink are a large open-source community of node operators, data providers, researchers, smart contract developers as well as security auditors. The company makes sure that all the node operators contribute to the network through decentralized participation. 

Chainlink is one of the first blockchain networks to allow off-chain integration of smart contracts. It is also a major player in the data processing field. Due to this feature, it has gained quite an attention from trusted data providers such as Alpha Vantage, Brave New Coin, and Huobi. Chainlink’s decentralized price feed oracle networks live in production securing billions in value for major DeFi applications such as yEarn, Aave, etc are powered by the large collection of node operators. The native token LINK achieved its all-time high value on 10th May 2021 for $52.88. 

Uniswap (UNI)

A popular decentralized trading protocol, Uniswap is known for its extraordinary role in facilitating DeFi (Decentralized finance) tokens. Uniswap was launched in 2018 and has gained a lot of popularity since its inception. It is an example of an automated market maker (AMM). Uniswap’s objective is to keep token trading completely open as well as automated for anyone and everyone who holds tokens. It considerably puts in efforts to improve the trading efficiency of these decentralized tokens as compared to traditional exchanges. 

It also aims to resolve liquidity issues by providing automated solutions that are the most frequent issue encountered by decentralized exchanges. UNI, the native token of Uniswap is also a governance token that gives the users to shape the future of the platform. The existence of Uniswap is to create liquidity. It is not a decentralized exchange in itself but aims to resolve the liquidity issues and other problems faced by them. The automated market-making process incentivizes activities by reducing the costs as well as limiting the risks faced by the parties. The identity requirements of the users are also removed by this mechanism, thus helping anyone to create a liquidity pool for any pair of tokens. 

Aave (AAVE)

Aave is a DeFi (Decentralized finance) protocol allowing people to borrow and lend cryptocurrencies. lenders can interest by depositing their digital assets into specific liquidity pools. The borrowers then can use this liquidity to flash out loans by using their cryptocurrency as collateral. 

Aave was originally known as ETHlend worth LEND as its native token. However, LEND has migrated to Aave with 100 LEND per 1 AAVE. AAVE also provides discounted fees to its holders on the platform. It is another governance token like UNI giving rights to owners for a say in the future developments of the protocol. There are various unique points of Aave as compared to its competitors and was one of the biggest projects during the DeFi craze in 2020. This project enables users to lend and borrow 20 different cryptocurrencies thus, providing them with a greater number of choices. 

Stellar Lumens (XLM)

Stellar is nothing but a decentralized open network that enables the movement and storage of money. The primary objective of this blockchain network during its inception was to reach out to the world’s unbanked, however, later it shifted its priorities to help financial firms to connect. The native token of this network is Lumens (XLM) which serves as the bridge to reduce the expensive fees required to trade assets across borders. All these features ease up the restrictions and reduce the fees which are otherwise required by payment providers with similar services. 

High transaction fees to send payments across borders are not just limited to fiat payment providers such as PayPal but also encloses Bitcoin and various other altcoins. Blockchain fees often go beyond expectations due to high congestions. Stellar aims to resolve this issue. It only costs 0.00001 XLM per transaction. This makes sure that users keep more of their money.

It has partnered with big names such as IBM. The World Wire launched by them helped financial institutions to transfer their assets to the Stellar network and transact these assets using the bridge of stablecoins. 

Stellar even gives governance rights to its users so that they can choose which venture to support. 

 

Altcoin  CoinMarketCap Rank  Market capitalization 
Ethereum (ETH) #2 $3,043.0
Chainlink (LINK) #15 $25.92
Uniswap (UNI) #11 $26.78
Aave (AAVE) #28 $384.04
Stellar (XLM)  #20 $0.3486

 

Source: CoinMarketCap

Conclusion 

Bitcoin was certainly the beginning of the crypto industry but there is a lot to explore in the crypto industry. More than 4000 cryptocurrencies are flowing in the market today and we are acquainted only with the tip of the iceberg. It is important to understand the various options available at our disposal to get better with our Investment plans and trading strategies. 

Altcoins have a lot to offer. The year 2021 has been a terrific year for various altcoins where a few of them have also hit their all-time highs. Experts believe that few altcoins such as ethereum have the potential to outdo Bitcoin in the long run. As people begin to develop an understanding of altcoins and their real-world usage, it is no surprise that their implementation will rise. This shall lead to a rise in altcoin prices. 

Need a few Blockchain jargons to be cleared? Enroll in DCXLearn, a complete and free cryptocurrency course. Stay updated with the latest happenings around the crypto world with CoinDCX. Investments have never been this easy before India’s simplest and safest investment app, CoinDCX Go. Start your crypto journey today!


Disclaimer: It is advisable to dive into an investment after conducting thorough research. The article is not aimed at any financial advice. *All prices are as of October 25th, 2021.


 

Share this Story

Check Also

A Guide to Crypto Taxation and Investment

Crypto investments have had a wild journey. The ...

GET ALL LATEST UPDATES ON YOUR EMAIL