It has been a tumultuous year for crypto, with prices falling dramatically since the start of the year but rallying this summer. Massive catalysts that will bring permanent changes to the second largest cryptocurrency and the crypto world have arrived. With all of this, now is a good time to keep a long-term perspective and look at the top three cryptocurrencies to buy and hold forever.
Fusion, Ethereum (ETH 4.98%) the long-awaited transition from proof-of-work consensus to proof-of-stake was completed last week.
Although it has become a common misconception that The Merge will speed up transactions on the Ethereum network and reduce fees, there will be other benefits. The transition to proof-of-stake will allow more Ethereum holders to participate in earning rewards from the network, as they can now stake their Ethereum to earn reduced transaction fees. While holders must have 32 Ethereum and meet several other requirements to do so, many third-party services like Coinbase (PIECE OF MONEY -5.50%) allow customers with small amounts of Ethereum to pledge their Ethereum to staking pools to earn interest. Coinbase currently pays an annual percentage return of 3.25% on staked Ethereum.
The merger will also significantly reduce Ethereum’s carbon footprint, as power-hungry mining equipment will no longer run night and day to produce Ethereum blocks. Some sources believe that Ethereum’s energy consumption before the merger was equivalent to that of a country like Chile. Experts predict that the move to proof-of-stake will reduce this energy intensity by more than 99%, which is a big deal for the planet and for investors who can now feel more comfortable investing in Ethereum.
The benefit of holding onto Ethereum for the long term is that while The Merge is a huge deal, the Ethereum developers aren’t stopping there. Vitalik Buterin, co-founder of Ethereum, estimates that the blockchain will only be at 55% of its potential after The Merge. The merger paves the way for sharding, in which the blockchain is split into multiple chains to reduce congestion on the network, which should eventually help improve speed and reduce fees once fully implemented. The level of progress so far and future ambition make Ethereum, the second largest crypto by market value, an asset to buy now and hold forever.
While all eyes were on Ethereum before The Merge, Bitcoin (BTC 5.00%) has rebounded quietly, gaining around 15% since hitting its cycle low of $17,664 in mid-June.
After The Merge, Bitcoin, the #1 crypto by market value, will single-handedly be the single biggest proof-of-work asset at the top of the crypto world. Bitcoin proponents consider Bitcoin’s proof-of-work consensus to be more secure than proof-of-stake and believe that The Merge will improve Bitcoin’s image as a secure decentralized network. I think Proof of Work and Proof of Stake have their own merits and I consider owning both Bitcoin and Ethereum to be the most sensible approach for investors.
Some have questioned Bitcoin’s status as an inflation hedge, as the price of Bitcoin has fallen this year in part due to rising inflation in the United States. But it’s important to remember that Bitcoin is a global network with users all over the world. Despite its decline this year, it still represents a viable and accessible safe-haven asset for individuals in countries with runaway long-term inflation, such as Turkey and Venezuela. The maximum supply of 21 million Bitcoins is an attractive feature in a world where governments print ever-increasing amounts of currency, diminishing the purchasing power of the existing currency. I don’t know if the price of bitcoin will be higher or lower a week from now, but I feel good about owning it as a potential hedge against future inflation and I think all investors can benefit from even owning one. small amount in their wallets.
With a market cap of $530 million and a market cap ranking of 71, Ravencoin (RVN -1.67%) is much smaller and less established than Bitcoin or Ethereum. So there is more risk when investing in Ravencoin, but there is also a substantial upside. Unlike Bitcoin and Ethereum, which are priced in the thousands of dollars, you can buy Ravencoin for around $0.06. Ravencoin has shown a scintillating performance this summer, gaining more than 50% in the past 30 days alone.
The summer push for Ravencoin is because it is a proof-of-work crypto that can be mined with GPU (graphics processing unit) mining equipment. All GPUs that mined Ethereum needed a place to go after the Ethereum merger, and Ravencoin is one of the most attractive destinations. Ravencoin’s hash rate has increased, indicating that miners have already switched to Ravencoin.
A short-term catalyst is all well and good, but here’s why Ravencoin is so much more than just short-term trading. Ravencoin was created with the purpose of allowing individuals to create their own tokens. Users can burn 500 Ravencoin and create their own token which represents a real asset. An example of how this could be useful is real estate tokenization. An owner could use Ravencoin to tokenize an investment property and divide it into 100 coins. This would give real estate investors far more liquidity than they enjoy today and lower the barriers to entry for investing in real estate.
Bitcoin, Ethereum, and Ravencoin are all good choices to buy now and hold forever. Cryptocurrencies are volatile and best suited for risk-tolerant investors. For these investors, buying the best cryptocurrencies now when the market is uncertain is a decision that could pay off in the long run.
Michael Byrne has positions in Bitcoin and Ethereum. The Motley Fool holds positions and endorses Bitcoin, Coinbase Global, Inc., and Ethereum. The Motley Fool has a disclosure policy.