3 Potentially Explosive Cryptocurrencies to Buy in 2023 | The Motley Fool
General economic woes last year crushed many of the world’s most promising cryptocurrencies. That’s because, in times of uncertainty, investors tend to favor the safest investments. Cryptocurrency is pretty new, and it’s too early to know exactly how big its role will be in areas like finance and entertainment a few years from now. And that equals risk.
But here’s something important to keep in mind. Today’s troubles haven’t changed the investment case for cryptocurrencies. A player with a solid platform and future prospects a year ago remains just as interesting today. But in many cases, it’s trading for a much lower price and offers potential for explosive gains. Let’s check out three to buy in 2023.
Avalanche (AVAX 1.78%) stands out in the sea of cryptocurrencies in two big ways: It’s fast, and it’s compatible with market-leading blockchain Ethereum.
Let’s talk about speed first. Avalanche can process an infinite number of transactions per second. And each transaction reaches completion in less than two seconds. By comparison, Ethereum processes about 14 transactions per second. Avalanche’s speed results in less congestion on the network and cheaper transactions.
And here’s another reason users may flock to Avalanche. The Ethereum Virtual Machine — Ethereum’s software to create decentralized applications (dApps) — can operate on Avalanche. Many developers are used to building on Ethereum. So they’ll like the fact they can continue using a platform they know well but on a faster, cheaper blockchain. And the Avalanche bridge makes it easy to transfer assets from one blockchain to the other.
Today, more than 300 projects exist on Avalanche. But this could be just the beginning. Avalanche sank 89% last year — and this leaves it ready to skyrocket on any positive news.
Cardano (ADA 4.22%) has built up its capabilities slowly but surely with a system of peer review to ensure the quality of each update to the system. As a result, users have been able to rely on Cardano operating without major outages.
In 2021, Cardano launched smart contract capabilities. This opened the door to dApp development, a very important step for any blockchain hoping to redefine the way business is done. Then, last year, Cardano completed the Vasil hard fork to boost scalability, stability, and the general environment for dApp development. But the best may be yet to come.
Software developers are working on hydra heads. The idea is to process transactions — such as payments, for example — on these mini-ledgers off the main chain. This will increase the speed of transactions and reduce congestion. In fact, early research demonstrated that each head could handle as many as 1,000 transactions per second.
Users must like what they see. Full-time monthly active developers on Cardano increased 16% last year from the previous year, according to a report by Electric Capital. All of this could support major gains for Cardano moving forward.
Algorand (ALGO 2.33%) recently got a whole lot faster. An upgrade last fall increased transactions per second to 6,000 from a little over 1,000. But there are plenty of other reasons to like this dynamic crypto player.
Many cryptos use proof of stake to validate transactions. This involves selecting validators based on their holdings of the cryptocurrency.
But Algorand’s founder created a new system called pure proof of stake that introduces a component of random selection to that model. This ensures security, scalability, and decentralization. These clearly are three qualities that could help Algorand stand out and be considered among the safest of platforms over time.
Finally, Algorand is built in a way that makes it the ideal platform for non-fungible tokens (NFTs). That’s because forking can’t happen on Algorand. This means the blockchain can’t split off into new versions. Forks are risky for NFTs because they could result in NFT duplication or loss of value. So, there’s reason for NFT creators and buyers to favor Algorand.
Like Avalanche and Cardano, Algorand plummeted in the double digits last year. But these declines don’t reflect the potential of these crypto players. They still have what it takes to grow and attract users. And this could lead to major gains from today’s levels.
Adria Cimino has positions in Ethereum. The Motley Fool has positions in and recommends Avalanche, Cardano, and Ethereum. The Motley Fool has a disclosure policy.
Read More: 3 Potentially Explosive Cryptocurrencies to Buy in 2023 | The Motley Fool
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