We recently released an article predicting that Bitcoin would reach $20,000 and possibly go beyond that, which would change the game for cryptocurrencies. At the time of writing , the price of Bitcoin ran up to $40,000, and is now plummeting back down to $30,000 and below. Even as the price falls, however, this bull run is a new paradigm for cryptocurrencies.
Keep in mind that a correction was certainly inevitable. This does not mean however that Bitcoin or cryptocurrencies as a whole have been exposed. In fact it is quite the opposite.
Bitcoin seems to be developing a pattern: every 2-3 years Bitcoin (and the greater crypto market) goes on a massive bull run. Such huge run ups are never sustainable, however they also set new standards for cryptocurrency. The first bull run in 2013, where Bitcoin jumped from only about $12.15 (yes only $12) a coin to over $1,000. Once the price crashed down to around $300, many pundits called it the new tulip bubble. However, crypto continued to develop and be iterated upon.
The second large bull run in 2017 was known to put Bitcoin on the map. Reaching a high of nearly $19,000, Bitcoin and cryptocurrencies finally reached the mainstream. However, this too slowed down and Bitcoin crashed once again to around $3,000.
Now we are seeing history repeat itself once again. While the massive bull run seems to be over, Bitcoin and cryptocurrencies have proven that they are not going anywhere. Investing in crypto has never been easier – however there are nearly endless options to invest in. Which ones offer the highest returns? Which ones are scams and should be avoided?
Realistically there are many different coins you can essentially bet on. However, for long-term investments there are only three cryptocurrencies that are worth buying:
- Bitcoin ($BTC)
- Ethereum ($ETH)
- Chainlink ($LINK)
Bitcoin: The King of Cryptocurrencies
While the most know cryptocurrency is currently in a price freefall, there is an argument that an investment in Bitcoin is necessary if you want to invest in the cryptocurrency market. Put simply, Bitcoin was the first of the cryptos and is going nowhere.
At its inception, Bitcoin was originally created to be a transactional tool, i.e. money. The idea was that there should be a safe, digital currency that did not require a government or central bank’s backing. Since its launch in 2007, though, Bitcoin has evolved past being used for transactions. Rarely will users buy anything with Bitcoin, mainly due to the high price and long transaction times (sending Bitcoin is not instant).
Bitcoin, instead, has become two things: (1) a barometer on the current cryptocurrency market sentiment and (2), a decentralized store of value. The first point is important, as all crypto investors must have some grasp on which way the direction of Bitcoin- and thus the greater cryptocurrency market- is headed. If you ignore Bitcoin and only invest in smaller cryptos, you are completely disregarding the largest market indicator for cryptocurrencies.
Even as Bitcoin faded as a useful transactional tool, its place as the first crypto will forever make it the king of cryptocurrencies.
Ethereum: The Fuel of Cryptocurrencies
The second largest cryptocurrency, Ethereum ($ETH), has a slightly more complicated history than Bitcoin. At its inception, Bitcoin was intended to be used as digital money. Ethereum, however, was never meant to be used for transactions directly. The purpose of Ethereum was to power decentralized applications. In other words, Ethereum developers use the cryptocurrency to create applications that have no central authority figure or owner. These applications use the Ethereum token Ether as fuel (quite literally called a Gas fee).
One of the largest applications of decentralized systems is in decentralized finance, or DeFi. DeFi is a term used to describe financial applications that require no custodian to manage its operations. An example would be decentralized exchanges. Unlike Coinbase or Gemini, there are exchanges that have no central figure running things behind the scenes. Many cryptocurrency enthusiasts love this idea, as the whole purpose behind cryptocurrency is to put everyone on an equal playing field. By having centralized exchanges that control the order flow of cryptocurrencies, it almost defeats the entire purpose.
Ethereum is important because, like Bitcoin, it was the first and most widely used cryptocurrency for decentralized applications. If you use a “DApp” online, it almost certainly is powered by Ethereum. Ethereum, though not without its issues (such as enormously high Gas prices), is an essential part of new blockchain developments. There have been attempted replacements, but since Ethereum is so solidly baked into the ecosystem, it realistically is unlikely to be replaced.
Chainlink: The Bridge for Cryptocurrencies
The third, and youngest, essential cryptocurrency investment is Chainlink ($LINK). Similar to Ethereum, Chainlink is not a currency and not meant for transactions. It instead is a building block for blockchain applications. The key differentiator for Chainlink, however, is that it links non-blockchain data to blockchain data. This has proven to absolutely essential in building Decentralized Applications, like DeFi.
Before its release in 2017, blockchain systems were limited in communication. Data on the Ethereum network was only able to send and receive data to other application on the network. This is problematic when developers are trying to encourage widespread adoption of their applications. With Chainlink, blockchain applications can send and receive non-blockchain data.
For example, a decentralized exchange needs pricing data in order to function. This inherently is a non-blockchain piece of data. Nearly every decentralized exchange uses Chainlink to bridge this gap.
Of all the cryptocurrencies, Chainlink arguably has the most growth potential due to its relative new rollout and its excellent use case. Also, like Bitcoin and Ethereum, it was a first mover in the space and has experienced widespread adoption by the community. If you want to make a decentralized application, you must use Chainlink if you want to add any outside data into your app.
All of the above being said, it is difficult to predict the future. None of the above analysis is predicting that the price of Bitcoin, Ethereum, or Chainlink will continue to grow to new levels in the near future. However, all of the above are must-have investments for any cryptocurrency investor due to how essential they have proven to be in the market.