itcoin prices have run up in 2021, and investors are now looking forward to 2022 to determine where the best opportunities could lie. Several altcoins are poised to benefit from further price appreciation. Some more popular altcoins like Ether could continue to outperform as the software domain becomes more acceptable. Developers count on some of the other Altcoins like Solana and Avalanche to provide several opportunities for investment into the future platforms.
What is Gaining Traction as a Platform?
More domains have been created, and more programmers are using specific platforms that feature altcoins. The ranking of active developers starts with the altcoin Solana, followed by Ethereum and then Elrond. Avalanche comes in 6th place. The number of Solana contributors is more than double the number of Ethereum, but the market capitalization is 13%. The analysis shows that many software platforms use altcoins that are gaining momentum and could experience an explosion in use and demand for the altcoin.
The Benefits of Solana over Ethereum
Similar to Ethereum, Solana provides a blockchain with several solutions that outperform Ethereum. Some of the benefits include that Solana uses no state as part of its programs where Ethereum stores state, making it slower. Additionally, Solana does not have on-chain clock verification. Solana streams transactions without waiting for global consensus. It also has lower memory requirements. The Altcoin platform removes the mempool by forwarding unconfirmed transactions to upcoming validators.
How has the Largest Altcoin Performed?
As of the beginning of December, Bitcoin returned to investors more than 73% year to date. These robust returns are dwarfed by the fantastic returns experienced by the second largest coin, Ether. Ether has run up 300% more than Bitcoin, rising from 737 to more than 4,400. Like Bitcoin, Ether runs on the Blockchain and has a limited number of coins that it can produce over time. Ethereum is the domain with the second largest number of programmers and could continue to experience upward momentum in 2022.
Earning Interest in Cryptocurrency
One of the benefits of owning a particular cryptocurrency is that you might earn interest if you hold the digital coin in your account and are willing to lend it to your broker. Similar to a savings account, some brokers will lend your cryptocurrency to others, so they can either short sell the cryptocurrency or lend it for use in generating a derivative.
If you plan on crypto trading using a buy-and-hold strategy, then earning interest could be an added benefit. This process is called staking. Coinbase, one of the largest platforms, allows investors to stake Ethereum. They will pay you interest up to 7% on Bitcoin and will enable you to compound your growth using your cryptocurrency. Popular altcoins on which investors can earn interest are Bitcoin, Ethereum, Litecoin, and Uniswap. The interest paid on these accounts is in the form of the cryptocurrency in your interest-bearing account, so you keep your exposure to the market. For example, if you own the cryptocurrency Ether and you sign up for staking your coins, you will receive additional amounts of Ether added to your account.
Compounding is a Power Tool
Compounding can be a powerful tool. If you are earning 7% on your stake of Ether and you own 100 ether coins, you will own 107 Ether after the first year. If Ether did not move for 10-years and you are earning 7%, the value of your portfolio would double during that period. You can see the different interest rates you can earn on each platform. There are clear benefits to earning interest on your Altcoins, making them even more attractive in 2022. There is usually a very low lockup period and no minimum amount required to open an interest-bearing account. The downside is that you have to own an account with an address and physically control the digital currencies. If you only plan to trade Altcoins like Ether, you might trade a CFD (contract for differences). Brokers that offer CFDs generally do not allow you to stake your coins for interest since you don’t own the underlying digital currency. When you use CFDs, you can also use leverage for crypto trading, which is not available when you hold your digital coins.
The Bottom Line
Ether and Solana have the most dedicated number of programmers and continue to see more domains created on their platform. The ability to stake your cryptocurrency and earn interest is also an exciting new process that will add more securities to the world of cryptocurrency.