Cryptocurrencies are still on everyone’s lips in 2023. This year, because of the falls that these digital currencies are accumulating. But what does that mean? Is it a bad time to invest in crypto? Many people think that the falls are the best time to keep buying, that depends on the strategy of each one.
If you have come this far, you are probably looking for new investment alternatives and one of the most interesting is, precisely, to invest in cryptocurrencies: assets that since their creation have experienced a great revaluation. In this article we explain what a cryptocurrency is, how it works, how to invest, which cryptocurrencies to invest in and which are the best in 2023.
In any case, for this type of investment as well as for many other high-risk investments, it would be best if you let yourself be accompanied by a financial advisor.
What are cryptocurrencies?
The most widespread definition of cryptocurrency is that it is a digital, non-physical currency that uses cryptography to secure and manage transactions, as well as to create new currencies within the blockchain network.
This explanation of what a cryptocurrency is includes the two most important characteristics of these digital currencies. The first is that there are no banknotes or coins as there are for euros, dollars or pounds. Cryptocurrencies are digital and, although they can be stored in physical devices (the so-called wallets or physical wallets such as hard disks or USB sticks), they have no physical representation as such.
The second is that cryptography is used to create new units. P2P technology is what, for practical purposes, means that there is no dependence on any government or country: there is no central body or government in charge of creating new currencies and putting more money into the market. As an example, Bitcoin uses blockchain technology to regulate the creation of new units. Moreover, in this case, the number of available coins is limited, something that is not always repeated with other cryptocurrencies.
Types of cryptocurrencies
Ethereum, Cardano, Polkadot… there are many virtual currencies beyond the famous Bitcoin. In fact, today the number of digital currencies stands at around 10,000 worldwide.
What differentiates the types of cryptocurrencies are the projects behind them. The blockchain technology used by cryptocurrencies can be used for many different purposes. From using a cryptocurrency as a means of payment, as is the case with Bitcoin, to the smart contracts of the Ethereum network. There are also currencies that use completely different formulas.
However, when it comes to investing, it is necessary to have sufficient financial knowledge and to know exactly which products we are investing our money in and what risks we are taking. We tell you which are the best cryptocurrencies to invest in and what you should take into account when choosing them!
List of cryptocurrencies
How many cryptocurrencies exist? The data varies constantly and is not entirely accurate, but it is estimated that currently, at the beginning of 2022, there are more than 10,000. Every week a new digital currency is created in a process called ICO, which we will summarize below.
The cryptocurrencies that, despite the falls, maintain a strong position in the top 10 (in terms of market capitalization) are:
1. Bitcoin
2. Ethereum
3. Shiba Inu
4. STEPN
5. PancakeSwap
6. Terra
7. Polygon
8. Solana
9. USD Coin
10. Polkastarter
The number of existing virtual currencies is much larger and continues to grow every day. To consult the legal cryptocurrencies you can do it through more than 800 digital currencies and their corresponding quotation such as: World Coin Index and CoinMarketCap.
In both places you can consult a list with the most important cryptos and also see the quotation of these digital currencies.
On the other hand, if you are considering investing but do not want to complicate the management, a good option is roboadvisors. Automated managers allow you to take your first steps in an easy and safe way.
New cryptocurrencies
The world of virtual currencies never stops and almost every day new proposals emerge, known as altcoins or alternative coins in reference to the fact that they are alternatives to bitcoins. In the previous point we have already reviewed some of the most important ones and now we are going to see how to invest in new cryptocurrencies.
Just as there are company IPOs, cryptocurrencies also have their initial public offerings. These are called ICOs or Initial Coin Offerings, which will remind the stock market investor of IPOs or Initial Public Offerings, which are called IPOs in English.
ICOs are used to finance projects. With the ICO, the company puts new digital currencies into circulation in exchange for money.
Making money with cryptocurrencies is possible, but you have to know which one to bet on and how to do it. In this sense there are different ways to invest in cryptocurrencies from trading with cryptocurrencies to mining digital currencies. Choosing the right asset and the way to mine is key, especially when they are so volatile and have so much risk.
Best cryptocurrencies to invest in 2023
What were the most profitable cryptocurrencies of the past year? Which ones have the largest market capitalization (current price x outstanding supply)? You can see the full lists on sites like Coinmarketcap. These figures can help us get an idea of what could be some of the best cryptocurrencies of 2023, although, due to their volatility, we will be updating only time will tell.
We must take into account the presence of new technologies and markets where cryptocurrencies can take center stage, as is the case of the metaverse, video games and digital finance. In this aspect, the Etehreum network and its competitors such as Cardano and Solana are proposals to be closely watched. For the Metaverse Decentraland and its platform where you can acquire “digital land” is giving much to talk about as well as The Sandbox. And Axie Infinity at the head of the revolution in the world of video games.
| Cryptocurrency name | Profitability throughout 2021 |
| Axie Infinity | +17.166% |
| The Sandbox | +16.645% |
| Terra | +14.243% |
| Polygon | +13.937% |
| Solana | +10.027% |
| Decentraland | +4.235% |
| Polkadot | 3,47 |
Returns during 2021, source: CoinMarketcap
Of course we must not forget the top 10 cryptocurrencies by market capitalization. This always indicates those cryptocurrencies that are having the highest relevance at all times and you can follow them through the CoinmarketCap website.
- Bitcoin: $385,420,950.07
- Ethereum: $139,180,318,281
- Shiba: $5,732,417,360
- STEPN: $560,509,052
- PancakeSwap: $448,169,277
Source: CoinmarketCap. market capitalization as of July 6, 2022.
The most successful cryptocurrencies
As they say in the stock market, “past performance is no guarantee of future returns.” And we learned this from the huge drop we saw earlier this year, after which the market seems to be recovering.
The evolution of a virtual currency is a good indicator of its potential, but that does not mean it will be the best cryptocurrency to invest in 2023. A good example is the drop in prices of virtual currencies, which in many cases have fallen by more than 50%. Is this a sign that we should rush out of this sector? Far from it, it’s just that the price has been too high.
Which cryptocurrencies will show the best results in 2023? As usual, it’s too early to talk about the most profitable cryptocurrencies this year, especially given the decline we’ve experienced in these first weeks of the year. Some of the most profitable last year were:
1. ETHER
Ethereum has surpassed in growth the other big cryptocurrency, Bitcoin, during the year 2021. While Bitcoin grew by 67%, the Ether (ETH) rose by 502%, making it the fastest-growing megacryptocurrency.
Behind the Ethereum network is the Smart Contracts project, which has received several nods for its usability in different applications from companies that are already starting to work in decentralized finance and in the world of the metaverse.
2. CARDANO
Ranked among the top positions, Cardano (ADA) went from being worth a few cents to being worth over 1 euro. This represents a growth of 670%. Based on Smart Contracts, but betting on greater scalability, the ADA token is a firm competitor to Ethereum and its ecosystem.
3. TERRA
It was a complete unknown at the beginning of the year and has ended up being a real protagonist by scoring more than 10,000% growth last year. Terra (LUNA) focuses its project on the creation of decentralized finance applications on a very high-speed blockchain to generate a high correlation between stablecoins from the crypto world with fiat currencies from all over the world.
However, things have gone awry in 2022 and this crypto has suffered sharp corrections.
4. SOLANA
This is another Smart Contracts project that competes closely with Ethereum by positing the possibility of handling up to 50,000 transactions per second. This would increase the speed with which transactions could be made in the world of decentralized finance. With a brutal growth of 10,942% Solana (SOL) achieved a record year and aims to be a cryptocurrency to keep an eye on due to the great projection of its projects.
5. DOGECOIN
The “little dog” has made it! Dodgecoin (DOGE) achieved a growth of 3,000% driven, among others, by Elon Musk. Although its value has plummeted from the last half of 2021, its explosion during the first half of the year was such that it managed to stay in the top 10. The “Meme Coins” or “Meme Coins” do not have big projects behind them, in many cases they do not have any, but they are very attractive for small investors looking to speculate in the cryptocurrency market due to their low value. So watch out for these types of cryptos in 2022.
There have been other cryptocurrencies and tokens with superior growths, as is the case of The Sandbox (SAND) which has grown more than 15,000%. This token went unnoticed during the first half of the year and barely moved reflecting a completely flat trend. However, being a project linked to the metaverse it started to burst on the market following announcements, such as Facebook’s now Meta, to start entering this new world yet to be explored.
In 2023 we may have new protagonists of which we know little, but they have begun to talk about at the end of the year we have just left behind. Protagonists of other ambitious projects linked to the metaverse and other new applications of DeFi (Decentralized Finance) such as Polkadot, Decentraland, Polygon or Avalanche. These cryptoassets, which have experienced strong growth and have large projects behind them, may give a lot to talk about in 2023.
Many of the cryptoassets mentioned are firm competitors to Ethereum and put forward ideas based on smartcontracts. So we could have position movements among the largest cryptocurrencies as they see their position threatened. Let us not overlook the fact that, as we have mentioned, while Ethereum has grown by over 500%, Bitcoin has barely touched 70% growth. We will see what returns 2023 offers us.
How to buy cryptocurrencies
There are two main ways to invest in cryptocurrencies: buying cryptocurrencies or mining them. The first option is the most common and also the most accessible.
Buying a digital currency is not so different from investing in commodities, for example. What changes is the platform through which it is done. To invest in cryptocurrencies there are specialized platforms, called exchanges. On these platforms you can buy cryptos in a super simple way, and even store them. But be careful, because this is not the same as having a cryptocurrency wallet or purse.
Cryptocurrency wallets
There are several types of cryptocurrency wallets, depending on their operation and security:
Hot wallet: 100% online wallets, which can be applications or can even be installed as browser extensions.
Cold wallet: physical wallets (hardware) whose common premise is that they work without internet connection and are physical devices, which makes them the safest option.
Where to invest in cryptocurrencies
Which exchange to choose, on which platforms can I buy cryptocurrencies? It will depend first of all on the digital currency you want to buy, as not all exchange platforms accept all cryptocurrencies existing in the market. With that in mind, here is a list of the most popular exchanges.
Best cryptocurrency exchanges list:
- Coinbase
- Kraken
- Binance
- Genimi
- Crypto.com
Mining cryptocurrencies
Investing in cryptocurrencies using exchanges and wallets is one way to make money with cryptocurrencies. The second way is cryptocurrency mining. How to mine cryptocurrencies? Basically, mining cryptocurrencies consists of solving complex mathematical problems, in exchange for receiving a reward. And this is fundamental for the Blockchain and the crypto ecosystem to work.
The most repeated question at this point is how to mine cryptocurrencies, what does it take to become a miner of Bitcoin or any other cryptocurrency. To start with you will need a mining machine or a computer. In theory, any computer will do, but in reality, if you want your activity to be profitable you must have a specialized machine, assume a high energy cost and a fairly powerful computer.
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