/ Cryptoboom 2024: Top 10 coins to invest in

There are thousands of different cryptocurrencies - from Bitcoin and Ethereum to Dogecoin and Tether - and it can be overwhelming when you're just starting to familiarise yourself with the world of cryptocurrencies. To help you navigate, here's a list of ten cryptocurrencies that are worth investing in, given their market capitalisation or the total value of all coins currently in circulation.

Best cryptocurrencies to buy

1. Bitcoin (BTC)

Market value: $1.3 trillion
Year-to-date return: 128%

Created in 2009 by Satoshi Nakamoto, bitcoin (BTC) is a pioneering cryptocurrency. Like many other cryptocurrencies, BTC is based on blockchain technology, where transaction records are stored and validated by a decentralised network of computers. The security of the bitcoin network is ensured by a proof-of-work process that requires complex cryptographic tasks.

The price of bitcoin has increased dramatically over time as it has become increasingly well-known and attractive to investors. For example, in May 2016, a single bitcoin was worth about $500. However, in May 2024, its price has risen to approximately $63,540, which is an increase of 12,608%.

2. Ethereum (ETH)

Market value: $369.0 billion
Year-to-date return: 65%

Ethereum, which is both a cryptocurrency and a blockchain platform, is in significant demand among software developers due to its unique features, including smart contracts that automatically execute when certain conditions are met and non-functional tokens (NFTs) that represent digital assets.

Ethereum has also seen impressive growth. From April 2016 to mid-May 2024, its value has risen from around $11 to $3,072, an increase of 27,829%.

3. Tether (USDT)

Market value: $111.0 billion
Year-to-date return: 0%

Unlike some other cryptocurrencies, Tether (USDT) is a stablecoin, meaning its value is backed by fiat currencies such as US dollars and euros, suggesting that it retains a value equal to one of these denominations. This makes Tether more stable compared to other cryptocurrencies and a preferred choice for investors looking to avoid severe volatility in the market.

4. Binance Coin (BNB)

Market value: $87.4 billion
Year-to-date return: 86%

Binance Coin (BNB) is a form of cryptocurrency that can be used to trade and pay fees on the Binance platform, one of the largest crypto exchanges in the world. Since its launch in 2017, Binance Coin has evolved from simply facilitating transactions on the Binance exchange to a multi-functional asset. It can now be used for trading, payment processing, and even booking travel. It can also be easily exchanged for other types of cryptocurrencies such as Ethereum or bitcoin.

In 2017, the price of BNB was only $0.10. By mid-May 2024, its value had risen to around $592, representing an increase of 591,883%.

5. Solana (SOL)

Market value: $69.4 billion
Year-to-date return: 625%

Solana was developed to support decentralised financial applications (DeFi), decentralised applications (DApps) and smart contracts. The platform operates on a unique hybrid of proof-of-stake and proof-of-history mechanisms, providing fast and secure transaction processing. The SOL token is Solana's internal currency and is used for the functioning of the platform.

At launch in 2020, SOL had a price of $0.77. By mid-May 2024, its price has increased to approximately $155, representing an increase of 20,026%.

6. United States Dollar Coin (USDC)

Market value: $33.2 billion
Year-to-date return: 0%

Similar to Tether, USD Coin (USDC) is a stablecoin that is backed by U.S. dollars and seeks a fixed 1:1 ratio with the U.S. dollar. USDC is based on the Ethereum platform and can be used for global transactions.

7. XRP

Market value: $29.6 billion
Year-to-date return: 23%

XRP, created by the team behind Ripple, specialises in digital technology and payment processing. This token can be used on the Ripple network to exchange various types of currencies, including fiat currencies and other cryptocurrencies.

At the beginning of 2017, the price of XRP was $0.006. By May 2024, it reached $0.54, which means an 8,835% increase.

8. Dogecoin (DOGE)

Market value: $22.6 billion
Year-to-date return: 109%

Dogecoin, originally conceived as a joke in 2013, has become a notable cryptocurrency thanks to a devoted community and original memes. Unlike many other cryptocurrencies, there is no limit to the number of Dogecoin that can be created, which can lead to devaluation of the currency as supply increases.

In 2017, the price of Dogecoin was $0.0002. By May 2024, it had risen to $0.16, an increase of 78,273%.

9. Tonсoin (TON)

Market value: $20.6 billion
Year-to-date return: 196%

Toncoin, originally developed as a Tier 1 blockchain for the Telegram encrypted messaging platform, was later brought under the control of the TON fund. The project was renamed "The Open Network" and then "TON" after its creators left the Telegram connection.

Toncoin, originally known as Gram, is the official token of the TON network. It is an app that allows users to buy, send, and store funds on the incredibly fast and environmentally friendly TON network.

10. Cardano (ADA)

Market value: $16.1 billion
Year-to-date return: 21%

Cardano (ADA) entered the cryptocurrency market later than the others, but has attracted attention due to its early use of the share confirmation method. This method shortens transaction times, reduces energy consumption and environmental impact by eliminating the competitive transaction verification process common to Bitcoin. Like Ethereum, Cardano enables the creation of smart contracts and decentralised applications backed by ADA coin.

In 2017, the price of ADA was $0.02. By May 2024, it reached $0.45, an increase of 2,154%.

How to invest in cryptocurrency?

Buying cryptocurrency is done through crypto exchanges such as Coinbase, Kraken or Gemini. Also, some brokerage platforms offer the option to buy cryptocurrencies.

Accounting for cryptocurrencies in tax returns

When trading cryptocurrency, it is important to consider tax rules.

Cryptocurrency is treated as a capital asset rather than cash, similar to stocks. This means that when you sell cryptocurrency at a profit, you need to pay tax on the capital gain. This applies even if the cryptocurrency was used to pay for goods or services. If you sold the cryptocurrency for more than you bought it, the difference will also have to be taken into account for taxation.

FAQ

Q: How is trading cryptocurrencies different from trading stocks?
A: While you can invest in cryptocurrencies, they are different in many ways from traditional investments such as stocks. When you buy a stock, you're buying an ownership stake in the company, which means you have the right to do things like vote on the direction of the company. If the company goes bankrupt, you can also receive some compensation after creditors are paid out of the liquidated assets.

Buying a cryptocurrency doesn't give you ownership of anything other than the token itself; it's more like exchanging one form of currency for another. If the cryptocurrency loses its value, you get nothing.

Q: Are there any cryptocurrency exchange-traded funds?
A: Given the thousands of cryptocurrencies that exist and the high volatility associated with most of them, it is understandable that you would want to take a diversified approach to investing in cryptocurrencies to minimise the risk of losing money.

There are exchange-traded funds, or ETFs, that trade both bitcoin futures and the spot price of bitcoin. However, choosing the right ETF for you depends on many factors, including your risk tolerance and investment horizon.

Q: What are altcoins?
A: When we first think of cryptocurrency, we usually think of bitcoin. That's because bitcoin makes up over 45% of the entire cryptocurrency market. Therefore, when we talk about any cryptocurrencies outside of bitcoin, all of these cryptocurrencies are considered altcoins. Ethereum, for example, is considered the most popular altcoin.

Q: Why is bitcoin valuable?
A: Part of bitcoin's value lies in its scarcity. The maximum supply of bitcoin is limited to 21 million coins. There are currently 19 million coins in circulation.

To create supply, bitcoin rewards cryptocurrency miners with a certain number of bitcoins. To be precise, a miner is given 6.25 BTC for successfully mining one block. To keep the process under control, the reward for bitcoin mining is halved almost every four years.