Over the very long-term, the stock market has been a wealth-building machine that’s doubled investors’ money, on average, about once a decade. But in recent years, cryptocurrencies have run circles around the stock market.
During the initial wave of the coronavirus pandemic, the total value of all digital currencies slipped as low as $141 billion. As of this past weekend, the aggregate value of the more than 17,500 cryptocurrencies listed on CoinMarketCap.com was $1.9 trillion. It’s a gain of more than 1,200% in 23 months.
Despite these huge gains, significant upside is still possible for those few cryptocurrency projects that offer a competitive edge and differentiation. The following three unique cryptocurrencies all have the tools necessary to turn a $100,000 investment into $300,000 by 2024.
The first differentiated digital currency that could triple an initial investment of $100,000 by 2024 is Avalanche (CRYPTO: AVAX).
With well over 17,000 cryptocurrencies listed, and thousands upon thousands of blockchain-based projects in the works, standing out is becoming tougher with each passing day. What allows Avalanche to separate itself from the pack is its operating efficiency, scaling potential, and compatibility with a key decentralized application (dApp) development tool.
Among crypto networks, none are more popular or trusted than Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH). But this popularity comes at a price. Bitcoin is only capable of processing seven transactions per second (TPS), with the typical transaction completing in 60 minutes. As for Ethereum, it’s capable of 14 TPS, with an average transaction finality of six minutes. Meanwhile, Avalanche is fully capable of handling 4,500 TPS and offers a transaction finality of less than two seconds. Whether you’re sending a payment, files, or data, it’ll reach its final destination almost instantly.
Bitcoin and Ethereum also have considerably higher transaction fees than most digital currencies. Although fees for both have declined in recent months, Avalanche is consistently lower from a fee perspective than either Bitcoin or Ethereum.
But icing on the cake for Avalanche is its incorporation of the Ethereum Virtual Machine (EVM). The EVM is the software used by developers to create dApps on the Ethereum blockchain. For the time being, Ethereum is bringing in more dApp protocol revenue than any other project by a mile. However, Avalanche can offer developers access to EVM, but with lower fees, faster execution, and superior scaling. It seems only a matter of time before Avalanche’s network starts gobbling up significant dApp protocol revenue of its own.
Another unique cryptocurrency that can turn a $100,000 investment into $300,000 in less than three years is IOTA (CRYPTO: MIOTA). With a market cap of $2.4 billion, it’s the smallest project of the three digital currencies listed here.
The first thing you’ll notice about IOTA is that its network is not — I repeat, not — blockchain-based. Instead, IOTA relies on what it calls the “Tangle.” The Tangle is a directed acyclic graph which requires each new transaction to confirm two previous transactions. As the number of transactions grows over time, the network becomes more efficient, and the connections between transactions begin to look like a tangled web (thus, the “Tangle”).
IOTA’s developers saw clear-cut advantages in avoiding blockchain technology. For example, the time it takes to propose new blocks or validate groups of transactions slows network efficiency. Cryptocurrency mining can also be energy-intensive and costly. With the Tangle, payments take only a couple of seconds to reach their final destination. What’s more, all transactions are feeless. Imagine sending cross-border payments, for free, in a matter of seconds.
This year, the big excitement surrounding IOTA is the ability for holders to stake their coins. Staking was introduced in December 2021, with users able to earn two new ecosystem tokens: Shimmer and Assembly. The Assembly mainnet is of particular interest. When it launches later this year, it’ll offer fee-free smart contract-based transactions. Smart contracts being the protocol that help to verify, facilitate, and enforce the negotiation of a contract between two parties.
A third unique cryptocurrency that provides a competitive edge and differentiation in an increasingly crowded space is Algorand (CRYPTO: ALGO). There are three aspects of Algorand that give it a reasonable chance to turn $100,000 into $300,000 by 2024.
To start with the basics, Algorand’s network checks all the appropriate boxes. As of December, it was able to handle more than 1,100 TPS, and was completing transactions in a little over four seconds. Compare that to existing financial infrastructure, which can take up to a full week to validate and settle cross-border payments. Additionally, Algorand’s transaction fee is a low .001 ALGO per transaction (about one-tenth of a penny) — even for the more complex smart contract-based transactions.
Second, the Algorand development team has a core focus on interoperability. As noted, there are thousands upon thousands of unique blockchain-based projects under development right now. While some of these projects may be engineered in a way where they can be compatible with existing financial infrastructure and/or other blockchain projects, many will not. Algorand is looking at ways to bridge these gaps, especially when it comes to the financial applications of blockchain.
The third stand-out factor for Algorand is its security. With traditional proof-of-stake consensus, small holders of a coin have an opportunity to disrupt the efficiency of a blockchain-based network. But with Algorand’s pure proof-of-stake consensus mechanism, ALGO token holders are chosen secretly and at random to propose blocks and vote on various proposals. This makes it almost impossible for wrongdoers to adversely impact Algorand’s network.
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Sean Williams has no position in any of the stocks mentioned. The Motley Fool owns and recommends Bitcoin and Ethereum. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.