Cryptocurrencies may be the most unpredictable asset you can buy right now, but you don’t have to risk your entire life savings to participate in the phenomena. Changing macroeconomic stability, conflicts, and the demise of Terra’s UST stable coin weakened investors’ faith in digital assets this year.
Cryptocurrency prices have fallen before, but the market has shown itself to be cyclical as more people use the technology and incorporate it into their traditional investment portfolios, so this isn’t unprecedented.
Cryptocurrencies can be volatile, so it’s essential to know which ones have low risk/reward ratios if you want to get involved in the market.
When compared to the risk an investor takes on by holding them, these 5 digital assets that we have on our list have the most upside potential for the risk they pose.
1. Bitcoin
The launch of Bitcoin was the start of the cryptocurrency market. Despite a lot of criticism and conflicting views about its core technology and tokenomics, this virtual currency has stood the test of time and given considerable returns to those who have stuck with it through good times and bad.
Bitcoin is a decentralized digital currency that can be sent from one user to another on a P2P (peer-to-peer) network without needing a third party. All transactions are written down in the blockchain, a distributed public ledger, and checked by network nodes.
Bitcoin is so prominent because it has many advantages over other ways to pay. The most significant benefit of using Bitcoin as your preferred payment method is that there are no bank fees when you use it. Aside from that, Bitcoin transactions are also known to be very mobile and safe.
Right now, Bitcoin (BTC) is trading close to $30,000. This is a crucial support level that the token has used twice to start a rally of at least 100 percent in the following months.
Could history happen again for BTC? The odds are in favor of a good result. History doesn’t repeat itself, but it usually rhymes, as the saying goes.
One of Bitcoin’s best features is its strong community of early investors who believe in the power of the blockchain and in BTC’s ability to become a world-class way to pay and store value.
2. Lucky Block (LBLOCK)
Lucky Block is a decentralized gaming venture that wants to change the whole industry by encouraging long-term HODLing and promoting transparency.
Lucky Block is a blockchain-based online gambling protocol that lets people play in a way that is fair, safe, and completely open. The Lucky Block project started in 2015 and is based on the Binance Smart Chain network, which is used by a lot of people. The goals were:
- End-to-end transparency
- Complete protection from manipulation, AND
- Guaranteeing that everyone would get a share of the profits
One of the things that makes Lucky Block (LBLOCK) special is that token holders get paid in many different ways. First, they always make money when the jackpot is given out because 10% of it goes directly to the investors.
Apart from that, Lucky Block also uses distributed ledger technologies to make payouts faster and clearer while keeping full monitoring and documentation, no matter how big the win is.
Also, Lucky Block verifies both players and tickets, making it less likely that data will be lost, deleted, or changed. The project is also run as an open-source project. Companies, especially new ones that are young and innovative, can use the blockchain for free.
The maximum number of tokens that can be made is 100 billion, so if more gamblers join, the token’s value may go up.
The jackpot for the project is paid for by a tax of 12% on short-term trading transactions. Aside from paying for this project, the tax also encourages people who have tokens to buy and keep them. In the end, this is good for the price because liquidity and supply remain limited.
3. Ethereum
Ethereum is the third least risky cryptocurrency on the list. Vitalik Buterin built this popular smart contracts network, which has attracted thousands of developers from all over the world because of its easy-to-understand coding language and the fact that the blockchain is strong enough to withstand 51% attacks because its ownership is split up.
Ethereum is the second-biggest cryptocurrency by volume right now, but its many uses can make it harder for new investors to understand than Bitcoin.
Ethereum is not “digital gold” like Bitcoin. Instead, it is a platform for software that runs on a blockchain. Users can use ether, Ethereum’s cryptocurrency, to interact with the platform or buy it to keep as a store of value. Ethereum is often used by developers, but some people also invest in it because of their belief that it will grow in value over time.
State of the DApps, a website that keeps track of the number of apps made with different blockchains, says that developers have made 2,962 apps so far using the Ethereum Virtual Machine (EVM).
Back in May 2017, there were only 62 active dApps. This means that the number of programs that are now powered by this blockchain has grown at a rate of 117% per year over the past five years.
4. BNB Chain (BNB)
One of the biggest cryptocurrency exchanges in the world, Binance, recently changed the name of its blockchain to BNB Chain. BNB Chain is made by the same company that made the Binance Smart Chain. This move is part of a plan to stop people from saying that the solution is too centralized because it was made by a centralized exchange.
BEP-20 and BEP-721 tokens are digital assets that can be made on the BNB Chain. This layer-one blockchain can also be used by developers to make decentralized applications (dApps).
The practical use of the network’s native token, BNB, which is used to pay all transaction costs generated by the system, makes it a good investment because it supports an income-generating project whose use has been growing over time.
State of the DApps says that the number of apps that use the BNB Chain has grown from 13 in September of last year to almost 250 right now. The BNB Ecosystem has also set up a $1 billion fund to support projects that use its blockchain.
5. FTX Token (FTT)
Over time, FTX has become one of the most valued exchanges for crypto derivatives in the world. In the most recent round of funding, this company that Sam Bankman-Fried started was valued at $32 billion. It just started offering services in the United States and is looking to buy a company that will let it offer stock trading services in North America.
Registered users of the company can buy the FTX token to lower their trading fees and use it as collateral to open trading positions when trading futures and options.
The token can also be “staked” to earn interest, and token holders may also get “airdrops” of non-fungible tokens and other kinds of freebies from time to time.
FTX has low fees for trading cryptocurrencies and a good number of digital assets to choose from. It also sells things like over-the-counter trading, derivatives, and margin trading. Some of these might be good for traders who can handle a lot of risks.
For example, borrowing is used in margin trading to increase both the possible profits and the possible losses. Futures are a type of derivative that is tied to the price of an asset in the future.
