Is cryptocurrency a good investment? What is the best cryptocurrency to invest in 2021?

Whether crypto assets pay off for investors will ultimately be determined by whether they achieve widescale adoption.

Bitcoin, for example, is seen by many as an investment akin to gold. Unlike fiat currencies, such as the U.S. dollar and Japanese yen, that can be printed seemingly at the will of politicians, Bitcoin has a maximum supply of just under 21 million coins. Many investors thus view bitcoin as a scarce asset that could increase in value as fiat currencies depreciate. Others believe bitcoin could eventually gain widescale use as a digital form of cash, with some going so far as to say it has the potential to become the first truly global currency.

Ethereum, meanwhile, wants to serve as a global computing platform. It serves as a launchpad for decentralized applications, or "dapps," which are open source and not controlled by a single organization. Ethereum allows the use of smart contracts, which have their terms written directly into code and can be executed automatically. These technologies could disrupt massive industries, such as real estate and banking, and potentially create entirely new markets.

If bitcoin and Ethereum can achieve these aims, then investors who buy their tokens today will likely be richly rewarded in the years ahead. But there are many other projects competing with these cryptocurrency leaders, and their success is not assured by any means.

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These are five of the best cryptos on the market

Bitcoin (BTC)

The closest thing you'll get to a blue-chip cryptocurrency, Bitcoin has dominated the market since the first bitcoins were mined in January 2009 – but that doesn't mean it has always been smooth sailing. Bitcoin prices hit a high of around $20,000 in December 2017 before collapsing in 2018, reaching a bottom at $3,234 by the end of that year. Since then, however, Bitcoin has enjoyed a comeback as prices surged to more than $40,000 in January 2021 for a market cap of more than $1 trillion – meaning bitcoins accounted for more than 69% of the cryptocurrency market. Bitcoin has its fair share of volatility, as prices have pulled back since hitting this high, but being the biggest name in crypto gives it a worldwide acceptance that lesser-known rivals don't have, arguably making it the best cryptocurrency to buy for investors new to the asset class.

Bitcoin Cash (BCH)

Cryptocurrencies like Bitcoin are predicated on blockchain technology, which stores information about crypto transactions within "blocks" of data that can contain 1 megabyte of data. As the currency grew more popular, these data blocks filled up, slowing down bitcoin transactions and increasing transaction fees. Some Bitcoin developers proposed a solution that would effectively reduce the amount of data needed in each block, but others believed this would compromise the integrity of the cryptocurrency – so they created their own version of Bitcoin in August 2017 and called it Bitcoin Cash. Bitcoin Cash has blocks that can store 8 MB of data, allowing for faster and more frequent transactions with lower fees. Bitcoin Cash may be newer and less popular than its predecessor, but its scalability means it has incredible potential for growth and puts it in the running for best cryptocurrency.

Litecoin (LTC)

Cryptocurrencies tend to seem obscure and complex to those who don't understand the underlying technology, but Litecoin was created to help fix that. In fact, founder Charlie Lee wanted to create the "lite" version of Bitcoin and develop a cryptocurrency that could play the role of "silver to Bitcoin's gold." Lee did just that with Litecoin in 2011, creating a cryptocurrency that adopted many of the best features of Bitcoin with some twists. For instance, while bitcoin transactions take about 10 minutes to confirm, litecoin transactions are far faster, taking less than three minutes. In addition, while it takes specialized hardware and impressive raw computing power for users to mine bitcoin, Litecoin has much lower system requirements – in fact, ordinary PCs are capable of mining for it. Faster and easier is a powerful combination for users and investors alike.

Ethereum (ETH)

One of the main philosophies behind cryptocurrencies is the decentralization of currency. Ethereum takes that a step further – rather than decentralizing money, Ethereum's goal is to decentralize the internet by replacing servers with a worldwide system of nodes, creating "one computer for the entire world." Ethereum is a software platform based off blockchain technology in which users can exchange a cryptocurrency called ether. Ether has become one of the most popular cryptocurrencies in the world, with a market cap approaching $139 billion that puts it second only to Bitcoin in market share. But the real draw is the platform itself, which has become wildly popular as a host for other cryptocurrencies – in other words, not only do investors profit from one of the best and most popular cryptocurrencies on the market, but also from the wider uses of Ethereum itself.

Binance Coin (BNB)

Like Ethereum, Binance Coin is much more than a cryptocurrency – as a matter of fact, Binance Coin was originally hosted on Ethereum until the Binance decentralized exchange, or DEX, went online in 2017. The Binance DEX is a platform much like Ethereum, albeit with a different mission. The Binance DEX is a decentralized platform where users can not only buy and sell binance coins but also use BNB to convert other cryptocurrencies from one to another. This has made the Binance DEX the biggest cryptocurrency exchange on the planet by volume and has helped fuel the popularity of the digital asset. Most importantly, the Binance DEX offers a discount to users who pay transaction fees on the exchange with BNB – a smart strategy that keeps users on the platform and helps sustain Binance Coin's growth.