The fast-moving and often volatile cryptocurrency market is constantly making headlines. But while media coverage focuses primarily on record-breaking prices and spectacular rates of return, the most exciting developments seem to be taking place on the technical front. In this market, decentralized finance, NFT tokens, and virtual reality (Metaverse) projects continue to grow rapidly.
Which representatives of these segments should we pay attention to and why?
1. Terra: stablecoins of the future
2. Solana: High-Frequency Blockchain
3. Decentraland: the digitization of reality
4. Dogecoin: A Joke Worth Billions
5. Ethereum: The World's Supercomputer
1. Terra: stablecoins of the future
In terms of return, this crypto has been the absolute number one of 2021. The Luna token has gained no less than 11,500% in 12 months, and as of mid-November, Terra was ranked 14th in the coinpaprika.com market capitalization ranking. More specifically, Terra is a blockchain that enables the creation of stablecoins. These are tokens with a stable value that allow payments to be made without the risk of price volatility. Thus, Terra solves the significant problem of sharp exchange rate fluctuations, which we are all too familiar with in the Bitcoin market (one day it can cost $68,500, a record high, and the next day it can be 10% cheaper). This is not the first project in this field. The most well-known stablecoin is Tether. The problem with Tether and other stablecoins like it is that it's a centralized project with a single company behind it, which guarantees the stability of its quotations. Terra, on the other hand, is a decentralized project, using an algorithm and a committed community to ensure this stability. The fact that it's only been operational since 2019 and is already high in the market capitalization rankings suggests that it enjoys significant interest and trust from its users.
2. Solana: High-Frequency Blockchain
This project, although only operational since 2020, rose to fifth place in the market capitalization ranking last November. Its token, SOL, saw its price increase by nearly 10,000% in one year. This project is part of the DeFi segment, and more specifically, it is a blockchain for fast and cheap transactions. It addresses the scalability and capacity issues of other well-known blockchains, most notably Ethereum (due to the sheer number of projects running on Ethereum, the network has struggled to handle demand, as in 2017 when CryptoKitties players caused the overload). Solana presents itself as the fastest-growing cryptocurrency ecosystem in the world. According to data from solana.com, on November 22, the network processed 2,705 transactions per second with an average fee of $0.00025. This high throughput is due to new technological solutions, including, among others, a unique transaction serialization method called Proof of History. Solana represents the third generation of blockchain, which, in addition to the features of Bitcoin and Ethereum, offers significantly greater operational efficiency.
3. Decentraland: the digitization of reality
Decentraland is a virtual reality (Metaverse) built on the Ethereum blockchain. It is a 3D game in which the user—with the help of an avatar—can create their own reality, including acquiring real estate, developing businesses, and then monetizing these activities. The cryptocurrency in this game is MANA. In 12 months, its value has increased by almost 4,500%, while NFT tokens are responsible for virtual property rights in this world. In this context, Decentraland is a combination of the NFT and Metaverse segments. This year, several records were set for this project. In June, the Republic Realm investment vehicle purchased plots of land in Decentraland for USD 900,000, and in October 2021, the Barbados government became the first in the world to open its embassy in this virtual world.
The cryptocurrency segment of the Metaverse was worth approximately $40 billion by market capitalization as of mid-November. Four projects—Axie Infinity, Decentraland, Enjin Coin, and Sandbox—were responsible for 50% of this amount. The announcement of Mark Zuckerberg's arrival in the Metaverse with Facebook was a significant growth factor for these projects.
4. Dogecoin: A Joke Worth Billions
This cryptocurrency is no match for the aforementioned projects in terms of technology and innovation. However, when it comes to making you smile, it is something of a phenomenon in the cryptocurrency world. Dogecoin was created as a joke and, to the surprise of many, has gained a wide range of fans, including the richest man in the world, Elon Musk. In terms of usage, it is sometimes used to pay tips online and organize community collections (the most famous was the one organized by Jamaican bobsledders, who wanted to travel to the Sochi Olympics with the money raised). Thanks to its strong community and the#dogecointoonedollarcampaigns, its market capitalization has grown by 6,700% this year, making it the seventh highest in the sector. It is worth remembering that exposure to Dogecoin is purely speculative, and one should expect a very high risk of volatility and vulnerability to pump-and-dump manipulation.
5. Ethereum: The World's Supercomputer
Ethereum has been the number two cryptocurrency in terms of market capitalization for years. Although this year it has grown by "only" 680%, many say that Bitcoin is increasingly feeling its breath. As of mid-November, its market capitalization was $0.5 trillion, while Bitcoin's was $1.1 trillion. There are two points that strongly favor Ethereum. First, the vast majority of alternative cryptocurrencies are based on its blockchain. According to icobench.com, 87% of all token issuances have used Ethereum for this purpose. Second, Ethereum is undergoing a technological transformation to move from PoW (Proof Of Work) to PoS (Proof Of Stake) consensus. While this process will take time, it is expected to be completed next year. If successful, it will significantly increase the throughput and scalability of the Ethereum blockchain, strengthening and cementing its position as the world's supercomputer.
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