Bitcoin is one of the star investments of our age. The value of one bitcoin sat at just over $100 following its 2014 launch, then hit a peak of nearly $65,000 in mid-2021 before cooling down in the ensuing months.
Even though Bitcoin’s the top celebrity among the vast number of tokens in the cryptosphere, for many investors, its phenomenal growth story could very well be over. With that in mind, a pair of Motley Fool contributors identified two peer assets that are juicier buys at the moment — Ethereum (CRYPTO:ETH) and Tezos (CRYPTO:XTZ).
This smaller network offers potentially explosive upside
Keith Noonan (Tezos): For investors looking for established plays in the cryptocurrency and blockchain-services space, Ethereum and Solana could deliver more big gains. However, if you’re looking to even come close to the gains of more than 8,600% that Bitcoin has posted over the last decade, it probably makes sense to focus on tokens with smaller market capitalizations.
With a market cap of roughly $4.1 billion and an intriguing application-focused ecosystem, Tezos and its tez token could be a worthwhile play for risk-tolerant investors seeking explosive upside. The Tezos blockchain provides a security- and efficiency-focused network for building scalable applications. Its digital currency could surge if the platform continues to gain favor from developers and benefits from investor interest shifting toward application-backed cryptocurrencies.
If blockchain and cryptocurrency projects continue to shift from proof-of-work to proof-of-stake protocols, Tezos could benefit, as well. There’s an enormous computing cost involved in mining Bitcoin, for example, and concerns have been raised about whether this is a worthwhile use of energy and resources — and the potential impact on the environment. For those looking to build energy-efficient blockchain applications, the Tezos network offers some compelling advantages.
While Tezos has climbed roughly 143% across 2021’s trading, those gains look relatively small, compared to the explosive numbers that many other cryptocurrencies have been putting up recently. After recent sell-offs that have impacted the broader crypto space, the token is also trading down roughly 46% from its high. Adoption for Tezos and tez remains at a relatively early stage, and investors could enjoy stellar returns if the network and its token continue to gain traction.
Smart contracts, smart investment
Ethereum is closely identified with smart-contract technology, the No. 1 draw of its native system. Ethereum is a pioneer and still a leading blockchain in the smart-contract space, so it’s little wonder that it has the second-highest market cap next to Bitcoin ($443 billion vs. $892 billion, respectively, as of this writing) of all coins.
Sure, with a bit of clever crypto-engineering, Bitcoin could conceivably be utilized in smart contracts. But why bother tinkering when you’ve got a native token anchoring a blockchain that has been specifically designed for smart-contract work?
One of the major arguments against the token and its blockchain is that Ethereum is clunky and occasionally expensive. There’s some validity to that. These days, Ethereum processes at something like 15 to 45 transactions per second and can, at times, cost plenty of gas (Ethereum-speak for fees).
But remember, it’s still very early days in the life of smart contracts. As they ramp up in use, developers in the Ethersphere are busy concocting Ethereum 2.0, a sweeping set of upgrades. Without getting too far into the weeds, these promise to make the blockchain function at much faster speeds while reducing those unloved gas expenses.
This isn’t a knee-jerk reaction to the blockchain’s skyrocketing popularity by crypto-nerds scrambling to patch a hole. Ethereum 2.0 has been in the works since 2014, and appears set to reach completion sometime in 2022.
That should relieve the congestion on the network and widen its popularity even more, just as larger swathes of the financial world learn about the wizardry of smart contracts. Yes, ether is a top cryptocurrency that has already produced great returns, but just wait until it becomes one of the world’s most broadly used digital financial assets.
This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium advisory service. We’re motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.