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What Makes a Cryptocurrency Promising?

What Makes a Cryptocurrency Promising?

There are hundreds of projects with strong appeal aiming to explore new segments beyond Bitcoin’s traditional “digital gold.” However, few projects succeed in gaining a substantial user base or achieving significant trading volumes.

To simplify the selection process, experts at Mercado Bitcoin (MB) have identified five promising cryptocurrency projects with positive prospects for the end of 2024. These options are ideal for those seeking to diversify their investment portfolios and grow wealth in a market that has been among the most appreciated over the past decade.

But how can one identify promising cryptocurrencies, and which factors should be considered? In this article, we’ll answer these questions and provide guidance on what to look out for.

Three Promising Sectors for the End of 2024

The MB research analysts highlight three sectors with high growth potential for late 2024: blockchain-based financial services, solutions that optimize existing networks and services, and assets tied to artificial intelligence (AI).

It’s worth noting that while promising, cryptocurrencies are subject to market fluctuations. Supply and demand, regulatory issues, limited adoption, and competition with traditional financial systems all impact these assets’ performance. Due to this volatility, some high-potential cryptocurrencies may have shown negative results in recent months. For new investors, this phase can present an opportunity to enter assets at more attractive prices.

Decentralized Finance (DeFi)

Transparency and security provided by the automated execution of smart contracts have driven the growth of Decentralized Finance (DeFi). Applications like collateralized loans, automated swaps, and derivative contracts showcase how DeFi is transforming the financial sector. DeFi offers accessibility without requiring identification or bank accounts, maintaining complete transparency and auditability.

Liquid Staking

Staking, or earning passive income by holding cryptocurrencies, supports transaction validation on the blockchain. Liquid staking, a variation of this practice, provides a digital token that can be used on other DeFi platforms. This broadens the asset’s usability, maximizing investor profitability.

Artificial Intelligence

AI-oriented cryptocurrencies benefit from decentralized data storage and processing capabilities enabled by blockchain technology. These digital assets foster collaboration and development within the AI ecosystem through mechanisms such as micropayments and rewards, all efficiently operated by smart contracts.

Ethereum (ETH) – The Scalable Smart Contract Platform

Ethereum (ETH) pioneered the creation of smart contracts and tokens on its blockchain and, despite competition, maintains a solid lead. Its vast developer network and the value locked in decentralized applications provide a significant competitive advantage. With over 500 decentralized applications and $45 billion locked in DeFi, Ethereum’s network effect is reinforced. Additionally, 28.5% of ETH tokens are currently staked, strengthening network security.

Ethereum’s scalability system, through layer-2 solutions, enables efficient processing of high transaction volumes. Projects like Polygon, Base, AAVE, and Uniswap contribute to the ecosystem’s continuous evolution. Even after eight years, Ethereum’s growth remains strong, and MB’s research team sees immense appreciation potential, given existing use cases and future developments.

Bitcoin (BTC) – The Preferred Choice of Financial Institutions

No list of promising cryptocurrencies would be complete without the market leader, Bitcoin (BTC). The Bitcoin network stands out for its immense mining power and high decentralization, making it the most secure option in the crypto world. New applications like Ordinals, which allow data recording on the blockchain without external storage, demonstrate ongoing innovation.

Bitcoin also boasts a history of resilience against attacks and splits, such as the 2017 hard fork that created Bitcoin Cash (BCH). The growing acceptance of Bitcoin spot ETFs in the U.S., with $45 billion in assets, further strengthens Bitcoin. Improved mining machine efficiency has enhanced network security through increased hashrate. For the first time, Bitcoin reached a new price peak before a halving, which occurred in April 2024. MB’s research team believes U.S. Bitcoin ETFs may cause a supply shock, supporting a positive outlook through the end of 2024.

Solana (SOL) – Focused on High-Performance Applications

Solana (SOL) is a smart contract platform that competes directly with Ethereum, opting for a high-capacity validator network. This approach enables remarkable operational efficiency, with processing fees up to 50 times lower than Ethereum, without needing layer-2 solutions.

With over 100 decentralized applications and a strong position in the total value locked (TVL) ranking, exceeding $4 billion, Solana has stood out. Its ability to capture growth in Web3 and AI applications is also a strength. Solana Labs continues to enhance the network, making it an attractive choice, especially in physical infrastructure for decentralized storage and processing applications. Solana’s community growth indicates a path to sustainability and expansion.

Akash Network (AKT) – A Leader in Cloud Computing

Akash Network (AKT) is a promising project focused on providing a decentralized solution for cloud computing services. Using blockchain technology, Akash creates an open marketplace for buying and selling computing power, connecting providers with companies and developers.

AKT, the network’s native token, is used for transactions, staking, and governance. The decentralized infrastructure sector, in which Akash operates, is highly promising, especially given the growing demand for computing power in sectors like AI. Akash’s innovative model positions it to capture a significant share of this expanding market, as noted by MB’s research team.

Ondo Finance (ONDO) – Betting on Tokenization of Traditional Assets

Ondo Finance (ONDO) is a DeFi platform specializing in tokenizing traditional financial assets, like Real-World Assets (RWA). Through Ondo, traditional investments such as U.S. Treasury bonds are transformed into digital assets (tokens), offering a new way to interact with the financial market.

ONDO, the ecosystem’s native token, plays a vital role in platform governance, allowing holders to participate in critical decisions about the project’s development. This governance occurs via a decentralized autonomous organization (DAO), where users can vote on proposals and influence the platform’s future.

One of Ondo Finance’s main advantages is democratizing access to institutional financial products, usually out of reach for small investors. Additionally, the platform provides real tokenized assets, such as short-term ETFs based on U.S. Treasury bonds, making the market more accessible and less bureaucratic for users.

What Makes a Cryptocurrency Promising?

Our research team goes beyond passing trends, focusing on a thorough evaluation of each project’s potential. To identify promising cryptocurrencies, we consider factors such as market size, direct competitors, the number of active addresses, community engagement, project governance, planned future updates, growth prospects, and the ability to generate a network effect.

We also analyze market capitalization, the number of exchanges with significant trading volume, and review smart contract audit reports. In this way, MB’s research team seeks to identify projects with real growth potential, while also offering investors a basic level of security.

Beware of False Promising Cryptocurrencies

While blockchain technology provides high security, decentralization allows anyone to create and promote their project. Therefore, caution is essential when evaluating supposedly promising cryptocurrencies, particularly to avoid malicious developers or projects with harmful code.

Some red flags include:

  • Cryptocurrencies issuing billions of tokens to keep a low unit value, which can be deceptive.
  • Many of these cryptocurrencies experience value spikes at launch but are held by only a few investors.
  • Projects without experienced teams or with questionable backgrounds often disappear quickly, sometimes within weeks or months.

Therefore, we strongly recommend that investors conduct their research before investing in promising cryptocurrencies. Due diligence is essential to avoid losses and make informed decisions.

How to Invest?

After exploring different promising cryptocurrency options, it’s worth mentioning that tools like The Crypto Code have become increasingly popular for those seeking to optimize trading efficiently. By providing a platform that combines automated and manual trading, it allows investors to adjust preferences according to their goals and experience level. The use of AI to monitor and execute real-time trades stands out, especially in the volatile cryptocurrency market.

For those analyzing digital asset growth potential and wanting to stay ahead of market trends, platforms like The Crypto Code offer an interesting option, whether for portfolio diversification or simplifying trading access with less manual effort. The platform’s ease of registration and customizable trading preferences make it appealing for those seeking a smooth, straightforward experience.

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