The Best Cryptocurrencies in 2020

Nov 24

The world of cryptocurrency can seem like a jungle. Just like the courses and exchanges we’ve explored previously, there are a huge number of cryptocurrencies available and the number continues to grow. Even traders on entry-level platforms like Coinbase encounter more options than it’s practical to research. In this guide, we’ll help you narrow in on the best cryptocurrencies in the world so you can make more informed crypto investment decisions in 2020. 


Best cryptocurrency overall: Bitcoin (BTC)

Best alternative to Bitcoin: Ethereum (ETH)

Best cryptocurrency for retail adoption: Litecoin (LTC)

Best cryptocurrency for high finance: XRP (XRP)

Cryptocurrency with the most exciting technology: Chainlink (LINK)

Best cryptocurrency for high-speed transfers: EOS (EOS)

Best cryptocurrency for privacy: Monero (XMR)


But First, What is Cryptocurrency?

A cryptocurrency is a digital currency that is supported by a blockchain


A blockchain is a public transaction record that allows everyone to see (and therefore verify) the trades that occur. The blockchain is decentralized, with the entire leger on every computer that is participating. Many cryptocurrencies have their own blockchains, but there are also cryptocurrencies that share the same blockchain. 


Blockchains operate by very specific rules. These rules are unique to each blockchain. They are generally not controlled by specific individuals, but rather an open-source, demonratic process. Some blockchains, such as the Compound blockchain, allow for modifications through a direct democratic process involving voting. Other blockchains are open-source and can be modified (then accepted or rejected) by anyone. When blockchains are modified, this can lead to forking, in which two cryptocurrencies emerge. This is how Ethereum and Ethereum Classic separated-- one exists on a modified blockchain and the other exists on the original blockchain.


The rules of the blockchain control the production of cryptocurrency units as well as verifying the transfer of the currency. This is how cryptocurrencies ensure security and stability without centralization. 


Some blockchains are primarily designed to facilitate the currencies they support. However, many blockchains are designed to serve other functions as well. In this case, the cryptocurrencies they support are means to achieving the blockchain’s other functions. This includes the Ethereum blockchain, which is designed to host and execute smart contracts. The Ethereum blockchain is host to many different cryptocurrencies, including Ethereum, Chainlink, and 0rx, all of which play a different role in the system of smart contracts. 


State of the Cryptocurrency Market in 2020

When the COVID-19 pandemic hit the world in March 2020, soaring financial markets abruptly crashed. This included the cryptocurrency market-- Bitcoin, for example, had a high near $10,000 in February and then hit a low of $3,858 in March. 


As of this writing in November 2020, the cryptocurrency market is experiencing a new period of strong growth and is now more robust than ever. In recent weeks, many cryptocurrencies have been reaching year or multi-year highs, with Bitcoin nearing $17,000 and Ethereum nearing $500. 


The growth of cryptocurrencies in late 2020 can be attributed to a variety of factors including public acceptance, corporate investment and technological advancement. Time will tell whether this current period of growth represents a new era of elevated cryptocurrency trading or whether prices will crash as they did following the boom of late 2017/early 2018. 


Features of the Best Cryptocurrencies

People purchase cryptocurrencies for two primary reasons: to get a return on investment and to participate in creating a new global economic model. In this article, we will highlight the best cryptocurrencies for achieving both of these aims. However, ultimately, the financial value of a cryptocurrency is based on its utility. Therefore, the best cryptocurrencies for advancing blockchain technology and creating the future of currency are often those that can offer the greatest return on investment. 


Cryptocurrencies are varied in their goals and strengths. Nevertheless, when evaluating a cryptocurrency’s potential, there are a few things that are always important to examine.


Security

The security of a cryptocurrency is extremely important. While banks and other financial institutions benefit from government insurance to protect funds, cryptocurrencies are protected by their very design. Since every transaction is recorded on the blockchain and distributed among many computers, it is possible for anyone to verify each transaction. This helps maintain security because the transaction record can reveal fraud and cannot be tampered with or hacked. Different cryptocurrencies have different levels of complexity and security features that make them more or less vulnerable to cyberattacks.


Ultimately, each cryptocurrency owner is responsible for the security of their funds. Keyphrases are used as wallet recovery features. If your keyphrase is shared, you risk someone impersonating you and transfering your currency to their own wallet. If it is lost, you may not be able to access your funds.


Privacy

One of the most common reasons people are interested in cryptocurrency is the desire for anonymity. While every transaction is recorded for all to see, they are described using a long ID number, not your name. The privacy of a cryptocurrency relates to how easy it is for someone to find your name, IP address, or other identifying information based on this ID number. Some cryptocurrencies include additional layers of privacy to shield your ID number and other personal information. It is also up to you to make sure to protect your ID number if your privacy is important to you. 


Utility

Many people wonder where cryptocurrencies get their value. Some cryptocurrencies, like Bitcoin, are valuable in the same way that fiat currencies are, as a token of agreed-upon worth that is assignable and transferable. Other cryptocurrencies, like Ethereum, are also valuable based on their utility. In Ethereum’s case, this utility comes from ETH’s ability to facilitate the execution of smart contracts. The overall value of a cryptocurrency is based on a combination of these two sources. 


Adoption Rate 

Adoption rate is a simple metric that tells you how many people are currently using a cryptocurrency. The higher a crypto’s adoption rate, the lower the investment risk because many other people already have a stake in the outcome. On the flip side, a higher adoption rate also correlates with lower chances of spectacular long-term returns because the market has already validated the currency. In our rankings, we use the A-F grading system for adoption rate published by Weiss Crypto


Market Capitalization

Market capitalization is the dollar value of all units of a cryptocurrency. It is a product of the exchange rate for the currency and the number of tokens that exist. In a similar way to the adoption rate, the market cap tells you how widely accepted the cryptocurrency is by measuring the amount of value that people have contributed to it through use and purchase. In this article, market cap values are pulled from CoinGecko.


Best Cryptocurrency Exchanges

Cryptocurrency exchanges are online platforms that allow you to trade cryptocurrency. There are hundreds of exchanges, and we took some time to narrow in on the best for different market segments. For the full list, read our complete guide to the Best Cryptocurrency Exchanges for 2020


Best Cryptocurrency Exchange Overall: Binance

Binance takes the cake for the best cryptocurrency exchange in 2020. Binance accepts over 30 fiat currencies and offers hundreds of cryptocurrencies to purchase. 


Binance has nearly $5B in daily trading volume, high trust, over 250 coins, and near-global availability. Binance also offers the lowest fees available.


Binance offers different platforms for users in different countries. In the US, you can expect a rollout of Binance.US in all fifty states by 2021 (as of this writing, it is already available in most states). Binance claims to offer the lowest trading fees in the USA.


Second Best Cryptocurrency Exchange: Kraken

Kraken comes in second place on our list of the top crypto exchanges due to high trade volume, high trust, a robust offering of coins, and global availability. However, Binance has the edge over Kraken because Kraken does not allow you to purchase coins with credit or debit card and Binance offers more coins.


Best Cryptocurrency Exchange for Beginners: Coinbase

One of the most well-known cryptocurrency exchanges, Coinbase is the best exchange for beginners in 2020. Coinbase has been one of the most popular introductory cryptocurrency exchanges since it was launched in 2012. Coinbase offers a simple and clean user interface, a variety of coins and payment options, educational modules, promotional offers, and more features targeted toward the crypto beginner. 


Best Decentralized Cryptocurrency Exchange: Uniswap

Uniswap was already known as a leading decentralized exchange when they released V2 in May 2020. Designed specifically for the Ethereum network, Uniswap has an automated market-making (AMM) system that is built with smart contracts. Uniswap allows the trade of any coin on the Ethereum blockchain, which includes cryptocurrencies like Ethereum, Chainlink, Basic Attention Token, 0rx, and many more. 


Advantages of Cryptocurrency

In 2020, cryptocurrencies continue to take the financial world by storm. When compared with fiat currencies, cryptocurrencies have several advantages.


Privacy

Cryptocurrencies allow people to transfer value to one another anonymously through the use of identification numbers. This is an advantage for those executing sensitive deals or those who simply don’t like their personal information accessible to others.


Decentralization

The dynamics of fiat currency markets are determined by centralized government institutions such as the Federal Reserve. The Federal Reserve has the power to change millions of lives through near-unilateral control over financial tools such as interest rates and currency supply. On the other hand, the control over cryptocurrencies is decentralized. Many cryptocurrencies are open-source, so anyone can make changes to their structure. Other cryptocurrencies are democratic, in which currency holders can cast votes to change their structures.  


Global Availability

Going hand-in-hand with the decentralization of cryptocurrency is their global availability. Since no single institution controls the market, cryptocurrencies are available to be freely traded anywhere in the world. 


Financial Freedom

Cryptocurrencies eliminate many of the traditional gatekeepers that prevent people from accessing financial services. This allows a huge number of people to achieve new financial freedom with cryptocurrency. In 2017, there were a whopping 1.7 billion people in the world without access to banking. Cryptocurrencies open the door for these people to begin saving, investing, borrowing, and more. This is already happening, with 2020 shattering records for peer-to-peer Bitcoin trading volume in Africa and Latin America. 


Transparency

Another benefit of cryptocurrency’s decentralization is their transparency. Unlike traditional banking, the rules of the cryptocurrency game are visible for all to see. 


Scarcity

Scarcity occurs when there is a finite supply of an asset such as cryptocurrency. Scarcity of hard assets like gold and stocks contributes to their ability to maintain their value over time. On the other hand, the supply of fiat currencies can be increased at-will through government actions such as quantitative easing. This puts their true value in question because new units of currency are created from nothing. Lack of scarcity can cause financial catastrophes such as runaway inflation. 


Some cryptocurrencies, such as Bitcoin, have an absolute limit on their supply. The last Bitcoin will be mined (created) in the year 2140. Other cryptocurrencies, such as Ethereum, have an indefinitely increasing supply, but the new units of currency are only created when value is created on the platform (through the execution of smart contracts in the case of Ethereum). 


Smart Contracts 

A smart contract is a contract between two parties that executes automatically when a condition is met. The automatic execution of a smart contract is accomplished through code. Smart contracts can replace complex, time-intensive processes with a simple, automated ones that leave nothing open to interpretation. 


Smart contracts are an innovation in cryptocurrency that were introduced with the Ethereum blockchain. Since then, the basic structure of smart contracts has been replicated many times by other currencies that use the same blockchain, such as 0rx and Chainlink. Examples of the kinds of smart contracts that are being created using cryptocurrencies include insurance claims, energy trades, loans, and much more. 


Liquidity and Transfer Fees

Many cryptocurrencies are easier to trade back and forth than fiat currencies. This increases their liquidity. Since crypto trades often require less time and computing power to validate and secure, they are cheaper than trades made with fiat currencies. 


Disadvantages of Cryptocurrency

Market Adoption

Most people want currency they can spend. Currently, some major companies such as Overstock.com accept payment in cryptocurrency, but by and large we still live in a world dominated by fiat currencies. The relatively low rate of adoption for cryptocurrency is a disadvantage for those who want their currency to be widely accepted.


Obsolescence/Abandonment

There are a huge number of cryptocurrencies and more are being released every quarter. As a result, there is competition amongst them and many fail. Some cryptocurrencies also fail because their founding team abandons them and they are unable to continue without the leadership of a strong team. 


Regulation Risk

In 2020, the cryptocurrency space remains largely free of government regulation. However, most analysts agree that regulation is on the horizon. How this regulation takes form and the impact it will have on the cryptocurrency market is largely uncertain. A key area of regulatory uncertainty is related to the possibility that countries will choose to regulate cryptocurrencies in very different ways, complicating the international trade in crypto.


Third-Party Risk

While cryptocurrencies are largely decentralized, there remains a level of risk associated with the centralized players in the space. Such players, like banks and exchanges, face threats from hacking and fraud. This risk is passed to investors when they use an exchange like Coinbase as their cryptocurrency wallet. 


Security

The security of your cryptocurrency is in your hands. Cryptocurrency wallets can only be recovered through the use of a cryptographic key, which is a series of words. As a cryptocurrency owner, you are responsible for keeping your key safe-- if you lose it, you will not be able to recover your assets. If someone else obtains it, they will be able to steal your crypto and you will have no recourse to retrieve it.


Scalability

The use of some cryptocurrencies is computationally expensive. This means that as the network grows, more and more resources are required to maintain it. Eventually, this could have serious ramifications for the efficiency of cryptocurrencies as well as the health of the environment. 


Volatility 

The volatility of the cryptocurrency market is a result of the many uncertainties in the emerging space. With prices known to fluctuate widely, the volatility of the crypto market is a significant deterrent to risk-averse investors.


The Best Cryptocurrencies in 2020

Now we present our list of the best cryptocurrencies for 2020. Market cap, dominance, adoption grade and trading volume are from November 16, 2020.

 

Best cryptocurrency overall: Bitcoin (BTC)

No surprises here, Bitcoin remains the top cryptocurrency in the world in 2020. The very first cryptocurrency, Bitcoin has a serious advantage due to its familiarity. In addition, Bitcoin’s technology remains the gold standard for cryptocurrencies and Bitcoin is receiving increasing attention from big players in finance and retail, with PayPal soon to allow trades using Bitcoin. Other online exchanges and merchants are likely to follow suit. You can use a service like CoinMap or BitcoinWide to find businesses and ATMs near you that accept Bitcoin. 


Bitcoin market cap: $309B

Bitcoin market dominance: 64.17%

Bitcoin adoption grade: A-

Bitcoin 24hr trading volume: $24B 


Best alternative to Bitcoin: Ethereum (ETH)

The Ethereum blockchain was the first in the world to offer smart contracts when it debuted in 2015. This quickly led to Ethereum’s emergence as the top “altcoin,” or non-Bitcoin cryptocurrency. Ethereum maintains that position today, with a significant market share and a huge number of other currencies that are supported by the Ethereum blockchain. In addition, the blockchain’s utility for executing contracts has attracted the investment of major players in the global economy, from Tesla to Microsoft to JP Morgan


Ethereum market cap: $52B

Ethereum market dominance: 10.88%

Ethereum adoption grade: A

Bitcoin 24hr trading volume: $8.7B 


Best cryptocurrency for retail adoption: Litecoin (LTC)

In 2020, the best cryptocurrency in terms of current retail adoption is Litecoin. Litecoin was developed as a more efficient version of Bitcoin to allow for greater scalability. This is an advantage for retail because retailers expect payments to be able to clear quickly and with low fees. Litecoin is a great buy in late 2020, as it has recovered from the COVID-19 collapse more slowly than its peers.  


Litecoin market cap: $4.7B

Litecoin market dominance: 0.98%

Litecoin adoption grade: B

Litecoin 24hr trading volume: $3.6B 


Best cryptocurrency for high finance: XRP (XRP)

The best cryptocurrency for high-level finance is XRP. XRP is unique among cryptocurrencies for a few reasons. First, XRP was created by a private, for-profit company, Ripple Labs. XRP is designed with a payment system called Ripple built in. The Ripple remittance system and XRP’s tremendous transaction speed have led Ripple Labs to attract more partnerships within global financial institutions than any other crypto.


XRP market cap: $13B

XRP market dominance: 2.69%

XRP adoption grade: B

XRP 24hr trading volume: $2.4B 



Cryptocurrency with the most exciting technology: Chainlink (LINK)

People are excited about blockchain and cryptocurrency technology for a variety of reasons. In our opinion, the cryptocurrency with the most exciting technology in 2020 is Chainlink. Chainlink is an Ethereum-based cryptocurrency that is designed to convert real-world data into smart contract actions on the blockchain. The data that Chainlink can accept include everything from actions on a website to voltages on power lines to the temperature in a freezer. The ability to feed this type of data into smart contracts can allow for such innovations as automated energy trading, automated insurance claims, and automated lending. This capability has attracted the attention of tech innovators such as Tesla. To learn more, head to the Chainlink website for 44 ideas on how to use LINK for smart contracts.


LINK market cap: $5B

LINK market dominance: 1.03%

LINK adoption grade: NA

LINK 24hr trading volume: $680M


Best cryptocurrency for high-speed transfers: EOS (EOS)

EOS is not the fastest cryptocurrency in existence (that would be Apollo), but EOS is the best for high-speed transfers due to its combination of speed and other strengths. EOS is another cryptocurrency whose blockchain supports smart contracts. EOS is unique because it also offers an operating system, enabling decentralized applications to live on its platform. EOS also has a stated goal of eliminating transfer fees. EOS is one of the fastest cryptocurrencies in the world, supporting 3,000 transactions per second.


EOS market cap: $2.4B

EOS market dominance: 0.50%

EOS adoption grade: C+

EOS 24hr trading volume: $1.3B


Best cryptocurrency for privacy: Monero (XMR)

There are a few cryptocurrencies out there that were specifically designed to maximize privacy. Of those, Monero takes the crown as the best cryptocurrency for privacy by taking the largest market share. Monero is an open-source cryptocurrency that achieves privacy with stealth addresses and ring signatures. This means that the sender and recipient addresses are hidden from view and the transactions on the blockchain cannot be traced to a specific address. 


XMR market cap: $2.1B

XMR market dominance: 0.43%

XMR adoption grade: C+

XMR 24hr trading volume: $228M


Investing in Cryptocurrency

Investing in cryptocurrency in 2020 is a way for you to diversify your portfolio, achieve potentially enormous gains, and contribute to creating the future of money. Besides our 7 winners for the best cryptocurrencies in 2020, there are a huge number of other cryptocurrencies that you can discover and invest in. If you are considering investing in cryptocurrency, we suggest exploring some of the free resources on this site and checking out our list of the top classes for cryptocurrency investors. When you’re ready to jump in, download a free, user-friendly exchange like Coinbase and start trading.



Created with