Which cryptocurrencies should you buy in 2020?

By Emanuel Coen

Updated Nov 30, 2020 at 09:38 AM

Reading time: 3 minutes

It has almost become a tradition that crypto prices rally around the new year. Experts attribute this to a range of factors, each bearing differing degrees of substance. Some say money sits loosely in the wallets of Wall Street brokers after they have pocketed their annual bonus while others point to the ever-increasing Google searches for crypto-related topics (often indicating growing trade activity). But what exactly causes this growing interest? And is there something different about this hype cycle?

Truth is, while most of the mainstream turned away from crypto over the last year, dismissing it as a short-lived trend, developers remained unfazed by the loss of interest and continued building on their vision of a decentralised future. Over the last year, venture capital funds, endowments and other institutional investors joined the crypto club. They not only invested in the protocols’ native assets themselves (like Bitcoins or Ethers) but also backed the companies building applications or tools on top of these new platforms.

It has also become increasingly apparent that there are really only two projects with serious traction: Bitcoin and Ethereum. Most other ‘challenger’ projects that raised money through so-called Initial Coin Offerings (ICOs) in the hype phase of 2017, are dying a slow and, dare I say it, deserving death. With these distractions gone, Bitcoin and Ethereum’s unique properties have become better understood by the public.

That’s why it’s important for people to understand the basics behind the two major crypto networks, Bitcoin and Ethereum, and look at some of the major events taking place this year for each.

Why Bitcoin?

Bitcoin was launched in 2008 during the depths of the financial crisis. To put it simply, it’s a currency that is completely electronic, lives on a peer-to-peer network that anyone can connect to, that is not controlled and can’t be controlled by any single entity. Contrary to fiat money issued by governments and their monetary policy, Bitcoins are not created out of thin air, but by miners all over the world who provide computing power to the network to validate the transactions that are broadcasted to the network.

These properties make Bitcoin a unique financial asset. Like gold, it is rare and ‘mining’ comes with operational costs giving it monetary value. Unlike gold, however, it can be divided into a million pieces and sent across the globe in minutes, which makes it a highly marketable and liquid asset. For citizens in countries with high inflation, Bitcoin is already a much safer asset than their local currency and much more accessible than the US Dollar, for example.

Check out share trading platforms like Crypto Head to find more informative and easy-to-digest explanations about cryptocurrencies.

Bitcoin Halvening

In May 2020, Bitcoin’s supply schedule will be halved. This happens every four years and means that Bitcoin miners will only receive 6.25 bitcoins (down from 12.5) for every block they solve. With fewer bitcoins earned, there will be less supply available on cryptocurrency exchanges, which will drive the price up, assuming a constant or rising demand.

Why Ethereum?

Most properties described for Bitcoin hold true for Ethereum as well, with two exceptions: global acceptance and liquidity. Bitcoin, having had a head start of a couple of years, is more easily tradable and its value is better understood by the mainstream. However, Ethereum has many attributes that Bitcoin doesn’t have.

For one, it allows developers to create applications or agreements on top of its platform (so-called “smart contracts” in Ethereum lingo) and people can trust that the code specified in the contract will be executed. Unlike traditional apps, which are hosted and ‘owned’ by companies, these applications can be deployed and used by anyone. Because users hold their funds in non-custodial wallets (retaining control over their funds) no middleman is necessary when they use these applications.

Secondly, it introduces the concept of ‘tokenization’, which allows issuing other assets on top of the network besides the native currency Ether. Where Bitcoin is a transaction network for Bitcoin only, Ethereum is a transaction network for any financial asset. These assets can, for example, represent a share in a company, a piece of real estate or a currency like the US dollar.

These two building blocks together led to the emergence of a movement called ‘Decentralized Finance’ or ‘DeFi’. In short, it aims to re-create the financial system that we use today, but in a way that removes the need for intermediaries like banks. Today, users can draw loans, trade synthetic securities or deposit their ‘crypto dollars’ in interest accounts by using smart contracts instead of banks. The value locked in these decentralised applications exceeds $1B dollars today and keeps rising.

Ethereum 2.0 Upgrade

While the last years were successful in experimenting with this new type of finance, Ethereum is now at a point where it is constrained by the capacity of the network. The good news: for the last few years Ethereum’s developers have been working on an upgrade of the network called Ethereum 2.0, which is planned to finally launch this year. From then on, Ethereum will be much faster, giving way to new types of applications and allowing existing applications to scale.

The next era of finance

Cryptonetworks create a common standard for exchanging financial assets in a trustless way.

Centralized Finance has been around for so long that many people don’t challenge the fact that there’s a better way to do it. The truth is that just like other human inventions, money has evolved a lot throughout history. Hopefully, we’ll see cryptocurrency and cryptonetworks shape the next phase of money innovation.

Cryptotesters is a crypto product comparison platform helping you to find the best products and get started with your crypto journey. Find the best cryptocurrency wallet, hardware wallet or cryptocurrency exchange!

Keep On Reading

By Charlie Sawyer

Who is going to be Donald Trump’s running mate? Will his top VP pick be a wildcard or safety option?

By Abby Amoakuh

What is girl therapy? The TikTok trend disguising middle-class consumerism as self-care to Gen Z

By Charlie Sawyer

TikToker Leo Skepi faces backlash for fatphobic comments in now-deleted video

By Abby Amoakuh

Gen Zers and millennials are ditching big cities for the country. We asked them why

By Fatou Ferraro Mboup

Why was Melania Trump not at the Manhattan courthouse with her husband?

By Charlie Sawyer

New Armie Hammer ex-girlfriend reveals actor has only gotten worse since cannibalism claims

By Alma Fabiani

Cult leader accused of being behind 400 deaths including 191 children

By Charlie Sawyer

The impact of Javier Milei’s presidential victory in Argentina and its influence on Trump’s candidacy

By Abby Amoakuh

Selena Gomez haters use singer’s comments on Israel-Hamas war to reignite Hailey Bieber feud

By Charlie Sawyer

What are ZYN pouches? Tucker Carlson’s go-to nicotine pillows that are fuelling right-wing Gen Z men

By Abby Amoakuh

TikTok comedian Matt Rife’s issue with his female fanbase is misogyny at its finest

By Alma Fabiani

John Cena reacts to Drake’s nudes on Instagram

By Fatou Ferraro Mboup

From Love & Hip Hop to the latest Offset drama, let’s unpack the queen that is Cardi B

By Abby Amoakuh

Watch the first official trailer for Netflix’s new reality TV show, Squid Game: The Challenge

By Fatou Ferraro Mboup

Keke Palmer’s ex-boyfriend Darius Jackson files restraining order after disturbing video emerges

By Charlie Sawyer

Man partied for four days unaware he had been shot in the head

By Charlie Sawyer

Miley Cyrus fans convinced that her bodyguard was hiding something shocking at Grammys 2024

By Charlie Sawyer

Legit or not? Debunking the latest viral £50 Temu free money giveaway

By Malavika Pradeep

What is vaporwave? Here’s everything you need to know about the viral music genre

By Alma Fabiani

Is David Attenborough dead? Netizens concerned by trending hashtag