Every single day, developers from around the world create new coins. In January 2022, there were nearly 10,000 different types of coins.
So which ones am I betting on for 2022? Here’s a list of my top picks, by layer.
Layer 1 Blockchains to Watch in 2022
What is a layer 1 crypto? These are essentially the backbone of cryptocurrency and the industry as a whole.
Examples of operating Layer 1 blockchains include:
In a nutshell= a Layer 1 blockchain is a set of solutions that improve the base protocol itself to make the overall system a lot more scalable
So, which layer 1 blockchain am I betting on for 2022?
Ethereum (ETH). And here’s why…
Ethereum is the second-biggest cryptocurrency after Bitcoin (BTC) by market cap. It’s available on most trading platforms, including Robinhood.
Investors are attracted to Ethereum as a competitor to Bitcoin because of its faster transaction speeds and the fact that it has a ton of decentralized applications that run on blockchains — increasing the overall utility of Ethereum.
Is Ethereum better than Bitcoin?
It may feel daunting to answer this question, but here are some points that can help you make the decision for yourself:
- Transactions are faster on the Ethereum network than on Bitcoin’s.
- Bitcoin is primarily used to store value and exchange.
- Ethereum is a general-purpose blockchain — so it has more use cases than Bitcoin.
Layer 2 Blockchains to Watch in 2022
Layer 2 blockchains create a secondary framework, where sales and transactions can take place independently of the main layer 1 blockchain.
Why would you want to use an off-the-main chain solution?
Because layer 2 solutions don’t need to go through as many hoops as layer 1 solutions — giving them the potential for high throughput without sacrificing network security.
Examples of operating Layer 2 blockchains include:
So, which layer 2 blockchain am I betting on for 2022?
Cosmos (ATOM) and here’s why…
I’m betting that Cosmos is going to make out of this world returns since its main focus is interoperability — meaning that helps networks talk to each other. Given this is going to be one of the main hurdles that crypto has to face this year, the interoperability feature of Cosmos makes it a coin to bet your lucky stars on.
Remember: diversify, diversify, diversify
Of course, I don’t have a crystal ball. I don’t know what will happen to layer 2 cryptos this year…
And that’s why I’m staying diversified. I keep my crypto portfolio diversified -with a healthy mix of layer 1, layer 2, and smaller coins that have the potential for huge ROI.
And, I keep my overall portfolio diversified with a healthy mix of stocks, bonds, cash, real estate, crypto, and collectibles.
To learn more about diversification, check out Investopedia’s 5 Tips for Diversifying Your Portfolio.