If you thought the stock market returns have been impressive this year, take a closer look at cryptocurrencies, which really have been the gift that keeps on giving. The total value of all digital currencies is up 196% this year, as of the late evening of December 21, and more than 1,500% since the cryptocurrency market hit the bottom of the pandemic in March 2020.
While many of the usual suspects were responsible for this nominal increase in market capitalization, it is the meme coin Shiba Inu (CRYPTO: gray hair) This is intrigued by crypto investors.
Shiba Inu prices went up in 2021, but they may go down next year
According to data from CoinMarketCap.com, investors had the opportunity to accumulate in SHIB for $0.000000000073 per token at midnight on January 1st. Over the course of 11 months or more, six zeros were eliminated. Based on the token price of $0.00003334 at the time of writing, Shiba Inu Coin has delivered an annual return of over 45,000,000%! In other words, investing just over $2 would make people millionaires, based on a 45.000.000% return.
There are many reasons why retail investors have flocked to Shiba Inu this year. Among them are the listing of SHIB on a growing number of exchanges, the launch of the decentralized platform ShibaSwap, the landing of SHIB for its major traders, and – without a doubt – Fear of Losing (FOMO). Cryptocurrency is also harder to short, compared to the stock market, which creates a natural short-term buying bias for Shiba Inu.
While it’s undeniable that these gains in 2021 were historic, they are almost certainly fleeting. This is because Shiba Inu lacks all the important categories that crypto investors should be concerned about. It offers no competitive advantage over other payment currencies, shows no real differentiation (social media pumping is not sustainable differentiation), and has a very limited benefit, with less than 390 merchants accepting it as payment.
Moreover, historical precedents have clearly shown that life-changing gains in crypto are always followed by epic reversals. With a gain of over 45,000,000% in less than a year, it makes sense to follow a 99% retracement.
These digital currencies could run circles around SHIB in 2022
While there are reasons to believe that Shiba Inu will be one of the worst performing cryptocurrencies next year, the following three cryptocurrencies all have the potential to run circles around SHIB.
despite of Avalanche (CRYPTO: AVAX) Not even close to the percentage gain of Shiba Inu this year, SHIB has been left in the dust when it comes to market capitalization. In 2022, I would have expected that gap to widen significantly.
What makes Avalanche such a blockchain network based on smart contracts interesting is its speed and compatibility. Smart contracts are protocols that help verify, facilitate, and enforce a contract between two parties.
In terms of the former, the avalanche is an exceptionally fast network. Its project homepage states that it is capable of performing more than 4,500 transactions per second (TPS), with transactions ending in less than two seconds. This is just a fancy way of saying that the transfer of funds, files or data is completed in less than 2 seconds. Relatively speaking, The Big Two, Bitcoin (CRYPTO: BTC) And Ethereum (CRYPTO: ETH), they are processed at 7 TPS and 13 TPS respectively, and take about 60 minutes (for Bitcoin) and 6 minutes (for Ethereum) to complete transactions. As a reminder, Shiba Inu is an ERC-20 token built on the Ethereum blockchain, which means that it is subject to the low TPS and lag times that sometimes hit the Ethereum network.
However, the compatibility of Avalanche’s blockchain network is even more enticing for investors. As you can see, the Ethereum Virtual Machine is already running on the Avalanche blockchain. This means that developers of decentralized applications (dApps) on the Ethereum network can easily move their projects to the Avalanche network to pay lower transaction fees and enjoy faster implementation and scalability.
Lately, nothing to do with dApp development and/or metaverse in the crypto space has been unstoppable. But don’t overlook the potential of blockchain-based payment networks with a financial focus. A good example of one that could run circles around SHIB in 2022 is excellent (CRYPTO: XLM).
With current infrastructure, cross-border payments can take up to a week to be validated and settled. This is not very effective, although it is something consumers and businesses have been accustomed to for decades. With Stellar, fiat currency is converted into a network protocol token (XLM, known as Lumen), sent to its destination, and converted back into the preferred fiat currency. This whole process only takes a few seconds, even across the border.
It is also a very inexpensive way to transfer money. The average transaction cost on the Stellar network is only 0.00001 XLM. Based on the closing price on December 21, it would take about 370,000 transactions before a user would be charged a $1 fee. Compare that to the transfer fee you would pay at your local bank and you’ll see what the Stellar blockchain network could be like.
Another thing worth noting is that Stellar has real-world partnerships. The Stellar Development Foundation collaborates with Visa and digital financial services provider Tala to deliver financial-focused blockchain solutions to emerging market countries. I also worked with IBM And dozens of banks in the South Pacific region are testing blockchain-based cross-border payments.
Now, if investors want something off the radar that can run circles around Shiba Inu in 2022, consider it. Qtom (CRYPTO: QTUM), pronounced “quantum,” for those curious.
Qtum hardly hangs in its position in the top 100 cryptocurrencies by market capitalization. But it is a very interesting blockchain project that offers clear competitive advantages. And when there are nearly 16,000 cryptocurrencies listed on CoinMarketCap.com, having a competitive edge is a must to stand out.
What makes Qtum so interesting is that it brings together the best aspects of Bitcoin and Ethereum into one blockchain project. It is based on the security of the Bitcoin UTXO model and combines it with the aforementioned Ethereum virtual machine. The end result is a highly secure blockchain that can support smart contracts and therefore will have no problem attracting dApp developers.
The Qtum blockchain also publishes what it calls the Account Abstraction Layer (AAL). Without getting too technical, AAL allows Qtum to regularly offer smart contract upgrades that will work with the Bitcoin UTXO model. In other words, it will still be backward compatible, no matter how complex the smart contracts are on the blockchain.
With so much partnership potential, Qtum should easily be able to outperform the Shiba Inu next year.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of the Motley Fool Premium Consulting Service. We are diverse! Asking about an investment thesis — even if it’s our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer.