What happened

The market went on a wild ride on Thursday morning after inflation data was released and investors tried to project how that would impact the Federal Reserve's interest-rate moves. Early on, worry about higher rates resulted in falling stock prices, and cryptocurrencies were some of the hardest hit. But the drop passed quickly, and values have mostly recovered.

For example, Dogecoin (CRYPTO: DOGE) has had a strange day, falling as much as 7.7% in early-morning trading only to recover and trade about flat on the day as of 1:30 p.m. ET. Polkadot (CRYPTO: DOT) dropped up to 7.9% and is now down 1.9%, ChainLink (CRYPTO: LINK) was down as much as 11.7% and is currently off 2.8%, while The Sandbox (CRYPTO: SAND) plunged 10.9% and is now down 3.4% on the day.

So what

The biggest news of the day was the Bureau of Labor Statistics releasing data that showed consumer prices were up 8.2% year over year and 0.4% month over month in September 2022. This was a slightly higher inflation rate than investors were expecting, which was why stocks and cryptocurrencies dropped sharply early in trading.

Investors have spent much of the last six months trying to figure out how far and how fast the Federal Reserve will raise interest rates, and inflation is the Fed's biggest concern. So higher inflation is seen as a sign that the Fed will keep increasing rates, which hurts the value of risky assets.

It's worth keeping in mind that inflation is up big over the last year, but it's slowed dramatically since June 2022. Although 0.4% inflation month over month seems high, that's only one month. And the trend is toward tepid inflation right now, which might mean the Fed is closer to slowing rate increases, especially if there's a recession.

Now what

There's a lot to digest today, and the market seemed to have multiple views in just a few hours. But I think the takeaway is that the Federal Reserve will likely raise rates through the end of the year, and it's possible that will lead to a recession. This isn't a new concern; stocks have been falling for months on exactly this uncertainty.

For crypto, the impact of higher rates isn't really known. Investors might see this as a risky asset, but cryptocurrencies aren't risky companies that carry debt loads or aren't profitable. These are blockchain assets that might or might not continue trading in step with volatile securities like tech stocks.

I think today's move is another example of typical market volatility. There's no underlying change in what's being built on the blockchain today, but assets are being priced differently based on what the public thinks the Federal Reserve is doing. Investors with a long-term mindset should look past volatile days and focus on the long term, because that's what matters for our portfolios. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why crypto cratered before a quick recovery today appeared first on The Motley Fool Australia.

What happened

It's been a rather difficult market to be a crypto investor of late. But despite nearly a week of consistent selling pressure, various large-cap cryptocurrencies are recovering nicely today. Ethereum (CRYPTO: ETH), Polkadot (CRYPTO: DOT) and Dogecoin (CRYPTO: DOGE) have surged 6.3%, 6.1%, and 3.1% higher, respectively, over the past 24 hours. 

These moves come as investors appear to be buying yet another bear market dip, as enthusiasm around key catalysts such as the upcoming Ethereum merge outweigh concerns around a heated debate brewing in the Ethereum community about whether validators should effectively censor certain transactions. 

Interestingly, Ethereum and Polkadot also took the top two spots in terms of most-developed blockchain ecosystems, according to a recent report by crypto analytics website Santiment using publicly available information. Investors appear keen to focus on blockchains with consistent and sustained development growth.

Dogecoin's price action, while more subdued than its peers, appears to align relatively closely with the overall price action of the market today.

So what

Ethereum, Polkadot, and Dogecoin are three tokens many investors watch closely as both high-growth projects and gauges of sentiment in the crypto world. Today's interesting shift toward a more bullish risk-on perspective from investors and traders is noteworthy, and all three tokens have benefited from this catalyst. But the growth metrics supporting Ethereum and Polkadot in particular are worth considering for investors taking a long-term view.

That's because while cryptos are difficult to value, many consider the true value of a given token as representative of the value of all projects on its blockchain. For Ethereum or Polkadot, which are tokens representing blockchains with massive ecosystems, more growth should mean, in theory, higher token prices. Continued and sustained growth over a long period of time, therefore, is important to see for investors with a long-term investing horizon.

Now what

For Ethereum and Polkadot specifically, the upcoming Ethereum merge, anticipated to take place in mid-September, is a massive catalyst. This upgrade will transition the Ethereum blockchain to a more energy-efficient proof-of-stake validation mechanism. Doing so carries great potential for improved efficiency over time, albeit with some specific risks.

While both tokens have rallied substantially off their June lows, it's clear the market is still taking a wait-and-see approach to how this merge will pan out. Despite today's bullish price action, some investors could be inclined to stay on the sidelines.

Although I think this upgrade should be a net positive, there are certainly risks involved for these tokens. Accordingly, it will be interesting to see how these tokens perform in the weeks to come.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Ethereum, Polkadot, and Dogecoin are rallying nicely today appeared first on The Motley Fool Australia.

What happened

The sentiment shift we've seen play out among major cryptocurrencies appears to be continuing this week. Today, Bitcoin (CRYPTO: BTC), Cardano (CRYPTO: ADA), and Polkadot (CRYPTO: DOT) each surged higher to start the week, building on gains these tokens have seen since bottoming in mid-June. As of 2 p.m. ET, Bitcoin, Cardano, and Polkadot appreciated 3.5%, 4.9%, and 6.8%, respectively, over the past 24 hours.

Bitcoin actually rallied more aggressively this morning, breaching the $25,000 mark for the first time since June. Broader market sentiment, which has shifted in a bullish direction as investors focus on catalysts such as Ethereum's upcoming The Merge over headwinds related to insolvencies and structural issues in this space, appears to be the key factor Bitcoin investors care about right now.

Cardano has seen continued interest, as this network approaches its own key update: its Vasil hard fork. Founder Charles Hoskinson has reiterated that this upgrade is unlikely to be delayed any further, noting no key issues with testing thus far. 

That said, Polkadot's rise today is rather intriguing to consider, as a Polkadot-backed stablecoin, acala dollar (aUSD), was recently hacked, losing 99% of its value. As with many ecosystem-driven crypto projects, it appears investors are paying less attention to these headlines, choosing to focus on Polkadot's ties to Ethereum in this market rally.

So what

It's truly incredible to see the degree to which market sentiment has shifted in the crypto sector. Tokens such as Polkadot that encounter a hack, or tokens like Cardano that delay their upgrades, aren't being put in the penalty box by investors. It's risk-on again, with speculators, traders, and investors alike all jumping aboard. 

The multiweek nature of this crypto market rally has some investors thinking the bottom may be in. Whether this buying activity can hold up in the face of upcoming rate hikes and the potential for more macro headwinds remains unclear. However, this is the most exuberant the market has appeared since last year, to be sure.

Now what

We're in an interesting period of time, in which most investors have become self-proclaimed economists. As the Federal Reserve has accelerated its rate hiking schedule, various risky asset classes (such as crypto) have been hit hard during the first half of this year. However, given a lag between the Fed's last rate decision (July 27) and its next decision (Sept. 21), there's a time frame in which investors can ignore the rate hike talk and buy the dip.

That said, through the end of the year, more headwinds could materialize if the Fed doesn't stop hiking rates, like most in the market expect. This could be a Goldilocks period, which provides a significant bear market rally.

Alternatively, this rally could continue if expectations are proven correct. And should the major upgrades in store for Ethereum and Cardano prove fruitful, perhaps this rally is only the beginning. Time will tell.

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Big buying activity boosting Bitcoin, Cardano, and Polkadot today appeared first on The Motley Fool Australia.

What happened

Today's price action among various altcoins that have outpaced the broader market by a wide margin are grabbing attention. As of noon ET, Polkadot (CRYPTO: DOT), Solana (CRYPTO: SOL), and Cardano (CRYPTO: ADA) are tokens that are gaining steam, surging 7.2%, 5.1%, and 2.7%, respectively, over the past 24 hours. 

Amid a range of bullish catalysts that have taken the cryptocurrency sector higher, many investors remain focused on Ethereum's upcoming Merge. With this update set to revolutionize the world's largest decentralized finance (DeFi) ecosystem via a move to proof-of-stake consensus validation, other proof-of-stake altcoins are starting to pick up steam as Ethereum alternatives.

Polkadot's surge appears to be tied to recent reports that the Web3 Foundation exceeded 400 project grants on Polkadot. This suggests that Polkadot's ecosystem growth rate could be better than many investors expect. 

Solana has moved higher, brushing off concerns around a controversial report released this past weekend that indicated much of the DeFi growth the Solana ecosystem may have seen over the past year was fraudulent. Investors are instead seemingly choosing to focus on the positives with Solana today, including bullish commentary from a Solana Labs co-founder around the future of the non-fungible token sector, and where Solana fits into this future.

Finally, Cardano has continued to battle headwinds of its own, tied to delays with the network's Vasil hard fork. However, data showing a surge in Cardano wallets (to more than 3.5 million), and developer interest in the Cardano blockchain (which makes this among the most developed blockchains in the world), is prompting buying interest from investors today.

So what

Polkadot, Solana, and Cardano are three projects that have been called "Ethereum killer" projects in the past, due to the ecosystem growth they have seen over time. Despite broad-based token price declines in the crypto sector, activity on these blockchains has certainly enticed investors to stay invested during this period of volatility. If activity is any gauge, these altcoins could be poised for outsize strength during the next crypto rebound, which may or may not be underway right now.

That said, concerns around the quality of the data currently being published on the crypto sector does provide investors with some pause. Reports that Solana developers may have been able to fake total value locked metrics makes differentiating crypto projects with "real" growth versus those with exaggerated growth more of a task.

Now what

This risk-on rally we've seen play out in recent weeks has led to impressive rallies across a number of select cryptocurrencies. The extent to which this crypto rally, which has more than kept pace with the rise in stocks of late, can continue remains to be seen.

That said, these three projects are ones worth keeping on the radar. For long-term investors looking for growth, these cryptos are ones with growth data that appears to support a growing valuation over time. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Polkadot, Solana, and Cardano are 3 altcoins in focus today appeared first on The Motley Fool Australia.

What happened 

So what 

Now what 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Polkadot, Cardano, and Solana all dropped today appeared first on The Motley Fool Australia.

What happened 

The cryptocurrency market had a bad start to the day Wednesday and values dropped across the board. A broad sell-off caught almost every cryptocurrency and volatility continues to be normal for the industry. 

As of 12:05 p.m. ET, the value of Solana (CRYPTO: SOL) was down 10.5% over the last 24 hours, Polkadot (CRYPTO: DOT) had fallen 8.9%, and Cardano (CRYPTO: ADA) had fallen 7.6%. 

So what 

The stock market is down sharply today and growth stocks are tumbling as well. Cryptocurrencies have been correlated with growth stocks for most of the last year and so when there's a big sell-off it's not surprising to see cryptocurrencies drop. 

One of the reasons the stock market is down is because interest rates are rising. In the U.S., the 10-year Treasury rate is up 5 basis points today to 2.59% and rates in developing countries are up even more. Brazil's 10-year rate was up 18 basis points to 11.54% and Mexico was up 6 basis points to 8.49%. Cryptocurrencies are traded globally, so the increases around the world will cause investors to flee to "safer" assets. 

There's also news that the Securities and Exchange Commission (SEC) has proposed expanding its definition of an exchange and may require more traders and businesses to register with the agency. The industry has been in regulatory limbo for years and at times there are signs regulations will be light and at other times it seems like burdensome regulations are coming. This news would fall in the latter camp and for now it's causing cryptocurrencies to lose value overall. I wouldn't be surprised to see regulation be a cause of volatility throughout the year.

Now what 

There are a lot of macro factors driving cryptocurrencies today but fundamentally I don't see any major changes to the long-term investment thesis. The disruptive nature of crypto and blockchains still exists and money is flowing into the industry. 

What also hasn't changed is that cryptocurrencies remain extremely volatile, especially on the interest rate and economic news. With rates on the rise and the economy uncertain for the next year it's understandable that there's a pullback in valuations. 

What I will point out about each of these cryptocurrencies is that they're utility cryptocurrencies that enable developers to build functionality in decentralized finance, non-fungible tokens, and other markets. Long-term, this should be the best place for investors and as development grows the value of cryptocurrencies should rise as well. 

For now, uncertainty has taken hold of the market and that's what's causing today's pullback. But it's nothing to be concerned about long-term because the crypto industry is maturing and becoming more valuable everyday. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Solana, Polkadot, and Cardano are down big today appeared first on The Motley Fool Australia.

It's not just the stock market that's showing signs of life these days. Many of the market's leading cryptocurrencies have also started to push higher.

Chainlink (CRYPTO: LINK), Avalanche (CRYPTO: AVAX), and Polkadot (CRYPTO: DOT) have all posted double-digit gains over the past week, up between 11% and 13% over the past seven days as of Thursday morning. Let's take a closer look at some of the leaders of the latest crypto rally. 

Chainlink: Up 11%

There's a world of opportunity in decentralized finance (DeFi) for crypto that can bridge gaps and make other digital currencies more useful. Chainlink is a decentralized blockchain oracle network -- built on Ethereum -- that helps with the transfer of data between blockchains and platforms that don't speak the blockchain language.

Chainlink is a pioneer in making smart contracts smarter, allowing for the tamper-proof transfer of external market data to a blockchain. It also isn't afraid to lean on tech gurus to turn heads. It has brought leaders of popular companies in as advisors, including DocuSign founder Tom Gonser and more recently the former CEO of Alphabet's Google, Eric Schmidt.

A sticking point in crypto transactions is the high fees that users can incur, but Chainlink is getting better on that front. Last month it introduced Chainlink VRF, a verifiable random function that can lower gas fees by as much as 60%.

Chainlink as a leader in the recent crypto rally is the break that its investors have needed. Chainlink had been a laggard before this past week's bounce. It has shed more than half of its value over the past year, and even with this week's pop it's still down 8% over the past month. With an important role in some non-fungible token (NFT) marketplaces and other DeFi applications it could finally be Chainlink's chance to shed its label as an underperforming cryptocurrency.

Avalanche: Up 11%

It's not just Chainlink making smart contracts more efficient. Avalanche's claim to fame is that it offers nearly instant finality -- that, unlike the platforms gloating about their lightning-quick processing speeds, is when a transaction is actually completed to the point of no return. Avalanche stands out by having three interconnected blockchains, each one performing a dedicated task to nail the race to the finality finish line without skimping on scalability or security.

Avalanche is a rising star in the DeFi world. It had $11.2 billion in total value locked (TVL) across 184 different protocols as of Thursday morning, according to blockchain tracker Defi Llama. TVL is the sum of assets deposited in DeFi apps, and Avalanche is the fourth-largest crypto in TVL despite being only the world's tenth-largest cryptocurrency in terms of market capitalization.                          

Polkadot: Up 13%

The third major digital currency sporting a double-digit gain over the past week is Polkadot. It's another tool in the crypto toolbox helping the revolution improve the speed and scalability necessary for blockchains and the Web3 movement to go mainstream. Polkadot's popular as the intermediary in applications where different blockchains can run independently in a single network.

There's value in being the equivalent of a translator in the crypto universe. Polkadot's parachains -- short for parallel blockchains -- let data flow easily between Ethereum and another rival blockchain. Parachains also can take the load off of processing demand from the larger cryptocurrencies that still have some work to do in terms of improving cost and bandwidth efficiencies.

Chainlink, Avalanche, and Polkadot are crypto leaders over the past week. The leadership bears watching since only Avalanche is trading higher over the past year. All three digital currencies have momentum in their corner right now, and it's something that they -- and their investors -- don't want to squander. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post 3 rising cryptos that are up more than 10% over the past week appeared first on The Motley Fool Australia.

What happened 

The cryptocurrency market continued its volatility this week, but for the time being it has been working for investors. The value of many cryptocurrencies jumped double-digits this week as investors bought riskier assets across the market. 

Bitcoin (CRYPTO: BTC) made a big move this week, climbing 9.7%, and is up 2.7% over the last 24 hours. Ethereum (CRYPTO: ETH) was up as much as 3.7% in the last 24 hours as of 3:00 p.m. ET and is up 16.4% over the past week. Polkadot (CRYPTO: DOT) made an even bigger move, jumping as much as 10.6% in the last day and currently trading 5.9% higher than yesterday, while Solana (CRYPTO: SOL) rose as much as 7.2% in the last 24 hours and is currently up 2.6%. 

So what 

The rise in growth stocks and the market overall has certainly helped cryptocurrency values this week, but there's something more meaningful happening in Washington D.C. 

A bipartisan group of representatives introduced the Virtual Currency Tax Fairness Act in Congress, which would exempt cryptocurrency transactions under $200 from taxes. This would simplify the tax code for small transactions, which are a growing part of the cryptocurrency ecosystem. 

Ethereum, Polkadot, and Solana are particularly interested in the tax code for cryptocurrency transactions because they're where most of the market's non-fungible tokens (NFTs), decentralized finance, and payment innovations are taking place. If buying coffee with cryptocurrencies, like Solana, were a taxable event it could be a burden on everyone in the U.S. 

Interestingly enough, a filing this week showed that Senator Ted Cruz even bought Bitcoin recently. Members of Congress are increasingly getting bullish on cryptocurrencies as usage grows and that could help push positive policy forward. 

We also got relatively strong jobs data this week, which likely means people will have more money to put into cryptocurrencies. Growing utility in the crypto ecosystem and an increasing number of users should push valuations higher long-term. 

Now what 

The battle over tax and regulatory policy has been ongoing for years but given the multi-trillion-dollar valuation of the cryptocurrency market lawmakers are taking more attention. What they'll have to balance is putting reasonable rules in place without ending some of the innovation that's taking place in the cryptocurrency market. Blockchains like Solana could upend the payments market with fast, low-cost transactions, which is the kind of innovation lawmakers will want to happen in the U.S. 

Long-term, I'm bullish on the value cryptocurrencies will add to the market but there's a lot to shake out in the meantime. And the policy battle is just beginning. I think that means we will see more volatility and it's unclear whether that means values are going up and down short-term. This is an exciting market to watch but a risky one to invest in, no doubt. 

This article was originally published on Fool.com. All figures quoted in US dollars unless otherwise stated.

The post Why Bitcoin, Ethereum, Polkadot, and Solana jumped this weekend appeared first on The Motley Fool Australia.

• There are more than 10,000 cryptos in virtual circulation
• It's important for altcoins to have real life utility
• Smart Contracts are continuing to gain traction

Crypto investors certainly have no shortage of choice these days.

With new altcoins launching almost every day, far outpacing the numbers that fail and are removed from virtual circulation, there are now more than 10,000 cryptos to potentially invest in.

But outside of the big names, like Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), many investors struggle to identify tokens with growth potential.

With that in mind, The Motley Fool turned to Josh Gilbert, crypto analyst at multi-asset investment platform eToro, for his take.

Below we look at 5 altcoins, all currently within the top-21 cryptos by market cap, that have the potential to outperform in the year ahead.

A word of caution

Before discussing his views on 5 promising altcoins for 2022, Gilbert reminded us that as a broker, eToro can't offer financial advice.

He also had these words of caution for our readers:

It's important to remember that crypto is a volatile asset class. Anyone considering investing should research the ideas behind the crypto asset they are looking at, and the potential uses it could have. Investors must look beyond headline numbers, understand what they are investing in, and not invest more than they can afford to lose.

Wise words.

With that out of the way, Gilbert said that while there's no way of knowing with certainty which cryptos could boom in the coming months, "these 5 coins are assets that have potential".

Five cryptos with the potential to outperform

The first altcoin Gilbert pointed to is Solana (CRYPTO: SOL):

Solana is one of the fastest blockchains in the world. The Solana Network has gained traction in the NFT space, where users can mint, buy and sell NFTs [non-fungible tokens] via the network. SOL soared in 2021, but has seen a dramatic correction in 2022, down 57% from its high.

Why is 2022 looking potentially strong for Solana?

"As Smart Contract platforms continue to gain traction, 2022 could be a key year for Solana," Gilbert said.

With a market valuation of US$34.8 billion, Solana is the 7th biggest crypto. Down 9% over the past 24 hours, Solana is up 14% since this time last week, according to data from CoinMarketCap.

The next crypto with strong potential is Polygon (CRYPTO: MATIC). Gilbert explained that, "Polygon is a protocol and framework built with the aim of building and connecting Ethereum-compatible blockchain networks."

Why is this one worth keeping an eye on?

According to Gilbert:

Its token, MATIC, has gained a lot of traction in the DeFi [decentralised finance] space for its low transaction costs and seems to be addressing common blockchain issues such as slow speeds and high costs whilst maintaining high levels of security.

Polygon is the 14th biggest crypto with a market valuation of US$12.2 billion. It's down 1% today and up 3% over the past 7 days.

The third altcoin with strong potential is Chainlink (CRYPTO: LINK):

Chainlink is a blockchain layer used to universally connect smart contracts. Secure interaction between complex smart contracts and external data feeds, payment methods and events are supported. The crypto asset is built on Ethereum and is an ERC-20 token.

Gilbert told us Chainlink has good potential because, "LINK is looking to revolutionise traditional finance through DeFi. It has use cases from decentralised exchanges, insurance, stablecoins and even money markets."

Next up he highlighted Polkadot (CRYPTO: DOT). He said:

Polkadot is a blockchain network designed to support various interconnected, application-specific sub-chains called parachains. In addition, the crypto asset is looking to enable bridges that will allow the Polkadot network to interact with other blockchains like Ethereum and Bitcoin. This will also allow tokens to be swapped without a central exchange.

Why could Polkadot be an outperforming crypto in the year ahead?

"Combining blockchains will be essential in 2022 as decentralised finance gains further traction," Gilbert said.

Polkadot is the 10th biggest crypto with a market valuation of US$20.1 billion. Polkadot is down 9% today and up 6% since this time last week.

Rounding out the list of cryptos with strong potential is Decentraland (CRYPTO: MANA):

Decentraland is a decentralised virtual reality blockchain platform that allows users to purchase, build and monetise virtual reality applications. The MANA coin surged in value through 2021, as talks of the 'Metaverse' accelerated. However, the crypto asset has since retreated 55% from its all-time high.

Why is Decentraland potentially well set to shine in 2022?

"With the Metaverse still only taking shape, it has a lot of potential in 2022," Gilbert said.

Why crypto investors should research utility

With more than 10,000 altcoins to choose from, we asked what crypto investors should be looking at, atop doing their own thorough research.

Gilbert said the 5 cryptos named above, "have already established themselves in the crypto ecosystem. With cryptoassets, the most significant focus has to be utility, and these 5 altcoins have this in abundance."

We also asked what types of 'moats' or barriers to entry these 5 cryptos might have to prevent rival altcoins from stealing their lunch.

According to Gilbert:

These altcoins are some of the biggest and most well-known altcoins, therefore, they can innovate and evolve when competition arises. In addition, they have the industry's top developers, which is key to any crypto project. However, these talents can come at a premium and are scarce. 

On top of this, the altcoins mentioned have vast volumes of transactions flowing through their networks, mostly as a result of having loyal customers that trust their networks. DOT, LINK, MATIC, SOL and MANA are all currently in the top 16 cryptoassets for volume on Messari.

There's no getting away from these cryptos' price correlation to Bitcoin though. At least, not yet.

Gilbert told us:

Currently, Bitcoin has a crypto market dominance of around 43%, which consequently means most altcoins have a high correlation. If Bitcoin's price sinks, you're likely to see altcoins suffer and vice versa.

Ultimately, Bitcoin acts as the primary driver of market sentiment.

The post Why these five cryptos could leave Bitcoin in the dust in 2022 appeared first on The Motley Fool Australia.

Although it's down some 22% from its 10 November all-time high of US$4,865, the world's number 2 token is up by 427% year-to-date.

At the current price of US$3,857, it has a market cap of some US$460 billion.

But faced with what crypto analysts are calling 'Ethereum killers", can it hold onto its mantle in 2022 and beyond?

For the answer to that question, the Motley Fool turned to Ray Brown, market analyst at crypto exchange CoinSpot.

What are Ethereum killers…and why investors should pay attention

Addressing the issues that are currently hindering Ethereum's growth, Brown told us:

Ethereum's scalability is one of the biggest hurdles that is currently limiting the success of its network and the countless dApps (decentralised applications) that run on the network. To be fair to the founder Vitalik Buterin and his team, they could not have anticipated the significant demand the platform has garnered since Ethereum launched back in 2015.

Brown pointed to the outdated working model and volatile fees as some of the problems Ethereum is working to overcome:

Ethereum's Proof-of-Work (PoW) consensus model has become outdated, as it can only handle around 13 transactions per second, leading to a congested network and highly volatile gas fees.

The current PoW model requires a significant amount of computational power, which means the energy required to maintain the network is extremely high. It's currently estimated to consume 54.57 TWh per year.

So, what's all this about Ethereum killers?

According to Brown:

While Ethereum 2.0 is being rolled out and being transitioned to Proof-of-Stake (PoS), the competition to take the DeFi [decentralised finance] crown is heating up by what some are labelling as the Ethereum killers.

Some of the contenders for the title of 'The Ethereum Killers' are considered to be Cardano (CRYPTO: ADA), Solana (CRYPTO: SOL) and Polkadot (CRYPTO: DOT).

What do these cryptos do?

Solana is the number 5 crypto by market valuation. And it's gained a whopping 8,864% in 2021, according to data from CoinMarketCap.

Cardano is the number 6 crypto by market cap. It's gained 616% this calendar year.

And Polkadot currently ranks as the number 9 crypto. Polkadot is up 217% year-to-date.

So, what do they do?

Brown told us:

Each of these cryptoassets tinker in the smart contracts space, each offering innovative advantages that Ethereum is currently lacking. They are all also building momentum quite quickly. Solana only launched in 2020 and is already the fifth biggest cryptoasset by market capitalisation.

Should crypto investors pay attention to this fast-changing trend?

"Certainly, there is even chatter that some of the Ethereum killers might someday overtake Ethereum in both utility and popularity, despite it being the first-mover," Brown said.

But he's not expecting the number 2 token to get bumped off its throne anytime soon.

"With Ethereum 2.0 on the horizon and its growing market cap, this may be unlikely," he said. "However, while Ethereum's dominance is clear in the DeFi industry, there's room for other cryptoassets to coexist and contribute to the future of Web 3.0 together."

The post What crypto investors should know about these 'Ethereum killers' appeared first on The Motley Fool Australia.