Editor’s Note: A more recent and timely article on this topic can be found here.

Want to see Wall Street analysts at their most confused? Ask them about cryptocurrency predictions for 2021. As bitcoin, Ethereum, XRP and others have rocketed in value, never before has Wall Street seemed so hesitant about “digital gold,” a name they use to invoke a margin of safety. But as any experienced crypto investor knows, that’s not the way cryptocurrencies work. Instead, it’s a digital popularity contest where winners keep winning and losers bite the dust.

So, which cryptocurrencies can make you rich in 2021?

To answer that question, we need to explore the world of altcoins — up-and-coming coins that you can buy for cheap. That’s because it pays to get in early. For example, $1,000 invested in Ethereum’s initial coin offering (ICO) would be worth $3.3 million today. Meanwhile, $1,000 invested in bitcoin today might earn “just” 4-5x upside if you believe JP Morgan’s lofty $146,000 target price.

But there are also significant risks because cryptocurrencies have no intrinsic value. Instead, their worth comes from their users. The more users a coin has, the more useful it becomes, and the higher its price goes. But when a coin falls out of favor, there’s nothing to stop it from going to zero. That means investing in cryptocurrency requires strong belief that others will eventually buy it from you for even more.

With so many coins out there, it’s often hard to know even where to begin. But to get you started, here are the top 25 cryptocurrencies you need to know for 2021:

• Ethereum (ETH)
• Bitcoin (BTC)
• XRP (XRP)
• Stellar (XLM)
• Cardano (ADA)
• Dogecoin (DOGE)
• Polkadot (DOT)
• Neo (NEO)
• Celsius (CEL)
• Nano (NANO)
• Chainlink (LINK)
• Monero (XMR)
• Tether (USDT)
• Litecoin (LTC)
• Binance Coin (BNB)
• NEM (XEM)
• TRON (TRX)
• Dash (DASH)
• Zcash (ZEC)
• Bitcoin Gold (BTG)
• Bitcoin Cash (BCH)
• Bitcoin SV (BSV)
• EOS (EOS)
• VeChain (VET)
• Dai / MakerDao (DAI)

Keep in mind that while each has enormous potential, some are safer bets than others. As such, I’ve organized the cryptocurrencies based on their overall risk-to-reward potential from most balanced to least. With that in mind, let’s take a closer look at the world of cryptocurrency.

Ethereum (ETH)

Ethereum is a relative newcomer that has risen up the ranks thanks to its superior technology and its ability to create “smart contracts.”

Approximate Market Cap: $100 billion

Year Established: 2015

Cost Per Transaction: $10

2020 Return: 470%

Score: ★★★★★

Ether, the cryptocurrency of the Ethereum blockchain, is a technologically advanced version of bitcoin. Rather than hold itself as “digital gold,” Ethereum runs on a series of contracts. That makes it more like Google Wallet or Apple Pay — a system that can approve or delay transactions based on real-world events. Online buyers and sellers, for instance, could set up trades that only follow through when the postal service independently verifies the delivery of goods.

Ethereum is also blazingly fast compared to bitcoin: transactions only take 15 seconds to clear, rather than 15 minutes. Although trading costs are still high, its speed makes Ethereum useful for real-time use, rather than only as a store of value. Finally, Ethereum also has widespread adoption, with over 600,000 wallet addresses in use. As developers add services and protocols to make cryptocurrencies more useful, Ethereum looks set to keep winning.

These qualities have pushed Ethereum to my No. 1 spot in terms of risk-to-reward potential, despite it having a later start than many other currencies. Its winning combination of widespread usage, technological superiority and relative safety (compared to smaller coins, at least) makes it a superior investment. Plus, it’s one of the few currencies still trading below its 2018 peak.

Bitcoin (BTC)

Bitcoin is the most widely adopted cryptocurrency. Although it’s not the most technologically advanced, it continues to lead the pack.

• Approximate Market Cap: $600 billion
• Year Established: 2009
• Cost Per Transaction: $15
• 2020 Return: 309%
• Score: ★★★★★

The first successful cryptocurrency continues to lead the pack. With its first-mover advantage, bitcoin not only won early name recognition. It also became the de-facto cryptocurrency for mainstream investors. Smaller investors can use Square (NYSE:SQ) and Paypal (NASDAQ:PYPL) services to buy as little as $1 (or as much as they can “hodl”). Meanwhile, institutional investors can use the Chicago Mercantile Exchange (CME) to transact millions of dollars in futures.

That makes bitcoin an essential allocation. The world’s No. 1 coin makes up close to two-thirds of the entire cryptocurrency market, providing liquidity between smaller altcoins. Its size also makes it resistant to 51% attacks, where large cryptocurrency miners attempt to use computing heft to try manipulating the blockchain.

However, popular as it may be, bitcoin has some downsides. As one of the earliest blockchains, bitcoin’s ledger is large and unwieldy. Transactions can cost $12 to complete and take over 15 minutes to clear. That’s fine for its purpose as “digital gold,” but it prevents BTC from use as a day-to-day currency. (People paying in bitcoin will often use third-party services to transact small amounts).

Bitcoin is also extremely sensitive to macroeconomic movements — the currency lost half its value in the most recent U.S. stock market downturn. And if 2021 reveals a weak economic recovery or mutated strain of the novel coronavirus, bitcoin could easily lose 50-80% of its value. But for those looking to invest in cryptocurrency, bitcoin remains the most liquid option. It’s an essential coin to hold, and one I give top marks for in 2021.

XRP (XRP)

XRP is a centralized cryptocurrency that’s geared toward taking out the high costs of inter-bank transfers.

Approximate Market Cap: $13 billion

Year Established: 2012

Cost Per Transaction: Nominal

2020 Return: 16%

Score: ★★★★★

If I could only bet on one cryptocurrency this year, XRP would be it. XRP is the largest currency to have 10x potential for 2021.

XRP is the odd duckling of the cryptocurrency world. Founded by Ripple Labs, XRP is a centralized currency that’s mined, managed and administered by Ripple Labs (instead of a broad-based community). On one hand, that gives the coin the benefits of Visa (NYSE:V) and other centralized payments processors. These include the ability to negotiate with large banks, execute trades quickly and control policies.

On the other hand, critics are right to question: “Why use a cryptocurrency in the first place then?”

XRP has also had its share of accounting issues. Specifically, in December 2020, the U.S. Securities and Exchange Commission (SEC) sued Ripple and two executives for selling XRP tokens as unregistered securities. Ripple also controls over half of the XRP supply.

Still, XRP has enormous potential. The currency is used by financial institutions as an alternative to the SWIFT network, giving it a real-world application. And its low price-per-coin makes it a tempting target for punters — it’s easier to see XRP rising 1,000% to $3.5 than BTC doing the same to $454,000.

Stellar (XLM)

A well-placed contender to XRP’s crown, Stellar offers low-cost, cross-border transactions.

Approximate Market Cap: $5 billion

Year Established: 2014

Cost Per Transaction: Nominal

2020 Return: 189%

Score: ★★★★★

2021 is shaping to become Stellar’s year. After lagging bitcoin in 2020, Stellar surprised analysts and investors alike by rocketing 200% in the first week of January.

Much of its success comes from XRP’s misfortunes; much like XRP, Stellar was designed to facilitate cross-border transactions. And as regulatory issues mount for rival XRP, Stellar has quickly moved to fill the void. But some of it has also come down to luck. In January, the Office of the Comptroller of the Currency (OCC) allowed banks to start using independent node verification networks. The same week, the Ukrainian government announced a partnership with Stellar Development to create a national digital currency.

All this grants perfect investment conditions for Stellar, a top cryptocurrency for 2021.

Cardano (ADA)

Cardano is the largest third-generation cryptocurrency, and it’s packed with plenty more upside potential in 2021.

Approximate Market Cap: $8 billion

Year Established: 2017

Cost Per Transaction: $0.07

2020 Return: 441%

Score: ★★★★★

ADA, which runs on the Cardano network is one of the most technologically exciting cryptocurrencies to date. Its proof-of-stake system means it can operate more efficiently than the standard proof-of-work system. And its use of smart contracts means that it can keep track of transactions like bitcoin while handling payments like Ethereum. In short, it’s a third-generation coin that improves on its predecessors.

ADA/Cardano still has plenty of work to do in the year ahead. After all, having a superior technological product means nothing if people won’t adopt it. But three key areas make it a top cryptocurrency for 2021.

First, ADA has momentum. The currency took just three years to hit a $10 billion market cap — one-third the time it took bitcoin to do the same. Second, it sits at just $0.30 per coin, making it a tempting target for punters to run up. Finally, it has the ability to handle transactions and smart contracts. This makes it a natural enhancement for other cryptocurrencies like bitcoin.

Dogecoin (DOGE)

An internet meme turned cryptocurrency, Dogecoin teaches the world about making money.

Approximate Market Cap: $1 billion

Year Established: 2013

Cost Per Transaction: $0.03

2020 Return: 118%

Score: ★★★★★

In 2013, IBM (NYSE:IBM) software engineer Billy Markus founded Dogecoin as a meme joke. And like most memes, Dogecoin saw its 15 minutes of fame. In 2017, DOGE briefly rocketed 85,000% as the internet found its new amusement; it subsequently lost 98% of its value.

But in the world of cryptocurrencies and memes alike, second acts DO exist. In December 2020, Tesla (NASDAQ:TSLA) CEO Elon Musk sent Dogecoin back up 200% in a week simply by tweeting about it. As 2021 rolls around, this newfound popularity could send the coin up to speculative heights. Dogecoin does have its merits: its faster block time makes it better at processing payments than bitcoin can. But in an asset class where popularity trounces usability any day of the week, Dogecoin could quickly return 1,000%.

Just make sure you take your profits.

Polkadot (DOT)

Along with Cardano/ADA, Polkadot is another promising third-generation cryptocurrency to consider.

Approximate Market Cap: $7 billion

Year Established: 2017

Cost Per Transaction: Nominal

2020 Return: 205%

Score: ★★★★

In December, Binance announced a $10 million fund to support projects on Polkadot, a new cryptocurrency. DOT’s price shot up 41% within a week. And more gains could be on the way.

Founded by Gavin Wood, the Chief Technology Officer of the Ethereum Project, its protocol improves on older blockchains. From a technological standpoint, Polkadot’s key difference is its use of parachains — multiple blockchains that can run in parallel. That solves a massive issue for bitcoin, which has a single, growing blockchain that all miners (and transactors) need to store. Developers have also added scalability, smart contracts 0and security.

Still, investors need to remember that, in the world of cryptocurrencies, the best technologies aren’t always the winners — it will take strong marketing (and some luck) to get Polkadot to rival its larger competitors.

Neo (NEO)

NEO — “the Chinese Ethereum” — looks set to shine if the Chinese Communist Party allows it.

Approximate Market Cap: $1 billion

Year Established: 2016

Cost Per Transaction: Nominal

2020 Return: 63%

Score: ★★★★

Don’t be fooled by NEO’s sleepy-looking returns in 2020. NEO (formerly known as Antshares) is one of China’s earliest and largest cryptocurrency ventures. The coin fell hard in 2018 as the Chinese government cracked down on cryptocurrency exchanges. But in 2021, the coin staged a remarkable resurgence as Chinese regulators turned their ire to Ant Group, a payments processor.

With the Chinese Communist Party now rethinking its stance on cryptocurrencies, NEO has a chance to shine once again.

Celsius (CEL)

Celsius is a cryptocurrency with the potential to become a bank.

Approximate Market Cap: $1 billion

Year Established: 2018

Cost Per Transaction: Nominal

2020 Return: 3,717%

Score: ★★★★

Celsius’ extreme 2020 rise makes it a currency worth considering. In 2018, Celsius crowdfunded $20 million to create a cryptocurrency lending platform.

The network looked to write $6.2 billion in loans, making it more like a bank than a currency. And by registering as an exempt issuer with the SEC, Celsius has soared even as other cryptocurrencies like XRP have struggled.

Still, Celsius has plenty of risk behind it. As companies from Bear Stearns to Lehman Brothers found, bad loans can quickly sink your battleship. And Celsius itself could blow up if loans aren’t well-vetted. But until then, investors stand to make a lot of hot-money returns.

Nano (NANO)

Want to have your own blockchain? Nano gives every user their own ledger.

Approximate Market Cap: <$1 billion

Year Established: 2015

Cost Per Transaction: N/A

2020 Return: 54%

Score: ★★★★

Nano is a prime example of playing the cryptocurrency lottery. Having traded sideways in 2020, Nano suddenly jumped 400% in the first week of 2021. Why? Some may point to a December hack on an Italian cryptocurrency exchange. Others might point to Nano’s reasonably superior technology. But in the microcap altcoin world, timing has far more to do with luck.

However, now that demand is rising, keep watch. A short-term spike is often how new coins gain popularity. With its ability to assign entire blockchains to individual accounts, Nano looks like an attractive bitcoin alternative.

Chainlink (LINK)

Chainlink is a cryptocurrency that allows others to run smart contracts. But can LINK succeed on its own?

Approximate Market Cap: $5 billion

Year Established: 2017

Cost Per Transaction: Nominal

2020 Return: 428%

Score: ★★★

Chainlink is as different as they come. Rather than operate its own blockchain, Chainlink runs smart contracts on other blockchains. That makes LINK an anomaly in the cryptocurrency world — a coin that’s relatively agnostic to whichever blockchain it’s working on. It’s a formula that sounds good in theory.

From an investor standpoint, however, Chainlink’s complexity has worked against it. Making use of the protocol still requires hardcore programming knowledge, and that shrinks its potential audience. What Chainlink needs is a strong sponsor — a business like Ripple Labs, for example — to market and implement its smart contracts as required.

If the currency can find that sponsor, LINK will soar. Otherwise, investors can expect the currency to stall in 2021 as newer smart-contract coins take over.

Monero (XMR)

Monero is the No. 1 privacy-focused cryptocurrency.

Approximate Market Cap: $3 billion

Year Established: 2014

Cost Per Transaction: $0.04

2020 Return: 244%

Score: ★★★

Monero has long been one of my favorite coins for its privacy applications. Unlike bitcoin, Monero’s public ledger is obscured — outsiders can’t use its blockchain to trace the source, destination or amount of any transaction. And its community has continued to improve its privacy — from improving its decoy transactions to obscuring recipient identities.

But Monero ran into early issues. Because transactions are so private, it quickly became a favorite of Darknet users looking to hide their tracks. After suffering a series of scandals, XMR’s price plummeted in 2017. Yet, the cryptocurrency has had a revival in recent months. Since February, the currency has increased by almost 300% as privacy concerns have taken center stage.

As we move into 2021, XMR looks like a cryptocurrency with second-wind potential. Investors should take note.

Tether (USDT)

With its value linked 1:1 to the U.S. Dollar, Tether is useful for short-term holdings. But it’s not a long-term investment.

Approximate Market Cap: $24 billion

Year Established: 2014

Cost Per Transaction: Nominal

2020 Return: 1%

Score: ★★

Tether is the world’s largest “stablecoin.” Its value is 100% linked to the U.S. Dollar. That means no matter how high or low other cryptocurrencies go, Tether will theoretically stay at $1. That makes Tether useful as 1) a currency, 2) a short-term savings tool and 3) a method of arbitrage between different exchanges.

As a long-term investment, however, it’s not particularly interesting; its value won’t ever deviate far from $1. Tether has also seen past accounting scandals that threatened the coin’s stability. In 2017, the coin dropped to $0.92, and controversy seems to keep cropping up every couple of months.

Nevertheless, Tether is still useful for transferring cryptocurrency between wallets without major price risk. And with many exchanges now offering up to 12% interest on stablecoins, it’s a currency that still shouldn’t get overlooked in 2021.

Litecoin (LTC)

As the largest “bitcoin clone,” Litecoin still hasn’t managed a life of its own.

Approximate Market Cap: $8 billion

Year Established: 2011

Cost Per Transaction: $0.07

2020 Return: 200%

Score: ★★

Litecoin is the largest of the “bitcoin clones,” making it far more understandable for most investors. Its founder, a former Google engineer, designed Litecoin by using bitcoin’s original codebase and modifying it to create blocks four times faster. That has made the younger fork cheaper and faster than bitcoin to verify. Litecoin’s size also makes it less vulnerable to a “51% attack” than other bitcoin-like currencies.

My two-star rating comes down to momentum. Although it was once a popular bitcoin alternative, Litecoin has since struggled to differentiate itself from its bigger brother. While it could be a good holding for 2021, it’s going to ride bitcoin’s success rather than shine on its own.

Binance Coin (BNB)

Binance’s homegrown coin has use on its platform, but not much else.

Approximate Market Cap: $5 billion

Year Established: 2017

Cost Per Transaction: N/A

2020 Return: 160%

Score: ★★

Binance, one of the world’s largest cryptocurrency exchanges, launched its own currency to reduce transaction costs. The coin became known as Binance Coin, or BNB. And thanks to generous discounts for using BNB, Binance’s homegrown coin has become a significant player.

However, investors should see BNB as a secondary coin for transferring money between different currencies within Binance. That’s because BNB’s value rests on Binance’s ability to draw more users. In October, Forbes staff released documents alleging that Binance and its founder created an elaborate corporate structure designed to deceive U.S. regulators.

With friends like that, who needs enemies?

NEM (XEM)

NEM is a speculative cryptocurrency that is still hanging on for its life after a massive 2017 theft.

Approximate Market Cap: $2 billion

Year Established: 2015

Cost Per Transaction: $0.13

2020 Return: 512%

Score: ★★

NEM, or New Economy Movement, was designed as an alternative to “mainstream” bitcoin. The coin rewards users for holding XEM for the long-term. However, the cryptocurrency stumbled severely in 2017 when Coincheck, a Japanese exchange, revealed that hackers had stolen over $500 million of customer funds. Since then, NEM has seen its coin value trade under 30 cents to the dollar. That makes buying NEM for 2021 a speculative play.

While it could easily double your money (thanks to its low base), there aren’t any apparent catalysts on the horizon.

TRON (TRX)

Hyped up by its controversial founder, TRX is a speculator’s dream-come-true. But that makes it risky for the long-term.

Approximate Market Cap: $2 billion

Year Established: 2017

Cost Per Transaction: N/A

2020 Return: 103%

Score: ★★

Since its 2017 launch, TRON has been on a wild ride. The currency peaked in January 2018 at 8.01 cents before plummeting to 2.3 cents just two months later. It has recovered slightly to 2.8 cents since. So, why does this Ethereum competitor make the “top-cryptocurrency” list?

In 2020, its founder, Chinese millionaire Justin Sun, bought BitTorrent, a central peer-to-peer file-sharing system. That put TRON right back on the map. Controversy has followed Mr. Sun everywhere — employees have noted stacks of hundred-dollar bills on his desk, while others have pointed out plagiaristic similarities between TRON and Ethereum.

Investors in TRON will need to accept the bamboozling required to push this altcoin. Everyone else might consider staying away.

Dash (DASH)

Litecoin’s largest fork, Dash is still struggling to find traction.

Approximate Market Cap: $1 billion

Year Established: 2014

Cost Per Transaction: Nominal

2020 Return: 109%

Score: ★★

Dash, created in 2014, was Litecoin’s most significant fork. It was an early winner among cryptocurrencies, reaching a peak of $1,051 in December 2017 and almost landed in the top-10 coins by size. Since then, success has been sporadic. The coin hasn’t been able to differentiate itself from other faster-growing ones.

As 2021 rolls around, Dash will likely go up on Litecoin’s coattails. But will it will reach top-10 again? That’s far less likely. Still, as an early coin winner, it’s worthwhile to keep on your radar. Second acts, as we know, happen all the time in crypto.

Zcash (ZEC)

Zcash is a privacy-focused cryptocurrency with programming flaws.

Approximate Market Cap: $1 billion

Year Established: 2016

Cost Per Transaction: Nominal

2020 Return: 99%

Score: ★★

Like Monero, Zcash has privacy at its core. Users of Zcash can choose to obscure their transactions on the Zcash ledger, making it ideal for privacy-focused individuals. However, its success in privacy has been mixed with users finding ways to identify users even with address shielding.

Still, as privacy issues with cryptocurrency grow in the developing world, Zcash might find greater adoption in the emerging world.

Bitcoin Gold (BTG)

As a small fork in the bitcoin road, Bitcoin Gold could come back to win. But its chances are slim.

Approximate Market Cap: <$1 billion

Year Established: 2017

Cost Per Transaction: Nominal

2020 Return: 32%

Score: ★★

A 2017 hard fork in bitcoin created Bitcoin Gold. But like Bitcoin SV and many other divisions, BTG never quite found its footing. Since 2018, the currency has lost almost 97% of its value. By size, it has dropped from the No. 5 coin to below No. 80.

But for those willing to take a flyer, Bitcoin Gold still holds some sway. As an earlier entrant to the cryptocurrency space, Bitcoin Gold has broad support on various exchanges. And its trust level remains relatively high, despite some high-profile thefts in 2017-18. Although there aren’t too many catalysts for BTG, its original link with bitcoin still gives it the potential for a second act.

Punters should take note.

Bitcoin Cash (BCH)

Bitcoin Cash is major bitcoin fork that hasn’t found its footing. It probably won’t.

Approximate Market Cap: $8 billion

Year Established: 2017

Cost Per Transaction: Nominal

2020 Return: 77%

Score: ★

Bitcoin Cash came as one of the earliest (and most prominent) bitcoin forks. Early on, it was also once the most successful. But today, it’s a shadow of its former self.

In 2017, as concerns over bitcoin’s scalability mounted, Amaury Sechet and a group of programmers released Bitcoin Cash to compete. With a 10-minute block time and larger block sizes, BCH can theoretically process more transactions per second than its older rival.

From an investment standpoint, however, the fork has been a massive disappointment. Its improvements proved far too minor to excite investors, sending the price of BCH spiraling from a $4,355 peak in 2017 to just $477 today. Although BCH will likely ride bitcoin’s coattails in the near-term, the coin remains a shadow of its former self. My recommendation? Sell BCH and find greener pastures.

Bitcoin SV (BSV)

Bitcoin SV is a failed bitcoin fork that keeps holding on for dear life.

Approximate Market Cap: $3 billion

Year Established: 2018

Cost Per Transaction: Nominal

2020 Return: 65%

Score: ★

Bitcoin Satoshi Vision (SV) was created in 2018 in a fork with Bitcoin Cash. The “civil war” between Bitcoin Cash and Bitcoin SV came from competing visions on block size and transaction fees. And the resulting civil war hurt both sides. Today, Bitcoin SV trades as a shadow of its former self, having lost almost 90% of its value since the fork. Its 2020 returns have reflected that truth.

As investors look to 2021, Bitcoin SV remains a player that’s likely a “pass.” The cryptocurrency, unfortunately, has too little name recognition and too little differentiation from bitcoin.

EOS (EOS)

EOS is a new cryptocurrency entrant, but little technological differentiation makes it a low-potential coin.

Approximate Market Cap: $2 billion

Year Established: 2017

Cost Per Transaction: Nominal

2020 Return: 1%

Score: ★

EOS, the currency of the EOS.IO protocol, has mostly traded sideways throughout its history. As a currency, it looks much like Ethereum’s network, with several improvements in the way transactions are approved. But as an investment, it has remained somewhat of a disappointment.

While EOS makes the list because of its relatively large size, investors looking at this lesser-known coin should watch for any significant uptake news before investing.

VeChain (VET)

VeChain is a Chinese cryptocurrency helping track food safety.

Approximate Market Cap: $1 billion

Year Established: 2017

Cost Per Transaction: N/A

2020 Return: 260%

Score: ★

VeChain is a Chinese-based cryptocurrency that works with food groups to track food and safety. In July 2019, it inked a deal with Walmart China for its Blockchain Food Safety program. And in September 2020, it joined forces with a Chinese food safety group that includes McDonald’s China.

While its trajectory still seems unclear, these wins have helped its placement on this list, making VeChain a nominal coin to track.

Dai / MakerDao (DAI)

Dai is a stablecoin that’s greasing the wheels of the Ethereum network.

Approximate Market Cap: $1 billion

Year Established: 2014

Cost Per Transaction: Nominal

2020 Return: 0%

Score: ★

Like Tether, Dai is a stablecoin whose value is pegged 1:1 to the U.S. Dollar. Its technology, however, is a little more complicated. Built on the Ethereum network, Dai allows investors to borrow money using Ether as collateral. In the past, it has also allowed savers to earn up to 8.75% interest. The rate has since dropped to zero.

That’s why investors looking for simple buy-and-hold altcoins should consider Tether instead. While Dai might help Ethereum, its interest-generating ability remains low, as does its upside.

Conclusion: Where Will Cryptocurrency Go in 2021?

Today, people invest in crypto for one reason alone: to make money. So far, cryptocurrencies have delivered on that promise. Mom-and-pop investors have profited handsomely as bitcoin and other currencies have rocketed in value. But the risks in 2021 are growing — at its core, cryptocurrencies only serve to transfer wealth from one party to another. And some new competitors have recently popped up.

“China has already developed a Central Bank-backed crypto, and in the U.S. it was discussed as part of the C-19 stimulus,” writes Laura Gonzalez, Ph.D., associate professor of Finance at California State University, Long Beach. “There is ample evidence of speculation as well, and the value of the current cryptos will be affected by the upcoming central-bank backed digital currencies.” In other words, unregulated cryptocurrencies will one day compete against state-sponsored ones too.

Here’s the takeaway: if you have an extremely conservative portfolio and need to add “risk-on” assets, choosing a basket of top-rated cryptocurrencies could be right for you. It’s a cheap way to gain massive macroeconomic risk exposure. But don’t get fooled by thinking of crypto as “digital gold.” If 2021 sees a surprise economic slowdown, no amount of hope will keep crypto afloat.

Good luck out there.

On the date of publication, Tom Yeung did not have (either directly or indirectly) any positions in the securities mentioned in this article.