What are the best low risk crypto for 2022 and beyond? This guide will give a detailed answer based upon experience and decent research.
Are you interested in investing in cryptocurrencies because of the fast growth and high returns over the years? However, you are also experiencing some fear of entering these markets at the same time? Don’t worry you are not the only one!
Investing in cryptocurrencies can be a real bummer if you do it at the wrong time where you can suffer some serious damage to your investment capital. For example, Cardano(ADA) was for a long time one of the best investments in 2021 where it gained more than 900% in value ($0.35 in January, $2.75 in September).
Ultimately, if you decided to invest some of your capital or savings into Cardano(ADA) when the price was around $2.70 you timed the market very badly. Additionally, until the time of writing, the price of ADA went continuously downwards which leaves you with a 61% loss 😮
For this reason, is there another way to enter these volatile markets? Are there any low risk cryptocurrencies available to buy? In this article, I’m going to give you the best options to invest in some low risk crypto where you at the same time can have some good profit(double-digit gains).
Finally, before taking off, I want to mention that I’m not a financial expert and you should do some research as well before investing any of your capital. So, let’s go 👍
Are there any low risk cryptocurrencies?
First of all, what does a low risk cryptocurrency actually mean? For example, is a cryptocurrency with a low price automatically less risky? Of course, this doesn’t have to be the case! When you buy crypto at a low level at price it can still go down by 50% or even more.
I think to define a low risk cryptocurrency you can define this into two parts: price and value. In other words, every cryptocurrency is given a certain price($) at a certain point in time. Also, you can value a cryptocurrency project for its innovative concept and continuity over time.
Bitcoin and Ethereum are some of the eldest and most highly-priced cryptos that have proven to give value to the world. Consequently, if you follow the price charts of these cryptos you can see a rising trend in price over time. As a result, you can say there is a rising demand which makes them one of the most trusted cryptocurrencies.
What is the least risky crypto?
Again, if you like the possibility of high gains but also have fear for double-digit losses(>10%) there is another option available for low-risk investors. Alternatively, instead of investing in cryptos like BTC or ETH, you start to invest in stablecoins.
Stablecoins are cryptocurrencies that are pegged to the USD and can’t rise or decrease in price. However, because of the offered stability, they are mostly used to transfer value between blockchain networks. Also, because stablecoins are considered safe they are very popular to park profits when the entire market is in a bear trend 📉
Even though stablecoins are pegged to the USD, they still can give you good gains(>=10%). For instance, you can use them for staking, lending them out, or in DeFi solutions. All in all, it’s safe to say that investing in stablecoins is the least risky option when starting to invest in cryptocurrency.
Best Low Risk Crypto of 2022
Based upon my research and experience(since 2013 in the markets) below are the most trusted cryptos of 2022:
- Bitcoin(Cryptocurrency with biggest marketcap🏆)
- Ethereum(Second biggest crypto🥈)
- Litecoin(One of the veterans🌟)
- Terra(Basket of fiat-based stablecoins☑️)
Low Risk Cryptocurrency Comparisons
The cryptos mentioned earlier will be divided into several statistics and data based upon price, market cap, type of coin, and age(time in the market). Remember that the data is accurate at the time of writing but can be subject to change over time.
Bitcoin, the founder of all cryptocurrencies, is the first decentralized cryptocurrency. Originally described in a 2008 whitepaper by a person, or group of people, using the alias Satoshi Nakamoto. It was launched soon after, in January 2009.
Particularly, Bitcoin is a peer-to-peer online currency, meaning that all transactions happen directly between equal, independent network participants, without the need for any intermediary to permit or facilitate them. Bitcoin was created, according to Nakamoto’s own words, to allow “online payments to be sent directly from one party to another without going through a financial institution.”
Some concepts for a similar type of decentralized electronic currency precede BTC, but Bitcoin holds the distinction of being the first-ever cryptocurrency to come into actual use.
Starting to invest in Bitcoin can be considered as low risk if you decide to hold for a long period of time(HODL). In addition, Bitcoin(BTC) can be traded or bought on a global scale where Binance and Coinbase are the most popular platforms to buy.
Ethereum is a decentralized open-source blockchain system that features its own cryptocurrency, Ether(ETH). ETH works as a platform for numerous other cryptocurrencies, as well as for the execution of decentralized smart contracts.
Initially, Ethereum was described in a 2013 whitepaper by Vitalik Buterin who is the main developer and founder. Buterin, along with other co-founders, secured funding for the project in an online public crowd sale in the summer of 2014. The project team managed to raise $18.3 million in Bitcoin, and Ethereum’s price in the Initial Coin Offering (ICO) was $0.311, with over 60 million ETH sold. Taking Ethereum’s price now, puts the return on investment (ROI) at an annualized rate of over 270%, essentially almost quadrupling your investment every year since the summer of 2014.
Ethereum has pioneered the concept of a blockchain smart contract platform. To sum up, smart contracts are computer programs that automatically execute the actions necessary to fulfill an agreement between several parties on the internet. Besides, smart contracts are designed to reduce the need for trusted intermediates between contractors, thus reducing transaction costs while also increasing transaction reliability.
Litecoin (LTC) is a cryptocurrency that was designed to provide fast, secure, and low-cost payments by leveraging the unique properties of blockchain technology.
The cryptocurrency was created based on the Bitcoin (BTC) protocol, but it differs in terms of the hashing algorithm used, hard cap, block transaction times, and a few other factors. Litecoin has a block time of just 2.5 minutes and extremely low transaction fees, making it suitable for micro-transactions and point-of-sale payments.
Indeed, because of the fast processing times of transactions and higher coin supply(84 Million), Litecoin was called the ‘silver of cryptocurrency‘. Meaning, where Bitcoin acted as gold with a total supply of just 21 Million coins.
Furthermore, Litecoin was released via an open-source client on GitHub on Oct. 7, 2011, and the Litecoin Network went live five days later on Oct. 13, 2011. Since then, it has exploded in both usage and acceptance among merchants. Besides, it has counted among the top ten cryptocurrencies by market capitalization for most of its existence.
Eventually, the cryptocurrency was created by Charlie Lee, a former Google employee, who intended Litecoin to be a “lite version of Bitcoin,” in that it features many of the same properties as Bitcoin—albeit lighter in weight.
USDT is a stablecoin (stable-value cryptocurrency) that mirrors the price of the U.S. dollar issued by a Hong Kong-based company Tether. Moreover, pegging exactly 1 Tether to 1 USD is achieved via maintaining a sum of commercial paper, fiduciary deposits, cash, reserve repo notes, and treasury bills in reserves. All these are equal in USD value to the number of USDT in circulation.
Originally launched in July 2014 as Realcoin, a second-layer cryptocurrency token built on top of Bitcoin’s blockchain through the use of the Omni platform. Later it was renamed to USTether, and then, finally, to USDT. In addition to Bitcoin, USDT was later updated to work on the Ethereum, EOS, Tron, Algorand, and OMG blockchains.
In general, the purpose of USDT is to combine the unrestricted nature of cryptocurrencies — which can be sent between users without a trusted third-party intermediary — with the stable value of the US dollar.
Finally, in the current blockchain space, the Tether(USDT) stablecoin can be used differently to acquire profits: lend it out, earn interest or provide liquidity in DeFi. All these options are at low risk and a good alternative to investing in regular cryptos.
USD Coin (known by its ticker USDC) is another stablecoin that is pegged to the U.S. dollar on a 1:1 basis. Particularly, every unit of this cryptocurrency in circulation is backed up by $1 that is held in reserve. Particularly, in a mix of cash and short-term U.S. Treasury bonds. The Centre consortium, which is behind this asset, says USDC is issued by regulated financial institutions.
The stablecoin was originally launched on a limited basis in September 2018. Put simply, USD Coin’s mantra is “digital money for the digital age”. Furthermore, the stablecoin is designed for a world where cashless transactions are becoming more common.
Also, Coinbase, one of the biggest exchanges in the world, is one of the founders of this stablecoin. Overall, the goal of this stablecoin is to be launched on as many wallets, exchanges with other service providers, or Dapps as possible.
To acquire USDC you can do this best at Coinbase. Finally, in the current blockchain space, the USDC stablecoin can be used differently to acquire profits: lend it out, earn interest, or provide liquidity in DeFi. All these options are making it a low risk crypto and a good alternative to investing in regular cryptos.
Binance USD (BUSD) is a 1:1 USD-backed stable coin issued by Binance (in partnership with Paxos). In addition, BUSD is approved and regulated by the New York State Department of Financial Services (NYDFS), The BUSD Monthly Audit Report can be viewed from the official website.
Launched on 5 Sep 2019, BUSD was primarily focused on the Binance trading platform. This platform also functions as a reliable place for this stablecoin. In particular, BUSD is a digital fiat currency, issued as ERC-20 and supports BEP-2.
On the Binance platform, this BUSD stablecoin plays an important role in transactions, payments and settlement, and Decentralised Finance (DeFi). As a result, many traders on Binance consider BUSD a low risk crypto that can be used to park profits when there is market turbulence.
Finally, top wallets like Metamask, Trust Wallet, Trezor, Zapper, and many more allow users to hold BUSD now. Also, platforms and services, like travel booking site Travala, payments gateways like Moonpay and Banxa, payment APIs like Wyre, and multi-currency payment services like ivendPay and Paylot are now supporting BUSD too.
Last in the list of best low risk crypto’s is Terra(LUNA). Instead of the stablecoins listed above, Terra is a blockchain protocol that uses fiat-pegged stablecoins to power price-stable global payments systems. According to its white paper, Terra combines the price stability and wide adoption of fiat currencies with the censorship-resistance of Bitcoin (BTC). In addition, it offers fast and affordable settlements.
In January 2018 the development of this protocol started and its mainnet officially launched in April 2019. As of September 2021, it offers stablecoins pegged to the U.S. dollar. Also, South Korean won, Mongolian tugrik, and the International Monetary Fund’s Special Drawing Rights basket of currencies — and it intends to roll out additional options.
Terra’s native token, LUNA, is used to stabilize the price of the protocol’s stablecoins. LUNA holders are also able to submit and vote on governance proposals, giving it the functionality of a governance token.
Instead of being pegged to 1 USD, Terra keeps its one-to-one peg through an algorithm that automatically adjusts stablecoin supply based on its demand. It does so by incentivizing LUNA holders to swap LUNA and stablecoins at profitable exchange rates. In other words, the value of Terra including supply and demand is handled automatically by a smart contract.
Want to know more on how to earn passive income with LUNA coin? Read this post about best places to stake LUNA token.
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