For well over a century, no asset class has more consistently built wealth for investors than stocks. But in recent years, stock gains haven't been able to hold a candle to the jaw-dropping increases witnessed in the cryptocurrency space.
For example, the benchmark S&P 500 jumped by a little more than 100% between its March 2020 low and the end of 2021. Comparatively, the aggregate value of all cryptocurrencies skyrocketed from $141 billion to $2.2 trillion over the same time frame (a more than 14-fold increase).
Despite these enormous gains, cryptocurrency projects that offer competitive advantages, differentiation, and real-world appeal still have the potential to head considerably higher. Keeping in mind that the crypto space is highly volatile and prone to corrections, the following three coins could all quadruple (or possibly head even higher) by 2025.
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Algorand
There are a lot ways digital currencies and blockchain technology-based projects can be winners. What makes Algorand (ALGO -1.98%) so enticing is the role it could play for businesses in the blockchain arena.
As I've previously pointed out, Algorand offers no shortage of clear-cut competitive advantages when it comes to speed and scalability. As of December 2021, the network was handling 1,162 transactions per second (TPS) and offered a block finality of 4.36 seconds. The latter means that the sending of files, data, or money reached its destination and was validated/settled in under five seconds.
Compare this to the two most popular networks, Bitcoin (BTC -0.24%) and Ethereum (ETH -1.35%), which can only handle 7 TPS and 13 TPS, respectively, and have transaction finalities of 60 minutes and six minutes. That's how much faster ALGO is compared to the most popular blockchain networks.
Additionally, Algorand offers a next-generation step up in network security. With traditional proof-of-stake consensus, the possibility exists for holders of a coin to adversely affect a network. However, with Algorand's pure proof-of-stake consensus mechanism, holders of ALGO are randomly and secretly chosen to vote on proposals and propose blocks. This randomization component, coupled with a vested interest in the network's success, makes it highly unlikely that small players will be able to disrupt the network.
But what makes Algorand so attractive to businesses is its focus on interoperability.
According to CoinMarketCap.com, there are more than 16,000 cryptocurrencies listed, and countless additional blockchain projects in development for financial and nonfinancial applications. While some of these projects are designed to work with existing blockchain projects, it's far more likely that these unique blockchain networks won't be compatible with each other. Algorand is all about bridging these gaps and making decentralized finance (DeFi) mainstream for businesses and consumers.
Not many cryptocurrencies have an enterprise focus, but Algorand's could make it an absolute rock star.
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IOTA
A second cryptocurrency that has the potential to skyrocket 300% or more by mid-decade is the lesser-known IOTA (MIOTA).
With an aforementioned 16,000-plus cryptocurrencies listed, uniqueness and a superior network are essential for success. Despite being a relatively under-the-radar project, IOTA brings both of these qualities to the table.
The single biggest differentiating factor with IOTA is that it's actually not blockchain-based. The secret sauce that makes IOTA tick is what's known as the "Tangle." The Tangle is a directed acyclic graph (DAG) that requires each new transaction to confirm at least two previous transactions. You can sort of imagine this as a person looking back at their ancestry and seeing the eldest family member connect to new lineages over multiple decades or centuries. Over time, the connections between transactions on IOTA's DAG begin to look a lot like a tangled web (ergo, the "Tangle").
The reason IOTA's developers chose this route over blockchain is simple: speed and cost. Blockchain networks are prone to congestion, and they can be slowed down by the need to gain consensus to validate transactions and/or propose new blocks. A network sans blockchain means rapid scaling can happen without adversely impacting the network. Best of all, transactions on IOTA's network are fee-free!
Another bit of exciting news for IOTA is the launch of staking, which happened last month. Investors are now able to stake their coins to earn either Shimmer or Assembly tokens. The latter is a fee-less smart contract-based network set to launch this year. Smart contracts are what verify, facilitate, and enforce the negotiation of a contract between two parties. Thus, IOTA's developers are pushing new utility ecosystems with IOTA, as well as encouraging IOTA holders to hang on to their coins for longer periods of time.
A final reason to be excited about IOTA's potential is its existing partnership with information technology solutions company Dell Technologies. IOTA is working with Dell to analyze the trustworthiness of data before it's used by an application. Getting recognition by brand-name businesses is a good sign for this under-the-radar cryptocurrency.
Image source: Getty Images.
Avalanche
The third cryptocurrency that can soar 300%, or perhaps much more, by 2025 is smart contract-based blockchain network Avalanche (AVAX -1.69%).
Among the biggest digital currencies, Avalanche stands out as my personal favorite. That's because it offers a clear competitive edge and compatibility that most other blockchain projects can't offer.
Not to sound like a broken record, but speed and scalability are really important in the crypto space. With existing payment infrastructure taking up to a week to validate and settle cross-border payments, it's imperative that blockchain projects provide demonstrable improvements to entice businesses and consumers to eventually make the switch to blockchain.
According to developers, the Avalanche network is capable of handling more than 4,500 TPS and completes transactions in under two seconds. That's much faster than existing payment infrastructure, and light years faster than other smart contract-enabled networks, like Bitcoin and Ethereum. In many instances, the transaction fees on Avalanche are considerably lower than the "Big Two" of crypto, as well.
The Avalanche network is also expected to lure decentralized application (dApp) developers in droves. That's because Avalanche has the highly–popular Ethereum Virtual Machine (EVM) running on its blockchain. The EVM is the software that developers use when creating dApps on the Ethereum blockchain. In other words, developers have the opportunity to utilize the same software on a network that's considerably faster, cheaper, and more scalable than Ethereum.
The feather in the cap for Avalanche is that it's landing brand-name partnerships. In mid-November, Deloitte formed a strategic alliance with Ava Labs, which is responsible for creating the Avalanche network. The Avalanche network will assist Deloitte's "Close As You Go" platform, which helps state and local governments filter through disaster reimbursement applications.
There's real-world utility at Avalanche's doorstep, which gives this cryptocurrency genuine moonshot potential.
