None of Them Are Bitcoin)

Bitcoin (CRYPTO: BTC) has dominated headlines for much of the last few months with the most recent halving event taking place on April 19, as well as the advent of spot exchange-traded funds (ETFs). Other cryptocurrencies may have fallen off investors’ radar.

For those looking to take advantage of the best this crypto bull market has to offer, it is worth considering these three digital currencies to provide a boost to their portfolio.

Image source: Getty Images.

1.Ethereum

It’s safe to say that no cryptocurrency portfolio is complete without Ethereum (CRYPTO: ETH). While Bitcoin provides investors with the opportunity to use the most proven, secure and decentralized cryptocurrency, it does not offer the possibility of decentralized finance (DeFi), one of the most prominent and innovative uses of cryptocurrencies today.

There are other blockchains with DeFi capabilities, but Ethereum completely dominates this space. As of today, approximately 60% of the total value tied to the DeFi economy calls Ethereum home. The next closest competitor is Tron with only 8%.

Consisting of lending protocols, stablecoins, non-fungible tokens, and much more, DeFi is brimming with potential. By investing in Ethereum, you can ensure your portfolio benefits from the continued growth of this emerging digital economy.

And the next step to get the green light from the Securities and Exchange Commission (SEC) could be the Ethereum ETF. Bitcoin was the first to approve an ETF in January, and now it looks like Wall Street is looking for more exposure to the crypto world and has its sights set on Ethereum.

If such an ETF is approved, it could open the cryptocurrency to new sources of demand, as buyers who have either held off buying cryptocurrencies because they are concerned about direct ownership of them or face restrictions on such direct ownership could be added to new sources of demand. Champion of DeFi for 401(k)s, IRAs, and many other similar accounts.

2. Stacks

Bitcoin does not provide access to DeFi as it does not have smart contract functionality that allows the creation of innovative applications commonly found in DeFi. While some may see this as a trap, there is a blockchain that takes advantage of Bitcoin’s unique features (security, decentralization, and so on) and combines it with its own smart contracts: Stacks (CRYPTO: STX).

Stacks, known as Layer 2, allows developers to create smart contracts and applications that then finalize transactions on Bitcoin, ultimately inheriting Bitcoin’s high degree of security and decentralization. Even better, Stacks is unlocking new functionality that will make it even easier for Bitcoin holders to participate in the DeFi economy, giving them access to the trillion-dollar market and new uses beyond the common buy-and-hold practice.

The story continues

The details of these updates can be examined in this article I wrote a few weeks ago. In summary, the basis for investing in Stacks is that it is an investment in the future convergence of Bitcoin and DeFi. As Stacks continues to grow and investors seek to leverage their holdings in new ways, Stacks is expected to see its value increase not only in this bull market but for years to come.

3. Polygon

No matter how prominent Ethereum is, it has some limitations such as speed and fees when the blockchain becomes congested. To solve this problem, developers plan to leverage Layer 2 networks to increase scalability. There are several Ethereum-based Layer 2 solutions today, but one in particular is the most investment-worthy: Polygon (CRYPTO:MATIC).

In March, Ethereum announced the Dencun upgrade, which reduces Layer 2 fees and increases speeds. Naturally, there has been an influx of activity across all such blockchains, but Polygon stands out from a crowded field for several reasons.

First, it is unique in that it offers developers a variety of solutions to build applications on a single network. Compared to other Layer 2 networks that offer a single approach to building, Polygon gives developers more control and customization when choosing the best scaling solution for their applications.

The latter is in the process of its own upgrade, which will bring a number of improvements. This update, known as Polygon 2.0, will unite all the different applications built on Polygon and create a mesh network that Polygon hopes will be the value layer of the internet.

Finally, Polygon was one of the first Tier 2s to enter the arena and with that comes a proven track record that makes it less risky for investors. With Ethereum’s clear strategy to rely on Layer 2 solutions for future scaling, Polygon’s established presence and innovative improvements position it for long-term success.

Should you invest $1,000 in Ethereum right now?

Before buying shares in Ethereum, consider:

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RJ Fulton has positions in Bitcoin, Ethereum, Polygon, and Stacks. The Motley Fool has positions in and recommends Bitcoin, Ethereum, and Polygon. The Motley Fool has a disclosure policy.

3 Cryptocurrencies to Buy Now (Hint: None Are Bitcoin) was first published by The Motley Fool