If you are an avid investor, you must have heard of blue-chip stocks. These are stocks of large corporations with a strong historical performance. The term ‘blue chip’ signifies reliability in the equity markets. For example, Facebook, Apple, Amazon, Netflix, and Google are considered blue-chip stocks because they have a track record of excellent past performance. Similarly, cryptocurrencies can also be classified as blue-chip. What Is Blue-Chip Crypto? To put it simply, they are the highest market cap cryptos that have proved themselves over time with respect to their fundamentals and past performance.
How Are Cryptos Denoted as Blue-Chip?
Usually, in the traditional terms, blue-chip companies are ones with a longstanding history of decades of sound financial performance. It is challenging to assess blue-chip cryptos with similar benchmarks.
But the market cap is often a good indicator in deciding whether crypto qualifies as a blue chip or not. It is indicative of many things, including adoption, investor confidence, market dominance, etc. before investing in blue-chip crypto You can further strengthen your research by combining it with historical fundamentals & performance.
Top 5 Blue-Chip Cryptocurrencies
Based on the characteristics discussed, below are our top five blue-chip cryptocurrencies.
P.S. – This blog is written as of 15/06/22; please do your own research before making any investment decision.
1. Bitcoin (BTC)
Bitcoin is the first-ever cryptocurrency. It was first introduced through its whitepaper on a mailing list in late 2007, in the early days of the global financial crisis. Diminishing confidence in the financial system and the fickle nature of the global financial network further helped fuel the adoption of Bitcoin.
Nevertheless, Bitcoin took until February 2011 to trade at $1. Since then, Bitcoin has had an uphill journey, with a lot of volatility. But over time, it has managed to win the trust of the masses and, as a result, become a relatively stable cryptocurrency. Today, it has a market capitalization of about $576 Billion, dominating more than 44% of the total market size, according to coinmarketcap.com.
Characteristics of Bitcoin aka why it is a blue-chip crypto
- Bitcoin network is a decentralized global peer-to-peer network that introduced the idea of decentralization to the masses.
- It has a limited supply of 21 million Bitcoins.
- Large-scale institutional adoption by players like MicroStrategy Grayscale
2. Ethereum (ETH)
Ethereum is another pioneering network in the world of cryptocurrencies. While Bitcoin decentralized payments, Ethereum decentralized the globe. It enabled people to build decentralized applications using its smart contract functionality.
Characteristics of Ethereum aka why it is a blue-chip crypto
- It provides an infrastructure for people to build decentralized applications.
- Over 3000 DApps are built on the network
- It has the second largest market share after Bitcoin.
3. BNB (BNB)
Next in line on the list of blue-chip cryptocurrencies is BNB.
Binance launched BNB in the year 2017. It is the utility token for the Binance ecosystem, you can use it to avail discounts on trading fees on Binance. BNB is a token based on the Ethereum blockchain, but it has plans to migrate to its native chain.
Characteristics of BNB aka why it is a blue-chip crypto
- BNB is positively correlated with the expansion and growth of the Binance ecosystem. It is one of the largest crypto platforms.
- It has maintained its position as the top 5 cryptocurrencies by market cap for a while.
- BNB also has a coin burn feature where part of its total supply is burnt periodically.
4. Ripple (XRP)
As per its defining traits on the whitepaper – Ripple Labs developed XRP as the native cryptocurrency for their products. It is used for payment settlement, asset exchange, and remittance systems within the Ripple Labs ecosystem. It works more like SWIFT, a service for international money and security transfers used by a network of banks and financial intermediaries.
Characteristics of Ripple aka why it is a blue-chip crypto
- It consumes a negligible amount of energy as compared to Bitcoin and Ethereum. The transactions are much faster and a lot cheaper.
- It provides a network for banks and financial institutions to transact.
However, you must know that Ripple is currently battling a lawsuit with the U.S. Securities and Exchange Commission (SEC) for allegedly engaging in illegal securities offering through the sale of XRP.
5. Cardano (ADA)
Launched in 2017, Cardano boasts of being the third-generation blockchain technology. It promotes scalability while maintaining transparency, and decentralization in the crypto world. Charles Hoskinson saw the scalability challenges in the traditional proof-of-work technologies like Bitcoin and Ethereum and started developing Cardano in 2015.
It is one of the largest cryptocurrencies by market cap.
Characteristics of Cardano aka why it is a blue-chip crypto
- It is trying to solve the scalability problem that exists in networks like Ethereum.
- It claims to be a third-generation blockchain.
What Are Some Other Blue-Chip Cryptos to Invest In?
Solana, Polkadot, and a few other cryptocurrencies could also qualify as blue-chip cryptocurrencies. However, the crypto market is very dynamic and this list can change swiftly. So ensure that you do proper research before investing in any cryptocurrency. Alternatively, you can also explore the Crypto Blue chip Coin Sets. These are crypto baskets curated based on a particular theme.