Is there a long-term case for crypto? With these 3 pieces, the answer is a resounding yes.

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In 2023, crypto looks set to finally be recognized as a viable long-term investment option for patient buy-and-hold investors. Large institutional investors reluctantly recognize that crypto is an asset class worth investing in, despite being a very high risk and volatile asset class. At the same time, some of the biggest names in the industry are increasingly discussing crypto as a way to plan for retirement.

With that in mind, here is a closer look at three cryptos – Bitcoin (BTC -0.14%), Ethereum (ETH -0.69%) and Polygon (MATIC -1.59%) – that might be suitable for anyone taking a long-term view of the market.

1.Bitcoin

The obvious starting point for anyone building a long-term crypto portfolio is Bitcoin, which now accounts for almost 45% of the total crypto market capitalization. While crypto is hardly a “safe” buy-and-hold investment, Bitcoin has proven to be surprisingly resilient to the ups and downs of the crypto market. Over its 14-year history, Bitcoin has weathered several major crashes, including one in 2011 that saw its price plummet to $0.01 within days. But each time, Bitcoin bounced back better than before.

Image source: Getty Images.

A long-term investment thesis for bitcoin is that it is “the future of money”. Over time Bitcoin will become more and more important as an online payment option. According to some Bitcoin bulls, such as Silicon Valley venture capitalist Tim Draper, Bitcoin will one day be used for all online transactions. When Draper recently suggested that Bitcoin could skyrocket to $250,000, that’s what he had in mind.

In a very long-term view, Bitcoin could eventually begin to supplant sovereign currencies. It was the original vision of Satoshi Nakamoto, the anonymous creator of Bitcoin. The famous Bitcoin white paper has been used to suggest that a decentralized, peer-to-peer digital currency like Bitcoin could be superior to fiat currencies when it comes to managing macroeconomic factors such as inflation. After all, Bitcoin has a fixed total coin supply of 21 million, so there is no risk of hyperinflation from a government or central bank producing too much money.

2.Ethereum

Ethereum, which accounts for another 20% of the total crypto market capitalization, is another coin with remarkable long-term resilience. While Bitcoin’s primary function is a store of value and an online payment option, Ethereum promises much more in terms of actual utilities and use cases. Ethereum pioneered the concept of smart contracts in 2015 and since then has been an innovation leader in decentralized finance, gaming, metaverse, and digital assets such as non-fungible tokens (NFTs).

The best way to think of Ethereum is that it is a foundation, or base, for anything developers can think of building in the world of blockchain and crypto. And that’s what gives Ethereum such long-term appeal. When you invest in Ethereum, you are not just investing in a single cryptocurrency, you are also investing in an entire blockchain ecosystem. Some analysts once called Ethereum a “digital oil” for its ability to power the modern blockchain economy.

Now that Ethereum has transformed into a faster, energy-efficient blockchain as a result of The Merge, it is better positioned than ever to be the world’s first layer-1 blockchain. Already, Ethereum founder Vitalik Buterin has laid out a fantastic long-term roadmap for the blockchain, in which it will eventually be able to process 1 million transactions per second. When this happens, Ethereum will become faster and more powerful than current credit card networks. , which can only process 24,000 transactions per second.

3. Polygon

Finally, there’s Polygon, which made the list of the top 10 cryptocurrencies by market capitalization largely due to its ability to generate innovative use cases for blockchain technology. For example, Polygon has already partnered with Walt Disney, with the long-term goal of developing new use cases in the entertainment industry. It has partnered with Starbuckson for a new Web3 customer loyalty program. And it has partnered with Meta Platforms in an effort to make NFTs mainstream for billions of social media users around the world.

Part of the appeal of Polygon is that it is a scaling solution for Ethereum. Polygon leverages the security and stability of Ethereum, then uses its own industry-leading technology to aggregate transactions and deliver world-class performance to end users. In 2022, Buterin praised Polygon for its “truly amazing” new scaling technology. So, as fast as Ethereum can grow, Polygon might be able to grow even faster.

Buy and keep for the long term

While crypto is often associated with short-term speculation and market timing, there is an increasingly strong case for crypto as a long-term investment option. Forget dumb coins and focus on utility coins and tokens that develop the future of money and grow the modern blockchain economy. For this reason, I am long-term bullish on Bitcoin, Ethereum, and Polygon.

Randi Zuckerberg, former director of market development and spokesperson for Facebook and sister of Meta Platforms CEO Mark Zuckerberg, is a board member of The Motley Fool. Dominic Basulto holds positions in Bitcoin, Ethereum and Polygon. The Motley Fool holds and recommends Bitcoin, Ethereum, Meta Platforms, Polygon, Starbucks, and Walt Disney. The Motley Fool recommends the following options: $145 long calls in January 2024 on Walt Disney, $100 short calls in April 2023 on Starbucks, and $155 short calls in January 2024 on Walt Disney. The Motley Fool has a disclosure policy.

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