How can I win $ 1 million

3 cryptocurrencies that turned $ 10,000 into $ 1 million (or more)

Historically, the stock exchange is the greatest wealth generator on this planet. While there were brief periods when commodities or real estate performed better, no other asset could hold a candle to the steady long-term appreciation of stocks.

This change has taken place with the advent of cryptocurrencies. The S&P 500's total return (i.e. including dividends) of just over 10% annually since 1981 has been dwarfed by the average annual return of some of the hottest digital currencies.

If you'd had the foresight and the courage to invest $ 10,000 in each of the following three ultra-popular cryptocurrencies five years ago (as of February 24, 2021), you would be sitting on well over $ 1 million today.

Bitcoin: $ 1.15 million

I won't leave you in the dark: Bitcoin, the world's largest cryptocurrency by market capitalization, is absolutely one of the three. A $ 10,000 investment in Bitcoin five years ago would be worth about $ 1.15 million today.

Bitcoin has benefited from a number of traditional growth drivers and the acquisition of branded companies. As for the old-school growth drivers, optimists continue to emphasize the 21 million token limit as a hedge against the ever-growing money supply in the US and around the world, as well as growing corporate usage.

Bitcoin's surge has been helped lately by increasing adoption from well-known companies. Tesla Motors bought Bitcoin for its balance sheet for $ 1.5 billion, with CEO Elon Musk citing the optimism for Bitcoin on the social media sharing platform Twitter. Payment service provider Mastercard also announced that it will begin supporting select cryptocurrencies later this year, and Bitcoin will undoubtedly be one of them.

But there are still many question marks about the staying power of Bitcoin's recent spike to $ 50,000. First, even if more companies are accepting Bitcoin than ever before, Fundera notes that only about 2,300 of the estimated 7.7 million U.S. companies with at least one employee accept Bitcoin as a form of payment.

In addition, Bitcoin is not even the best alternative. As a payments-focused network, Bitcoin can validate and process payments in an average of 10 minutes. For comparison, Stellar can do the same thing in a few seconds with its Lumen token. Bitcoin has the first-party advantage, but it is unclear whether it has staying power.

Dogecoin $ 1.75 million

Another cryptocurrency with a strong increase in value is Dogecoin (NASDAQ: DOGE-EUR). A $ 10,000 investment five years ago would be worth over $ 1.7 million today.

The fire that has started under Dogecoin in recent weeks has largely to do with retail investors joining forces on social platforms. Both the SatoshiStreetBets board on Reddit and Twitter were perfect tools for small investors to work together and get the Dogecoin up. Even Elon Musk took part in the campaign and cheered the Dogecoin on Twitter.

The worrying thing about this step is that there really is no substance behind it. Bitcoin can be viewed critically, but there are recognizable reasons why it has moved up. With Dogecoin, it seems like the only reason it is up over 1,000% in 2021, simply pushing it by musk and retail investors. Dogecoin is not really any different from other altcoins and has very limited uses. This means that very few merchants are willing to accept it as a means of payment.

If you need even more evidence that Dogecoin should be avoided, then just read up on its origins. It was developed by two engineers in 2013 within a few hours. They thought it would be fun to combine two of the hottest internet topics (cryptocurrency and a Shiba Inu dog meme) into one digital currency.

Suffice it to say that the only people who are laughing now are the ones who managed to sell their Dogecoin to an even higher bidder. This is not an asset that should be in your portfolio.

Ethereum $ 2.52 million

The best performing cryptocurrency of this trio is Ethereum. If you had invested $ 10,000 in Ethereum five years ago and did nothing, you would have over $ 2.5 million in your account today.

Ethereum's growth thesis revolves around its non-financial applications. While Bitcoin, Stellar and a multitude of other digital currencies are designed to log, validate and process payments transparently and immutably, the blockchain underlying Ethereum offers the potential to reshape supply chains, improve energy trading platforms, process real estate or property transfers, or tax regulation and compliance to name just a few possibilities.

What sets Ethereum apart from others is the integration of smart contracts. These are protocols that the parties have agreed on and that help to verify, facilitate and enforce the negotiation of a contract. For example, if all parties have agreed that a certain product should be automatically reordered as soon as 70% of the existing product is sold, a smart contract could execute that order. Since Ethereum isn't just tied to the financial sector, it could offer greater potential than Bitcoin.

However, the acceptance of the blockchain among companies is not yet very widespread. With well-known companies unwilling to make the costly and time-consuming switch to blockchain-based networks, the future of Ethereum depends on the hope that companies will develop more confidence in the technology.

Personally, I'm a much bigger fan of investing in complementary cryptocurrency stocks than the digital currencies themselves. But of the three listed here, I believe Ethereum's ether token has the most compelling backstory and the best outlook.

The post 3 cryptocurrencies where 10,000 US dollars became 1 million (or more) appeared first on The Motley Fool Germany.

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Sean Williams has no position in any of the stocks mentioned. It has been translated so that our German readers can take part in the discussion.

The Motley Fool owns shares of and recommends Mastercard, Tesla, and Twitter. The Motley Fool recommends Bitcoin.

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