If you’re as enthusiastic about crypto as we are, you’re most likely searching for the best crypto project to invest in during the bear market, which is a challenging period. Experts recommend choosing Layer 1 digital currencies, which include platforms like Ethereum and Bitcoin, because they were created with scalability in mind and therefore offer the best advantages.
Over the last few years, the market witnessed the launchf of Layer 2 protocols that rely on Layer 1 networks for security and consensus. Due to Layer 2 protocols, Layer 1 scalability issues are even less frequent; therefore, this group of crypto projects is worth turning your attention to them.
We mentioned Layer 1 cryptos, but what are they?
The term Layer 1 is used to define the initial crypto platforms or ecosystems launched. For example, Bitcoin is a Layer 1 blockchain with several Layer 2 projects placed above it to boost its functionality.
Layer 2 crypto projects are developed on top of Layer 1 blockchains (decentralised finance and NFTs). Layer 1 cryptos are the primary security providers for their networks, and it’s wise to invest in them because even if their value might decline during the bear market, they won’t suffer as much as newer projects.
Layer 1 vs. Layer 2 digital currency projects
The average contract platform has three components: scalability, decentralisation, and security. But it’s challenging for a project to feature all three components (and this is what experts call a blockchain trilemma). The majority of contract platforms have two of three parts.
Ethereum and Bitcoin are quite secure and decentralised, but they’re not really scalable. On the other hand, Binance Smart Chain, a Layer 2 platform, is secure and scalable but features some decentralisation obstacles.
Let’s remember that Layer 1 is the first system created within the Blockchain, so it can perform standard functions. Layer 2 was developed to solve cost and speed problems and includes projects like Liquid Network, Bitcoin Lighting Network, Polygon, and Arbitrum.
What Layer 1 Projects should you turn your attention to in the bear market?
If you want to diversify your portfolio and don’t know what Layer 1 cryptocurrencies to buy, here is a list that might help you.
Bitcoin
If you’re reading this article, you probably know how to buy crypto and that Bitcoin is the most popular and widely used digital token. No matter the state of the market, it’s described as one of the best currencies to buy because it has a high value and lengthy history of great performance. It has managed to maintain its status as the most notable form of digital currency over the years and has the highest amount of liquidity.
Therefore, you’ll have no issues buying, trading, and selling Bitcoin. Bitcoin, like all the other volatile assets, experiences volatility, but it’s one of the most stable tokens in the crypto market. Even if it relies on a proof of work consensus, it’s still one of the most profitable Layer 1 cryptocurrencies to add to your portfolio.
Ethereum
Ethereum is defined as the first smart contract platform and has the largest capitalization in the market. Therefore, it can be named one of the best Layer 1 projects to consider investing in. Crypto enthusiasts invest in Ethereum due to several reasons, but one of the most important ones is that it features an Ethereum virtual machine, which is a decentralised computer that interacts with the developers engaged in creating smart contracts.
This compatibility makes the Ethereum blockchain ideal for developing code for cryptocurrencies, which facilitates the implementation of blockchain projects. Bitcoin might be the most popular Layer 1 project, but Ethereum has a stronger ecosystem and is the most decentralised Layer 1 blockchain; hence it’s great to invest in it.
Solana
Solana was the most talked about crypto project in 2021 and will most likely continue to keep the public’s attention as it has a unique consensus mechanism. The blockchain timestamps all transactions, supports several smart contracts, powers a range of DAaps, and is part of a series of high-performance blockchains. Investors have named it one of the best smart contract platforms because it strives to increase its efficiency.
At the moment it can process 65,000 TPS, which is the fastest in DeFi. This feature made the experts in the crypto sector to name it the most hype-filled project last year and continues to make it quite attractive to those looking for a profitable Layer 1 token to add to their portfolios.
Avalanche
Avalanche was developed to solve the scalability problems Ethereum experiences. It uses the C-chain as a proprietary network chain enabling developers to create smart contracts. Its features make the Avalanche project a versatile Layer 1 project to invest in. The C-chain features two additional Blockchain, the Exchange Chain and the Platform Chain. When they perform specialised tasks, the network is both scalable and efficient.
Avalanche intends to become a worldwide asset exchange, so it’s worth having a look at it if you’re looking for Layer 1 cryptos.
Cosmos
Cosmos, with its native token ATOM, is an Ethereum-compatible project. It’s an application-agnostic platform that can engage with Ethereum mainnet and other EVM-compatible ecosystems. Its increased interoperability makes it one of the best Layer 1 projects to invest in, especially because it has a series of characteristics Ethereum lacks.
Because it allows developers to launch Ethereum apps on the cosmos Blockchain without having to rewrite the code, it’s one of the most popular ecosystems among investors and developers. Cosmos intends to deploy interchain security to allow more use cases for its native token ATOM.
Polkadot
Polkadot is an open-source blockchain that allows different blockchains to connect by creating parachains. All chains created on the platform rely on a modular framework, transforming the Blockchain into one of developers’ favourites. Polkadot promotes scalability, upgradeability, and transparent governance, among other characteristics.
As stated earlier, not many Layer 1 cryptocurrencies are scalable, so this feature helps Polkadot stand apart.
Last thoughts
Now that you gained some knowledge on what Layer 1 cryptocurrencies are and which are the most popular, you can decide which one to add to your portfolio.
