Bitcoin got a big boost in 2017. Here are 5 other cryptocurrencies to watch in 2018. (2024)

But remember: As exciting as it may be to think about investing, the risks here are equally great. As with other highly volatile assets, you might want to think twice about getting involved — unless you're willing to accept losingit all.

Bitcoin cash

You can think ofbitcoin cash as bitcoin'sfaster and younger sibling. Functionally speaking, it works in much the same way. It's simply a form of digitalcash you can use to buy real-world goods and services, such as a cup of coffee. Itwas invented only last year after a number of developers working on regular bitcoin, or "bitcoin core," as some call it, decided they were unhappy with the direction of themain project.

At issue was how quickly and cheaply bitcoin could process transactions. Bitcoin's rising popularity hadstrained the platform's capacity, which meant that over time, if you wanted to buy or sell something on the network, you had to pay ever higher fees to have your transaction cleared. Bitcoin made certain changes in its codeto bring downthose fees and speed things up, but the people who wound up creating bitcoin cashwanted to go much further. That's how bitcoin cash was born.

If bitcoin cashultimately becomesthe stronger, more capable digital currency, it could spell trouble for bitcoin core (and its sky-high price), according to Ryan Selkis, a bitcoin investor and founder of the publication CoinDesk.

“You have to be long [on bitcoin cash] as a hedge,” he wrote in a recent blog post.

Zcash

One of bitcoin's original benefitswas the promise of anonymity. After all, every wallet or accountassociated with bitcoin is identified simply by a jumble of letters and numbers, not a person's real name.But soon, law enforcement and academics began demonstrating that simply byanalyzinga particular bitcoin wallet's public transaction history you could deduce with relative accuracy who the owner could be. It's similar to the way looking atyour cellphone's locationrecords or Web browsing history can give an indication as to who you are.

“The anonymity it offers is kind of brittle, is the way I've described it,” said Jim Harper, the executive vice president of the Competitive Enterprise Institute, a Washington think tank.

Zcash has tried to solve that problem by encrypting not only the wallet information, as bitcoin does, but also by encrypting information about individual transactions, as well — hiding it so that casual passersby can't try to sleuth outwho was paying whom, or even how much.

Monero

Monero is a bit like Zcash but takes the additional step of mixing together the online addresses of senders and recipients with other possible senders and recipients. In theory, this makes it harder forthe truesender or recipient of money in any transaction to be identified; from the outside, you'dknow thatone of a number of people listed in the transaction were involved, but you wouldn't necessarily be able to tell which one. In that respect, monero promises privacy through obscurity.

Monero has made headlines recentlyasa haven for criminal transactions. That's not surprising, given that illicit behavior tends to seek shelter from the watchful eye of law enforcement. But it could also gain traction among those who are simply conscious of their privacy or distrust mainstream institutions.

Ripple

Created in 2012, Ripple is unlike some othercrypto-assets. Instead of being controlled by a network ofcomputers that otherwise have nothing to do with one another, aswith bitcoin, Ripple is managed by a single company based in California that wants to transform how international payments work.

Today, if you wanted to send money to another country, it could take days for the transaction to clear. But Ripple promises settlement in four seconds, and,according to its website,foreign workers living in Japan are already using the platform to send money back home to Thailand.

“Itold people about Ripple when it was under $1 billion that it was a small company solving a big problem,” said Lou Kerner, a venture capitalist at the investment firm Crypto Oracle. “I started getting an avalanche of calls at $40 billion.” Ripple hit a market cap of $40 billion in August 2013.

Ethereum

Ethereum is probably the most well-known crypto-asset after bitcoin. Its currency, which is known as ether, enables users not only to perform monetary transactions with one another but also gives holders access to an entire array of distributed computing power. By spending ether and getting access to this computing power, industry analysts say, users of ethereum could theoretically have an even wider range of applications than bitcoin. Where bitcoin could disrupt traditional financial institutions by wresting the power to clear transactions away from big banks and governments, some say ethereum could do the same for apps and online services.

Experts call this idea a “distributed app,” because the programming behind the app is collaboratively written and executed. Here's a series of other effortsto explain what ethereum is and why it could be important.

The bottom line

There are many more virtual currencies out there that we haven't discussed yet, including Litecoin, NEO and IOTA, just to name a few. Nearly all of them are on the rise, with often subtle differences separating one from another. Any one of them could emerge as one of 2018's breakout stars, too. But some analysts are reminding people of the risks involved in backing these emerging technologies.

“I just don’t know when buying crypto will stop being a good idea. It was a great idea in 2017,”wrote Fred Wilson, a co-founder of the venture capital firm Union Square Ventures, in a blog post.

Investing in crypto-assets may prove disastrous for investors who leap before they look, Kerner said, but it's the technology behind the price swings that really matters.

“Ninetypercent of people have no idea whatthese companies do — and that'sfine,” he said. “Inthe long run, that won't have any impact on howmassively disruptive and wealth-generating it is.”