What is RoI? Best Cryptocurrencies in Terms of RoI in 2021

    What is RoI

    Be it a business, stocks, or real estate, the reason why people invest is the same for all, a better RoI, i.e., Return on Investment. When it comes to cryptos, RoI plays an important role as you have to keep an eye on your RoI to make important decisions regarding your investments.

    Just investing your money isn’t enough, you must have an idea about the return you are earning on your investment so that you can compare it and invest it somewhere else where you can get higher returns.

    First of all, you must have an idea about what RoI is, how it is calculated, and what its importance is. Other than that, this article also talks about the top cryptocurrencies in 2021 that offer great investment opportunities.

    What is RoI?

    Not only in the cryptocurrency world but if you are an investor who invests his or her money in anything, you must have a fair idea of the return you are earning.

    In the crypto world, RoI is a measure of the performance of the cryptocurrency, which indicates the performance of the investment by showing the income you’ll receive from a cryptocurrency or a portfolio consisting of different cryptocurrencies.

    It shows you how much you’ve earned on your initial investment; you can compare it with other investment opportunities and measure the performance against the best in the industry. If your RoI is positive, you are good; if it is negative, you need to spend some time revising your portfolio.

    Importance of RoI in the Crypto World

    RoI is not a word native to just the crypto world. Where there is an investment, there is RoI that helps you to measure your objective with the actual results and shows whether you are going as planned or not.

    Say you are a business person who buys goods at a certain price, incurs some expenditure, and then sells it; you need a measure to calculate whether you are earning a profit on the trade or not. Here comes RoI, which describes how much did you earn on top of your investment.

    And not just business, everyone from a small shop owner to a large businessman needs to calculate RoI for his/her business to determine the expected profit from a project and make decisions based on it.

    It takes account of your initial investment, your expenses, your incomes from the project, etc., and then figures out the profit you made or going to make. Being a businessman, you need to project a positive RoI to investors to raise funds by showing them the potential of the project in terms of its income.

    The RoI shows investors whether they should invest in a project or not; it convinces a businessman to undertake a project and invest his time into it. In the crypto world, you have to keep an eye on whether your portfolio is showing a positive RoI or not. If you track your RoI, you can save yourself from bearing long-term losses.

    How to Calculate RoI?

    If you are not adept with numbers, it’s ok. Calculating RoI is much easier than you think. An example will make it easier for you:

    You have a car that you bought 5 years back for $10,000. You incurred an expense of $2,000 on it, and now, you are willing to sell it for $15,000.

    You don’t need the formula necessary to calculate the ROI in this case. It’s a simple concept. ROI is the income after deducting the initial investment and all the expenses that you incurred from the current value of your investment divided by the total investment. ROI, in this case, can be calculated in the following way:

    ROI = Current Value of Investment ($15,000) - (Initial Investment ($10,000) + Expenses Incurred ($2,000)) / Total Investment ($12,000)
    ROI = ($15,000 - $12,000)/$12000
    ROI = $3,000/$12,000
    ROI = 25%

    So, you are earning a profit of 25% on your investment as it is a positive ROI; you can go for the price.

    Limitations of RoI

    ROI is a great measure if you require it for a short time as in cryptos, but it has its own set of limitations:

    • RoI Sets Aside Time Factor

    As you must have noticed in the example that the car was sold after 5 years but during the RoI calculation, time is not taken into consideration.

    When time is an important factor in an investment, you can’t expect RoI to project a clear and true picture of the investment and income. In every investment decision, time is an important factor that ROI blindsides.

    • A Higher ROI Means Higher Risk

    If you are risk-averse, you should satisfy yourself with the risk-free rate, but if you are willing to take the risk, you can earn a higher return on your investment by undertaking the risk. This is a general principle.

    The higher the ROI, the higher will be the risk associated with it. Cryptos are highly volatile and making decisions based solely on ROI can be fatal sometimes.

    • Valuation of Investments

    The inflation rate affects an investment, the depreciation is charged every year on the assets, but when it comes to ROI, a bare initial investment is taken without taking into account any of these.

    • It Provides a Short-Term Perspective

    ROI only focuses on short-term goals and investments. It lacks the long-term perspective, which may help make good financial decisions.

    • It May Mislead

    It may mislead you into dropping off the stocks, which are growing steadily but have a great future while making you focus on the stocks, which have higher ROI today, but the future is uncertain.

    RoI for Cryptocurrency Stocks

    You must track the RoI of your portfolio, but it should not be the sole indicator of the path ahead, or you may end up losing your investments by making some bad decisions.

    10 Best Cryptocurrency Stocks in Terms of RoI

    Before diving straight into the list of the 10 best cryptos in terms of RoI, you must know that these cryptos are not selected randomly but after taking 3 important points into consideration, which are:

    1. Their Annual ROI report
    2. Their Current Market Cap
    3. Experts Opinion

    So, let’s learn about the most investable stocks of 2021:

    1. Bitcoin (BTC)

    Price – $51,000 approx.
    Market Cap – $949 billion approx.
    ROI – 309%

    The king of the Cryptocurrency world is ruling the market still and is expected to increase at an even higher rate in the future. The first-ever cryptocurrency was born in 2009 by Satoshi Nakamoto and has changed the world of digital currency since then.

    It is a decentralized digital currency that allows peer-to-peer transactions and you don’t require any intermediaries. You don’t need evidence to prove its worth. The currency, which started at $0.30 in 2011, is trading at over $50,000 today.

    You can estimate its growth yourself. In fact, at the end of 2020, it was somewhere around $20,000 and in the 2 months has crossed its highest ever. Experts believe that the prices are only going to rise, with some institutional investors hinting towards the same. If you have money to invest and you are not afraid of risk, you can choose Bitcoin.

    2. Stellar (XLM)

    Price – $0.40 approx.
    Market Cap – $9 billion approx.
    ROI – 189%

    The stock has jumped up to #12 rank on the CoinMarketCap list. Born in 2014, Stellar is supported by the Stellar Development Foundation (SDF).

    It is an open-source, decentralized protocol that aims to make cross-border transactions easier by converting digital currencies into fiat currency so that transactions can occur with ease between any pair of foreign currencies.

    One of the reasons why institutions prefer Stellar is the low-cost transaction fee which is fixed at 0.00001 XLM. Stellar started amazingly in 2021 as its ROI went straight up to the skies. In the first week of January, the Ukrainian government has announced its cooperation with Stellar for developing its digital infrastructure.

    Since then, the stock has surprised investors and experts. Some big names, like IBM, Deloitte, and ICICI Bank in India have also partnered with Stellar indicating the bright future for the investors.

    3. Uniswap (UNI)

    Price- $32.94 approx.
    Market cap– $17 billion approx.
    RoI – 1.71%

    Uniswap is a new player in the crypto world but has gained popularity like none other. Founded by Hayden Adams in November 2018, it is run by open-source software and allows peer-to-peer transactions between cryptocurrency tokens without the need of an intermediary on Ethereum blockchain by using smart contracts.

    After the September 2020 crash, Uniswap has emerged as the strongest player among the decentralized exchanges. As it is a decentralized exchange, the UNI token holders have the right to vote on the prospective changes to be made, and the changes are implemented only after getting an affirmation i.e. achieving consensus.

    Note: With the introduction of its UNI token last September, more investors are investing now in this fast-growing cryptocurrency.

    4. XRP (XRP)

    Price – $0.47 approx.
    Market Cap – $21.5 billion approx.
    ROI – 16%

    Don’t look at the ROI figure alone. This cryptocurrency has great potential in 2021, as per the experts. XRP is the native cryptocurrency of Ripple, developed in 2012 by Ripple Labs Inc.

    The idea of Ripple was to facilitate payments, currency exchange, and settlement in real-time of a large amount of money with a nominal transaction fee with the help of its own currency, XRP. Over 100 banks partnered with Ripple to undertake transactions at a nominal cost.

    To date, several financial institutions choose XRP as its principal mode of payment. In 2020 though, a ripple effect was caused by SEC on Ripple as SEC accused Ripple founders of issuing XRP as unregistered securities. Nonetheless, at present, the crypto presents a great opportunity for investors and is a great investment option in 2021.

    5. Litecoin (LTC)

    Price – $184 approx.
    Market Cap – $12.3 billion
    ROI – 50%

    Litecoin is essentially known as a fork of Bitcoin exchange which was born in 2011. It is an open-source software project and peer-to-peer cryptocurrency, which is also known as “Digital Silver”. Developed by Charlie Lee, there are certain differences between Bitcoin and Litecoin:

    • The block process time for Litecoin is only 2.5 minutes which is 10 minutes for Bitcoin.
    • It works as a payment system as well as performs the functions of a digital currency.
    • It uses a different proof-of-work algorithm which is complex as well as expensive than Bitcoin.

    Pre-COVID, the currency was trading at a mere $42, which fell during the lockdown, and then it recovered, and the year ended at a good $125. Now it is almost $185 and is predicted to grow in 2021 at a greater pace.

    6. Binance Coin (BNB)

    Price – $234 approx.
    Market Cap – $36 billion approx.
    RoI – 22,442.17%

    Binance Coin is an ERC20 token which is operated by the popular Cryptocurrency Exchange Binance, which was founded in 2017 by Changpeng Zhao in China. As it is an ERC20 token, it operates on the Ethereum blockchain. If you use Binance exchange, BNB tokens can help you to avail of great discounts on its services.

    Even with the increased move towards decentralized exchanges, some popular older exchanges have got a hold on the market, and Binance Coin is one of them. The value of the Binance Coin is expected to increase in the future as the company policy is to burn half of the tokens, which will increase the value of the ones in the market. The currency has seen a journey from $39 to its present $234, and greater heights are yet to be achieved.

    7. Cardano (ADA)

    Price – $1.12
    Market cap – $35.9 billion approx.
    RoI – 441%

    Cardano is an ultimate cryptocurrency network and an open-source project, which was established in the year 2017 by Charles Hoskinson. It is a pioneer of technologically advanced crypto networks that use smart contracts, thus handling and tracking transactions are like Bitcoin while payment efficiency is as that of Ethereum.

    ADA is the internal currency of Cardano. What makes it attractive for investors is that it is priced at a low cost right now, but its potential has been exposed. The cryptocurrency took only one-third of Bitcoin’s time to hit a 10 billion market cap. Its RoI in the last year has shown tremendous growth, and experts expect it to grow like this in the near future.

    8. Chainlink (LINK)

    Price – $30.89 approx.
    Market cap – $12.22 billion approx.
    RoI – 428%

    From a mere $1 to $23 in the year 2020 only, Chainlink needs no evidence to prove it is among the best investment options. Due to some initial misunderstanding concerning the cryptocurrency, shortly after its launch in 2017, it created doubt, but as nothing was found worrying, the crypto took off like none other in the crypto world.

    It is different from other blockchains because it operates on multiple blockchains instead of one. In December 2020, Chainlink ranked first on Benjamin Cowen’s list of cryptocurrencies with the highest RoI. At the time of this write-up, the currency’s price is around $31 approx, and its ROI shows that investors should opt for it if they want a good return in the future.

    9. Ethereum (ETH)

    Price – $1742 approx.
    Market Cap – $198 billion approx.
    RoI – 470%

    The name Ethereum is well-known in the crypto world. It stands 2nd on the CoinMarketCap list. Reason? It’s highly investable. The Ethereum Foundation developed Ethereum in 2015. It is an open-source as well as a decentralized platform that is majorly known for smart contracts.

    Actually, Ethereum is a platform, its cryptocurrency is Ether, which is the only crypto that also goes to the miners as a reward of mining. What makes it better than Bitcoin in terms of performance is its high processing speed and adoption on a much wider level. Ether also stands among the most powerful blockchains in the crypto world.

    After 5 years of launch, Ethereum is still growing at a fast pace. The experts have anticipated it to mushroom consistently in the near future as well.

    10. Polkadot (DOT)

    Price – $34.08 approx.
    Market Cap – $31.3 billion approx.
    RoI – 205%

    The currency got a boost up when Binance announced $10 million fund support for projects on Polkadot. In a week, the prices rose to 41%. Experts believe it’s only the beginning.

    Gavin Wood established Polkadot to create an architecture to facilitate transfers of tokens and data on different blockchains. The architecture is aimed to run parachains – i.e. multiple chains that run parallel on blockchains.

    Gavin says that the idea is to create a network for different blockchains to work beside one another, and Polkadot will serve as the bridge between them. The idea is different, and so is its popularity, resulting in a 205% RoI in the past year. Investors can definitely think about this one.

    Wrap Up

    The list of the best cryptocurrencies with high ROI is not limited to this list. Several other cryptos are developing rapidly too, e.g. Dogecoin, Celsius, Nano, Neo, Lisk, Monero, TRON, Dash, Bitcoin Cash, VeChain, EOC, and Tether Zcash.

    So that now you understand the meaning of RoI, you can calculate it for your portfolio and use it for evaluating the performance of your project. So, use your knowledge and invest in the best cryptocurrencies of the year 2021. Wish you luck!