3 Altcoins About to Absolutely Demolish Dogecoin

The meme token Dogecoin (CRYPTO: DOGE) may have started as a joke when it launched in late 2013, but today it's the ninth-largest cryptocurrency in the world, with a market cap of more than $24 billion. While Dogecoin and its network continue to lack real-world utility, a fervent community on social media has buoyed the token.

I do not foresee many individual catalysts for Dogecoin, but the token has historically traded with high volatility based on developments in the broader cryptocurrency sector. Recently, however, Dogecoin has not performed well, despite numerous tailwinds in the crypto sector, largely due to President Donald Trump's pro-crypto administration. Dogecoin is down approximately 49% year-to-date.

While Dogecoin may not be going anywhere, I think there are far better options to speculate on. Here are three altcoins poised to surpass Dogecoin.

Image source: Getty Images.

Look for real-world utility

Crypto is a new asset class, so there's still a lot that investors likely do not understand about the sector. When investing in crypto, I would recommend looking for tokens that run on strong technical blockchain networks with real-world utility.

An obvious first choice is Cardano (CRYPTO: ADA), which, as of this writing, is the 10th largest cryptocurrency in the world with a market cap of roughly $18.2 billion. Cardano's network operates on a proof-of-stake (PoS) consensus mechanism, in which investors stake their tokens in exchange for the opportunity to validate transactions and mint new blocks, earning rewards in the process. This consensus protocol provides Cardano with smart contract functionality and enables developers to build decentralized applications on the network.

Cardano also leverages a Layer-2 blockchain solution called Hydra, which can process transactions off the main network, allowing for greater scalability as the network can process more transactions per second (TPS) without excessively increasing network fees. Due to its strong technical network, Cardano is believed to one day have the potential to process tens or even hundreds of thousands of TPS.

The power of digital teamwork

Another altcoin I prefer to Dogecoin is Avalanche (CRYPTO: AVAX), the 21st-largest cryptocurrency by market capitalization. Avalanche also runs on PoS, but also has three different blockchains within its network, each for different functions.

The platform chain is where users can stake tokens to validate transactions, the contract chain operates the network's smart contract functionality, and the exchange chain enables users to create new assets, as well as handle asset exchanges and transfers across different blockchain networks. Investors believe that institutions may find Avalanche's unique architecture useful and try to leverage the technology.

A final altcoin to consider is Polkadot (CRYPTO: DOT), the 25th-largest cryptocurrency. Polkadot runs on a nominated PoS consensus protocol in which validators are selected by Polkadot investors. Polkadot's main draw is interoperability. Other blockchains can transfer assets and data through Polkadot's network, making it appealing in a world where there are now thousands of different cryptocurrencies and numerous networks as well.

Ultimately, while I believe these three tokens operate on networks with significantly higher potential than Dogecoin, they remain quite volatile, which is why I would recommend keeping positions smaller and more speculative for now.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Avalanche. The Motley Fool has a disclosure policy.