July 10, 2018
By
Crypto IQ
Last year was perhaps the most pivotal year for altcoins we’ve seen. New crypto architectures sprang up almost daily proposing solutions for myriad industries. The heat of the moment brought attention to altcoins, which catalyzed a manic uptick in public discourse, technological advancement, and most glaringly, price. But through this manic proliferation of cryptocurrency types, it’s grown increasingly difficult to parse the fundamentals of each coin and determine which ones have value and which ones are more smoke and mirrors.
Security coins, utility coins, platform coins — it can be dizzying to figure out how to invest your money. But if you take a closer look at the top 15 altcoins, more than half are platform coins. And within the top 15, Ethereum’s dominance is clear and far larger than coins like NEO, NEM, Cardano, Stellar, and EOS. Throughout the big bull run late last year and into early January, platform coins rose to the top and pushed their way to the forefront of attention. The one thing that’s clear is that lots of money is moving into these platform coins. Each of these platform coins has a different consensus mechanism, scripting language capability, and developer flexibility. As such, it’s unlikely that platform coins will be a zerosum game.
There are too many options for developers to flock to one platform en-masse. And while Ethereum’s dominance is miles ahead of most platforms, there are many that provide superior alternatives. Taking this into account, we find it necessary to communicate to investors both options. Ethereum is the best platform investment for the risk-averse, but risk-tolerant and riskaggressive investors should consider allocating funds into nascent platform coins to maximize their gains.
Ethereum’s advantages abound in terms of leadership, developer support, and name recognition. There’s no denying this, but it’s also been around the longest. It’s unlikely Ethereum will perform a 13,000 percent price increase faster than one of the small to mid-cap platforms. We may not get another opportunity to see the same degree of magnitude of gains like we did in 2017. For the more risk-tolerant or risk-aggressive investor, investing in smaller platform coins is a great strategy for maximizing gains.
Adding coins like NEO, Stellar, EOS, and NEM to your positions will provide you with an opportunity for larger return multiples. We don’t know if every single one of these platforms will be successful, but we do know that platform coins have a good chance of longevity due to versatility in development. It’s likely that platform use will be fragmented across various industries, nations, and communities.
Ethereum is the de facto platform in the current market, but different countries and industries will not value the Ethereum platform as highly as others. For countries like China, where centralization is held in higher esteem than decentralization, Ethereum might not have the best chance at penetrating the Chinese economy. China has a track record of staying away from foreign technologies, only embracing domestic ones for use in its society (e.g. Alibaba instead of Amazon, WeChat instead of Facebook, Baidu instead of Google etc.). As such, a coin like NEO is better suited to be embraced in the Chinese political landscape.
Taking a expansive approach to platform coin potentials and valuations is necessary in this market. There are too many political, cultural, and technological variables for Ethereum to be the de facto platform long-term. For these reasons, allocating funds into the most promising platforms is a sound investment approach going forward. And if any of these platform coins reach even half the success of Ethereum’s in terms of market share, you’d be looking at a minimum of 10x gains. At this time, it’s Ethereum’s market to lose.
Charlie Shrem is a Bitcoin pioneer, a social economist and digital currency trader. His work in this field is legendary. In 2011, at the dawn of the crypto era, he founded BitInstant, the first and largest Bitcoin company. In 2013, he founded the Bitcoin Foundation and serve as its vice chairman. Since then, Charlie has advised more than a dozen digital currency companies, launched and managed numerous partnerships between crypto and non-crypto companies, and is the go-to guy for some of the world’s wealthiest entrepreneurs. In short, he is the ultimate insider at the epicenter of the crypto universe.
Crypto.IQ is a premier advisory firm providing expert research, education and advice in the world of cryptoassets. The company is unique in that it combines the unparalleled expertise of crypto pioneer Charlie Shrem with the unparalleled market knowledge of three Wall Street experts with more than a century of combined financial industry experience. Together, they have managed and traded more than $1 billion in assets. In a world of “instant experts,” who have little knowledge or trading experience, the Crypto.IQ team offers the proven depth, insight and knowledge to help their clients achieve success.
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