The world of cryptocurrency is of course synonymous with the original and largest of them all, Bitcoin (BTC), making up 63% of the global market as of February 2020, but what about the alternatives? Namecoin, launched in 2011, is thought of as the first of its kind to follow Bitcoin and started the trend of being referred to as an ‘Altcoin’.
So called Altcoins – cryptocurrencies made after Bitcoin which attempt to work alongside BTC or carve out their own niche, now number in excess of 5000. With such a prolific amount on the market, it’s understandable that many will simply fall by the wayside. It is telling that, of the cryptocurrencies which featured in the top 10 in 2013, outside of Bitcoin, only Ethereum and XRP still remained there earlier this year.
Cryptocurrency’s fluctuations do give rise to questions about why you should invest in anything other than Bitcoin. There’s no easy answer, but if you consider that as of the end of July 2020 60% of cryptocurrency exchange volume is now from Altcoin, compared to just 37% in February, we’ve already seen a significant shift. With this in mind, let’s take a closer look at what the future of altcoins is going to be and the reasons for putting your hard-earned dollars into them.
First of all, let’s examine some of the factors we need to consider when choosing future Altcoins to invest in:.
Take a look at the team behind the altcoin, what are their motivations? Are they experienced and diverse? Novelty ideas are one thing but the best results are going to come from those who’ve got the knowhow.
Solvency or liquidity level is vitally important as it sets the tone for how easy a currency is to trade without losing its value. A major selling point of these coins are the cost effective and efficient way they can be traded and some of them have this nailed on. Typically, the best performing cryptocurrencies in this sense are also the most popular.
What is the function of the coin? Does it have a value in the real world? These are key questions when you consider that less than half of cryptocurrencies have any utility. Altcoins can offer specific industry benefits in areas such as data transfer, storage and decentralization, making them incredibly useful outside of simply being a currency.
As mentioned, there are a myriad of choices, making cryptocurrency a mining field (pun intended!). The following will provide you with a little inspiration on what the future of Altcoins looks like.
A safe bet for many, Monero is considered to be the most secure cryptocurrency in the world and for good reason – it offers several key layers of protection. This includes Stealth Addresses, which means the sender and recipient’s details are untraceable on the blockchain, and Ring CT which combines the senders ‘signature’ with several other users rendering it impossible to distinguish who the sender is but also the amount. Finally, to top it all, the I2P which prevents hackers tracing the IP address of the sender.
This security level, coupled with it’s very active and passionate contributor base, makes it extremely popular with its customer base as currently no cryptocurrency, Bitcoin included, can come close to its levels of anonymity. The customer base is also invited to chime in on the decision making process so that there is a broad consensus on its future direction so you not only have a stake in its coins, you also have a stake in its direction of travel.
Despite not having the market cap that many of its rivals do, it has continued to climb the ladder, with it currently standing as the 16th largest cryptocurrency. What’s more, it’s already 150 strong research and development team have made some very sensible acquisitions with the use of crowd funding to further underpin an already talented and diverse workforce.
Monero’s stock has continued to rise with significant gains in transactions and active addresses, coupled with the aforementioned exceptional work, make it one of the most exciting prospects to invest in.
This Altcoin has seen some very active trading in it, particularly for the month of July. Investors see this as a hot commodity and where there’s lots of exchange activity, there’s lots of growth potential. What’s more, ETH has overtaken Bitcoin in daily network fees twice this year in what some analysts are predicting as the flippening. This is the term used for a potential Altcoin which may overtake the value of Bitcoin. With a market cap already valued at a whopping $43 billion, it may well become a reality.
A major reason for this buzz around Ethereum has been related to ETH 2.0. This is the term the cryptocurrency is using for its scaling strategy which, according to creator Vitalik Buterin, has ‘basically succeeded’. The scaling upgrade is designed to expand Ethereum’s blockchain, which is seen as notoriously difficult due to basic blockchain designs as every network node is required to process every transaction, with a strategy called sharding, Ethereum have been able to process each transaction without using every node and therefore make it much easier to expand its operation. On Monday 27th July it took its first steps with its transition to 2.0, seen as its most important update to date, which will also crucially see it move from Proof of Work (POW) to Proof of Stake (POS).
In other words it will move from miners solving complex math to validate transactions (POW) to a system that allows entities known as validators to do this with transactions by locking up holdings of the Ethereum cryptocurrency as collateral and without needing computer hardware (POS). This is seen to be a major boon for its scalability as it will decrease the size of each individual transaction and make them far more cost effective.
This is all exciting stuff but the key part of Ethereum is its DeFi (Decentralized Finance) protocols. DeFi refers to finance initiatives not linked to things like government interest rates, such as synthetic stock and decentralized stablecoins giving the user vast interest rates. These DeFi protocols have become popular due to yield farming, where users are offered incentives for depositing their coins within them.
As the vast majority of these protocols are housed in Ethereum, it has had the most to gain from the boom and has seen its coin value increase a whopping 68% in the past month! When you also consider that over $200m in Bitcoins has been tokenized on the Ethereum blockchain, it’s hard to see Ethereum’s value going anywhere but up.
A newcomer to the cryptocurrency scene, it was created by a stalwart of the world, Dan Larimer back in 2018 and is already a major player. Using a POS model vs Ethereum’s current POW function means it can currently validate two transactions per second compared to 15 seconds for one in Ethereum’s case.
As mentioned, Ethereum is rolling out POW but this could take years and for many critics, EoS has looked at the Ethereum model and improved upon it in some respects. EoS is also gaining ground in terms of smart contracts as it doesn’t have the limitation on scalability and transaction costs are practically free. EoS also uses C++ which makes it more accessible for starter blockchain developers to use as they can use any programming language and simply convert it over for web assembly to make a start on it.
Another key feature of EOS is that it is designed for developing, hosting and executing dApps or decentralized applications on its platform. It also helps developers with debugging and deployment to make it as user friendly as possible and also a safe haven for stability in the decentralized blockchain world.
The fact that it is already the eighth largest cryptocurrency in the world after such a short time on the scene is partly a reflection of the early faith that was put into the project but it is also a demonstration of its staying power and its accessibility. What’s more the word on the street is if Amazon were to ever move over to blockchain, EOS would be their cryptocurrency of choice due to its scalability and choice. Now that’s something to think about when considering an investment!
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