Coin Suggestions

If you’ve kept reading to this point, congratulations, as you finally have enough information for me to give you my coin recommendations. I give you all the prior information so that you have the tools to research on your own, and know what to look for.

Before reading, I have to restate this again: I am not a financial advisor. This is NOT financial advice. You are taking a financial risk. I am not liable for any losses you may incur while trading.

I plan on doing a deep dive on these in later posts, but this is my short version introduction to each.

Big Coins

Ethereum (ETH)

See Above. I also think that they’re primed for a big expansion in the next few years. Ethereum is currently undergoing a massive upgrade, to something called “Eth 2.0”. This is a massive undertaking where they will switch from being Proof of Work Based, to a Proof of Stake consensus algorithm. It also includes updates such as something called Sharding, which will increase the transactions per second possible on the blockchain. There are also many other community scaling ventures such as Rollups and SNARK’s. You don’t need to know what those words mean, just that they’re new technology meant to increase the capabilities of the network.

Smaller Coins

Monero (XMR)

A token focused on privacy over all else. Cryptocurrencies like Bitcoin and ethereum, are actually pseudo-anonymous. This means that your transactions can be linked back to your real world identity. When you send Bitcoin from an exchange to an address, the exchange keeps records of you sending it somewhere. If certain addresses are public knowledge because you disclose it somewhere, then it’s possible to trace transactions back to its real world identify. Companies and governments are already working on ways of de-anonymizing these transactions. Monero solves this by obscuring all parts of the transaction from outside viewers. In a Monero transaction, the sender, the amount sent, and the recipient are all hidden to any outside observers, and completely anonymous. It is based on Proof of work, similar to Bitcoin, but does include a robust community and several possible solutions to increase efficiency. Market Cap - ~$5.8 Billion.

VeChain (VET)

VeChain is an Asian company combinining QR codes and asset Tracking with Blockchain permanence and transparency. It will help protect consumers against counterfeiters & ensure transparency in shipping. Imagine walking into a store and scanning a QR code. It then scans the blockchain, to get all the information about every step in the journey your product took to get to you, to ensure its authenticity and safety. It has Major Institutional Backers such as Walmart China, PWC, H&M and BMW. It has major consumer use cases and scalability solutions that allow consumers to reap the benefits of blockchain technology without having to use a currency.

Tokens

Chainlink (LINK)

The most popular Ethereum Oracle Program currently in use. I covered Oracles above, but it’s the fastest growing one and an integral part of many decentralized Applications.

Uniswap (UNI)

The Governance token of the Uniswap Protocol. Uniswap is the core of decentralized finance. It allows you to swap Ethereum and thousands of tokens for one another, in a decentralized way, with no middle-man and low fees. Normal exchanges operate on the Order book model, connecting buyers and sellers. Because of the way the blockchain works, this is not a good model for Cryptocurrency. Decentralized exchanges like Uniswap, utilize the liquidity pool model. This is where people provide their tokens as liquidity for exchanges in exchange for fees. Let’s say I provide liquidity for a pool exchanging Ether for Chain Link.

I provide equal amounts of both of them and wait for someone to swap one for another. When making a transaction, a small amount of the transaction’s input value is paid as a fee to the liquidity providers. This is then distributed based on a person’s percentage of pool ownership and paid out when the person withdraws their liquidity. Ownership of this token allows you to vote on things like changing the transaction fees, creating new liquidity pools, etc. There is currently around ~$9 Billion in liquidity locked in Uniswap with about ~$1.2 Billion in daily transaction volumes. Roughly 20% of all ethereum transaction fees being spent daily are on Uniswap, making it an integral part of the ecosystem.

“Eth Killers”

” So I’ve heard a lot of buzz about these so-called Ethereum-Killers like Cardano and Eos, Should I buy them?”

That’s a tough question, with no definitive answer. Nobody really knows if they’re gonna be able to overcome anything ethereum has built. It’s possible that they could, and it’s possible they could go nowhere. The reason that people claim they would be “eth-killers”, is their scalability and low fees.

It is true that at the moment blockchains like Solana and Eos have lower fees, but that comes from the fact that less people are using them. Ethereum has high fees because every developer is using it as the base of their applications and so they’re fighting for block space. While some developers are using Solana or Eos for their applications, it’s nowhere near as many people using ethereum. This means that the desire for block space is much lower, and thus lower fees under an auction model.

It’s a very real possibility that as those platforms grow and more people use them, they will encounter very similar problems to Ethereum in terms of scalability. Another important factor is the Scalability Trilemma, which I’ve described above. The chains that have claims of higher scalability have done so by sacrificing Decentralization. For example, chains like EOS and the Binance Smart Chain use a “delegated proof-of-stake” (DPoS) consensus model where only a few privileged users are able to add blocks to the chain. This increases throughput as those block producers can run more sophisticated hardware to increase processing speed, but requires placing your trust in more centralized actors.

Ethereum chooses a regular Proof-Of-Stake model, that allows anyone to become a block producer. This reduces the speed, but increases decentralization and security, by making it harder for a malicious actor to control the network. Despite as alt-coins have prices and market-caps nowhere near Ethereum, a smart investment strategy involves hedge your bets. This is important as it minimizes your exposure to a single coin, decreasing downside risk, and increasing profit if one of them does take off. However, it does seem unlikely that anything is going to supplant Ethereum anytime soon.

This is a difficult issue to analyze and nobody really knows how this will shake out. This is because, to the average consumer, speed and fees are the most important factors. While decentralization is essential, it is often the factor most cared about by nerds and and techies like myself. If we want cryptocurrency to be a viable medium of exchange, decentralization is the least important factor.