As of this writing, Dogecoin, a cryptocurrency created as a spoof of the bitcoin bubble, has a market value of $1.6 billion. The coin's value is unjustified because it lacks a specific use case or attributes.
Nolan Bauerle, a research director at CoinDesk, believes that 90% of today's cryptocurrencies will fail in a market collapse. Those that make it to the end of the game will be the ones who have the most to gain, which will result in higher rewards for those who invested early. If RBC Capital's forecast of a $10 trillion market for cryptocurrencies is correct, those returns are considerable.
It is, however, difficult to distinguish the winners and losers in the cryptocurrency markets. No single currency has achieved mainstream acceptance or even close to it. High transaction costs and slow networks hamper even Bitcoin, the world's most valuable and popular cryptocurrency.
One of the founders of Brooklyn-based blockchain technology advisory and investment business Coinfund Jake Brukhman, argues fundamentals are not reflected in cryptocurrency pricing.
Brukhman argues, "It's essentially a wager that information and awareness will lead to adoption." According to him, cryptocurrency prices reflect optimistic views on decentralized networks.
Cryptocurrency Evaluation
Before investing, Christopher Grey, co-founder of CapLinked, an enterprise software company, recommends focusing on three areas. Find Your Next Cryptocurrency Investment Here.
The founders' and project teams' prior experience is the first consideration. Even though cryptocurrency and blockchain technology is still in their infancy, their origins can be traced back to existing businesses. The smart contract tokens of Ethereum can be used to link pieces inside well-established industries, for example. As a result, knowledge gained via experience is valuable.
If a project team member lacks crypto or blockchain skills, an investor should inquire how their prior work qualifies them for the current project." Grey asks, "Have they at least worked in the same industry?"
Investors should also review the terms of the offering. The quantity raised and the amount that goes to investors are two crucial factors to consider. In this case, traditional stock-based indicators aren't relevant.
Bitcoin marketplaces are a reverse of the usual business model in that entrepreneurs may seek finance before they have a stable customer base or the ability to sell their products.
"If someone wants to revolutionize the entire world of banking and they're only raising $5 million, there would be a tremendous divergence between what they want to do and how much money they are raising," says Grey, who adds that the contrary is also true. In other words, the better a company's chances are, the more focused it may be.
In the end, investors must examine the technology itself. In the absence of any tangible evidence, "if it's simply an idea, a white paper, without anything built, you'll be forced to rely solely on the faith of the team," adds Grey. How does a product produced by a team function?
This conclusion should be viewed with some skepticism. Cryptocurrencies, according to Brukhman, are among the least fascinating uses of blockchain technology. "We don't have a solid understanding of that," he says, referring to how cryptocurrencies might affect the market.
Which Cryptocurrencies Will Survive in the Future?
The top 20 most traded cryptocurrencies are a smart place to begin. Identifying a few notable survivors from this list is not difficult in the event of a cryptocurrency market meltdown. When it comes to digital currency, Bitcoin is the original. In addition to Litecoin and Bitcoin Cash, its blockchain and codebase have also produced offshoots.
Both are vying to be the most commonly used cryptocurrency. Populous, a token based on the Ethereum network is one of many decentralized applications (Dapps) gaining interest.
Others, like Dash, have made similar claims and established themselves in both emerging countries like Zimbabwe and affluent ones like Spain. NEO could be the surprise package. For this purpose, it has teamed up with the Chinese government and is promoting a smart economy. Also, Microsoft China and Japan's Ministry of Economy are among the organizations it has collaborated with in the past.
On the other hand, the lower down the list you go, the more likely investors will need a higher level of risk tolerance. Consider TRON, a cryptocurrency that has lately soared in value despite its founder's apparent lack of product knowledge.
When it comes down to it, Request Network purports to represent the future of commerce, but it's just an online money-transfers-aggregation service that just shifted its focus. Cryptocurrency's white paper describes various applications for its coin, including the Internet of Things, online payments, and government regulations. However, the startup lacks experience or collaborations in these areas.
