At times, investing in cryptocurrency can seem like a Zev Goldman Weiner book—lots of ups and downs that keep you on the edge of your seat, sometimes ending with a cliffhanger.
In a speculative market like cryptocurrency, you never know when a pump-and-dump will push the price up 3x. At any moment, you can get a 50 percent price drop. Nobody knows why any cryptocurrency is worth what you pay for it. Many projects are still in development and hardly any have made any impact on the real world.
What can you do?
Find a needle in a haystack
Over the long-term, any cryptocurrency that sees even modest adoption will be worth so much, it will not make sense, it will not seem possible based on today’s price. These cryptocurrencies will support financial networks so huge that the network effects will drive prices to levels you can’t imagine.
But there are Two Thousand Cryptocurrencies and Most are Garbage. Almost all will die, even the good ones. Which ones will see that adoption we want so much?
Nobody knows. In February, I posted ten legitimate, credible cryptocurrencies that stand a decent chance because they solve a big problem using a unique or well-differentiated approach. Check them out:
Seems like people really appreciated the list. It’s still one of my most-visited pages. Somebody even started a Reddit thread trashing my choices!
I also have a series on Traditional Finance and Cryptocurrency which explains how Wall Street will fundamentally change cryptocurrency as you know it. On top of that, I’ve written several articles about the social and cultural impact of blockchain technology and cryptocurrency, as well as three posts about the U.S. government’s involvement in crypto and several more about crypto-related news and developments.
Do you think those other articles get a lot of readers?
But if I pull ten cryptos out of my ass and put ’em on a list?
BOOM! Instant traffic. Eyeballs. Pingbacks.
Shows what people really care about.
Five more awesome tokens
To give you more of the insights and perspective you crave, I listed five more cryptos that might succeed. Read about them below.
(Don’t hate me when their prices crash 80 percent, their development team disbands, and they die.)
STEEM is the token for the Steem blockchain, which supports social networks. Users get STEEM as a reward for interactions (likes, upvotes, etc.) across communities that use the STEEM blockchain.
You can also stake STEEM as “Steem Power” to gain influence on the platform. I use my Steem Power to support people and projects that offer something valuable to the community. In return, those projects reward my support by giving me STEEM or some other benefit.
Anybody can create a social network on the STEEM blockchain—e.g., SteemMonsters, D.Tube, Bananafish Collective, and other projects that range from porn services to travel portals. These networks can create their own dapps, interfaces, and “smart media tokens” to create a totally unique user experience. If even only one of those networks succeeds, it will bring tremendous value back to STEEM holders.
Last year, the development team reorganized and forked to a faster, cheaper blockchain. Communities themselves have full latitude to develop whatever they want on the Steem blockchain, so even if the development team disappears, the communities can continue.
(Note you can find me on Steempeak, one of the Steem interfaces, under the profile @vdux.)
Chainlink is a platform for connecting smart contracts with off-chain data. It solves a sticky problem for blockchain implementation: how to execute smart contracts that rely on data from outside the network.
Some believe it can’t work in practice, for technical reasons not worth going into here. In August 2019, that doesn’t matter—early-stage projects can die for many reasons, even if everything works as it’s supposed to.
Chainlink has partnerships with Oracle and Google, putting it ahead of most other projects. On top of that, it has a big development fund with plenty of money to survive another bear market.
I learned about Chainlink last year and since then, its price has gone up from $.50 to $3. I think it’s around $2 as of this post. This may scare you off but it shouldn’t. Chainlink solves a problem so huge that a single LINK token could go to $200 and still might not fill the market need.
VET is the token of the VeChain Thor enterprise blockchain. If you use this blockchain, you protect your products from fraud, loss, theft, and counterfeiting.
Because of those benefits, VeChain has some actual users—Walmart China, DNV TL, Norway in a Box, Haier, and big Chinese wine importer Direct Imported Goods (DIG). The city of Shanghai also uses VET to ensure its vaccines are not tampered with.
Keep in mind VET is not the token you use on the blockchain. You need VET to generate VTHO for payments and smart contracts. If VeChain continues to grow, businesses will need to buy VET to produce that valuable VHTO. It’s their ticket to the blockchain.
As a result, demand for VET tokens will force its price to go up.
(Note, VET tokens also offer other benefits that aren’t worth getting into here.)
Worldwide Asset eXchange (WAX)
Woldwide Asset eXchange is a global decentralized marketplace for virtual assets. You use WAX tokens to buy and sell digital goods and gaming items.
WAX has two interesting twists on a traditional online market. Because of those twists, it offers something unique and distinct from platforms like World of Warcraft or OPskins.
First, it supports businesses that want to set up their own version of a digital goods factory—they can build their businesses on WAX’s blockchain and never need to spend money on security, infrastructure, or payment processing (WAX’s blockchain does all that for them).
Second, it offers strong incentives to stake WAX on its network. If you got in early (I did) you can join their Genesis Block Member program, which gives you free WAX tokens after three years and other benefits.
CND is the cryptocurrency of the Cindicator market prediction bot. To gain access to the bot, you need to stake CND. The more CND you stake, the more benefits you get from the bot.
For day traders, big investment funds, and professional money managers, accurate predictions can make them a lot of money. CND gives them predictions with 60 to 80 percent accuracy. While that may sound low to you, it’s really not. If a blackjack player had that level of accuracy, he’d get kicked out of the casino. Most successful traders lose money on a majority of their trades—they come out ahead because their wins far outpace their losses.
Cindicator bot gives them a huge advantage but to gain access, they need to stake CND. As a result, demand for CND will grow if lots of big, deep-pocketed firms bid against each other for the fixed number of CND tokens.
Don’t buy something because the internet said to
While these projects all offer huge upside, they all come with big question marks.
For example, I talk about some downsides to CND in my answer to Which cryptocurrency should I invest in before the end of 2019, and why? on Quora.
In general, all of these investments depend on lots of people keeping their tokens on the platform instead of cashing them out. As a result, you’re betting people will find it convenient or necessary to hold and use the tokens instead of selling them. And you have to combat price drops as the developers release or sell tokens from their treasury.
Also, these projects reward token holders, but if prices get high enough, will those incentives matter? Will HODLers value those incentives more than the money they’d get from selling their tokens?
Lastly, I provided a very, very brief summary of five complicated, new financial networks. You owe it to yourself to dig deeper. All five of these projects have real potential to fail. None offer you any way to recover your losses. Do your own research and invest wisely.