We thank Aubrey Hansen for this guest post.
The relative stability that Bitcoin has enjoyed recently is a strong indicator that things are changing. This much is obvious: if 2017 was the summer of ICOs, this year’s was a space filled with hundreds of startups shouting into a void. Here skepticism has run rife and Ethereum notably saw a dramatic price correction, in part driven by startups selling off their ETH holdings in droves due to unsuccessful ICOs.
So, if nearly $13 billion of value was lost Thursday, all is not necessarily lost. Sentiment suffers but the end goal of widespread adoption does not. Crypto communities are increasingly saying that, no we do not want revolutionary concepts but instead show us a working product.
Neither should any of us want an inflated market. By design, ICOs work as a fundraising process and offer little to the retail investor beyond vague hopes of future gains. Cryptocurrencies need a stable value that is linked less to speculation and more to genuine demand. Otherwise, there is no hope of attracting institutional money.
If a bull run is in the offing it could be wise not to get too excited; similarly, crashes should be – if not welcomed – accepted with equanimity as part of a growing process. We are hopefully moving towards a stage where the old school, so Bitcoin, Ethereum, can offer some level of stability while new altcoins are judged on their tech and credibility.
This offers retail investors an opportunity, but no longer should we entertain the fantasy of recouping our money 1,000 times over. A mature market will see much more of ‘pocket change’ investments which, if held in the long run, could prove to turn out as profitable ventures.
The old meme rings true: Be in it for the tech
You are welcome, of course, to dream of flying to the proverbial moon. But investment decisions made upon dreams of a crypto gold rush are as good as gambling. If indeed the ‘days of 1,000 times gains are over’ it is hard to see how this would be a good strategy for retail investors.
Development of blockchain technologies has exploded far beyond the maiden project that is bitcoin. A nascent technology, it now exists in many permutations as development teams around the world work to solve the current challenges blocking progress into the mainstream.
You do not need to be gambling on the big coins as these markets are too vast for retail investors to play in, perhaps with an exception for savvy day traders and long-term hodlers.
Buy alt-coins with pocket change
It is a lot of work to sort through the crypto noise, though. There are platforms out there trying to deliver something different: notably, the issue of scalability with traditional blockchains may require a different approach. Other solutions have been proposed and young projects are proposing an entirely different design in their networks. Here are two examples which both look to have a working product by 2019; these are possibly the types of coins you should put your change into and forget about for two years.
CyberVein (CVT) recently featured in Forbes for their platform which, similarly to IOTA (MIOTA), proposes a Directed Acyclic Graph (DAG) structure. This scales far better than traditional blockchains, they say: several thousands of transactions can complete per second, compared to bitcoin’s cap at seven. There could be some capital getting in at ground level with the Chinese startup; it is certainly worth throwing at least ten dollars into.
FairLayer (FRD) has scant noise around it outside of smaller tech circles, but the kinds of people who will be investing in this project lend it more credibility than most. Its founder is Egor Homakov, a respected programmer who enjoys, if not reverence, certainly high praise from people best placed to make such judgements. Homakov makes bold claims in the project abstract – he believes his network will be infinitely scalable without compromise on security – so it’s well worth a read.
Keep an open, yet discerning mind
The initial era of hype is gone and, as a consequence, it is more important than ever that retail investors scrutinize projects, encourage debate and support projects. Throwing too much weight behind an altcoin may not be a wise move for most, instead, distribute investments across projects which pique interest.
What will help the crypto markets reach a level of serious maturity is less speculation and more functional judgements. If the community were to achieve this, it could bring the legitimacy crypto’s to need to foster widespread adoption.