TOP 10 CRYPTO CURRENCIES: AS A LONG TERM INVESTMENT – NUMBER 7-5

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Important Disclaimer MUST READ : This list does not constitute investment advice, it is for illustrative purposes only, you should always do your own research and apply critical thinking considering all the facts when investing. Only risk what your are willing to lose. This informative list is written at one point in time. Facts can change at any given moment that could constitute the assumptions in this list void at any time in the future. Black swan moments can occur and investing in crypto currencies is still a very speculative endeavour.Crypto markets can experience large percentage swings either up or down at any given moment. Investing in any of these crypto currencies could result in singnificant loses or significant gains.

Investing in crypto currencies can mean being your own custodian of funds so it is your responsibility to secure these safely. You can also rely on third party custodians to hold your assets so due diligence and a full understanding of this risk needs to be considered.

Seek professional investment advice where possible and always ask your investment advisor whether he is personally invested in the products he is recommending. Ask your advisor for proof he is personally invested in the products he recommends and seek additional verfication when necessary. Ensure the advisor informs you if his own personal investments change from any moment in the future that differs from what he advised you of.

There is no Long term because “In the long run we are all dead” as said by John Maynard Keynes, but here we are assuming 1-2 years here and we all hope to be live longer than that.

The authour of this material is likely to be invested in any or all of the coins mentioned here but this can change at any given moment as the facts and assumptions change. This reflects a view at one point in time, when publishing was made. Things can change quickly in the crypto world so a good investment one minute can turn out to be a bad one the next. The author accepts no liability whatsoever for any personal investment made by anyone based on any view published here.

Basic Assumptions of this thesis: The internet will continue to exist in its current open form with free access to all which allows anyone to run their own software on their own computer that can freely connect to the internet and communicate with other users. Any change of this current form of free internet could severely damage access to sharing and transferring value of any of cryptographically secured coins. The whole thesis is completely dependent and relies on this free form of internet. Any change to this model on how access is permissioned could seriously harm any crypto coin community and the underlying value of the associated coins.

The coins on this list will also focus on those with more of limited supply as some other coins appear to be more infinetly inflationary, or opaque. Some coins and their associated technology could be great platforms solving real world problems, that could well explode in popularity, but it’s the attached value mechanism we are more interested in. The coin should be designed and established in it’s current code base to be more stable and relatively less inflationary. This allows the underlying functionality and technology of the platform to be the focus. Some great platforms can allow for inflating the attached crypto currency coin during periods of volatility which means the long term value proposition as an investment is inherently more risky. These type of platforms and attached coins will not necessarily be included as a focus in this series of articles.

Of course any investment success also depends on the entry price and exit price and theoretical gains are an illusion until you sell out or cash in. A prudent investment strategy always uses gains to diversify further a portfolio.

Important:

  • Never invest what you can’t afford to lose.
  • The amount you invest should very much depend on how much you will not need for the essential bare necessities of your life.
  • It is possible to take more risks with a few 1,000 dollars than you can with a few million.
  • Always have enough money to pay your expenses and fund your desired level of lifestyle.
  • Don’t take on high interest debt to fund risky illiquid investments unless it makes absolute sense.
  • Leverage can be a great way to increase potential returns but can also more likely lead to ruin and the piling up of more debt.
  • Never forget debt is power and those that you owe will always be able to use that debt to their advantage.
  • Be careful with complex financial products that entail contracts as invariably there will be small print you haven’t read that will mean really big gains can be reduced by the contracting party and they will always try to recoup big losses if things don’t go in your favour.
  • Set clear investment objectives in terms of timeframe and desirable profits or acceptable loses and stick to them.
  • Don’t deviate from your plan or strategy and remove emotion from any trading and investing.
  • Don’t get emotionally attached to an investment and exit if things start going wrong especially if the original fundamentals that convinced you to invest change considerably.

For a full list of the potential upside in certain coins compared to the popularity and network of Bitcoin as a baseline, then please check out the  Cryptindexes.com fundamental index.

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Top 10 Crypto Currencies: As a Long Term Investment

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7. BitShares

Potential Upside: 100’s %

Justification: Great Name and popular scalable platform with a real big world use case.

BitShares is one of the great Crypto Currency platforms that was developed with a very popular and essential real world use case in mind – A Stock Exchange. The disruptive potential of BitShares is still enormous. When Bitcoin’s underlying technology became more widely understood the next disruptive nature of the technology that came to mind was that of a multi asset exchange of value. There is nothing bigger than the global stock exchanges in terms of exchanging value (except of course global currency exchanges). Then when you think how the stock exchanges have seemingly become nothing more than automated algorithmic trading platforms, where those with inside knowledge profit at the expense of all others, then there really needs to be a replacement technology.

BitShares could really become the decentralised stock exchange of choice. It has been established for a reasonable amount of time and its community is still active today, so it has a great chance. The underlying BitShares crypto currency has a maximum supply of 3.7 billion so scarcity is on its side for value appreciation.

BitShares has great scalability potential due to its 3 second block times and already has built up a very large dedicated community that contributes to its relatively large market cap . The potential transactions per second on the network is said to on par with even some of the largest stock exchanges today.

BitShares also has an active paid development community thanks to its self sustaining funding model. This means they have a number of paid developers that can contribute to its ongoing development with adequate rewards set aside for them. BitShares uses a so called delegated proof of stake to secure its network. This attempts to solve the problems of both Bitcoin’s traditional Proof of Work system, and the Proof of Stake system of Peercoin and NXT. This model implements a layer of technological democracy to offset the negative effects of centralization.

Risks / Headwinds:

Bitshares developers have been moving away as of late to start new projects. This is likely because the funds set aside don’t seem to leave enough of the pie leftover to enormously incentivise and motivate developers. Therefore BitShares has possibly become less financially interesting and they have been setting up new projects for themselves to make more money. Charles Hopkinson was one of the original founders and since joined Ethereum (and more recently Ethereum Classic). More recently Dan Larimer founded Steemit and would now appear to be fully focused on this. This means the heart of a more motivated financially rewarded team could come and in and produce an even more effective competitive platform with better incentives, after all this is the nature of open source technology.

Overall, despite its Proof of stake scaling question marks, it has first mover advantage in the stock exchange space that is ripe for disruption. BitShares started with great promise and some explosive price movements but it does seem to have gone a bit stale as of late. There has been some updates but nothing seems to be ground breaking.

Despite it having the first mover advantage for this type of required crypto platform it is ripe for disruption itself by a new more powerful platform that can galvanise the community more.  However it is still the best crypto platform name with a shares type exchange as a disruptor and its dedicated remaining community should keep it competitive.

emercoin main-logo

6. EmerCoin

Potential Upside: 100’s %

Justification: Versatile and flexible Platform with a Russian Founder and business focus. 

EmerCoin is not one of these crypto currencies that everyone has heard of or that jumps out at you but once you get under the hood you start to see this Emerald sparkle. The Soviet links seem to flow through the main team featured on it’s site and this provides our first reason for making EmerCoin part of a mixed multi region portfolio. This Russian focus give it a greater chance to possibly become the number one coin in this vast region. Notable on the team is also some strong characters from finance and technology showing the main team has some experienced people behind it. This is crucial as any coin without a strong team, developers or community mean you have very little potential value in this very competitive space.

The code base takes from some of the best parts of NameCoin and PPCoin, while not inspiring it does shows some basis and proven track record. While NameCoin and PPCoin are still operational they have lost a lot of interest and seem to be chugging along with no real direction. Whereas EmerCoin has a focus and some innovative built in features ready for business today. This means it could solve many of the real world problems that everyone talks about Bitcoin and blockchain solving that never really seem to emerge. EmerCoin has mainly a proof of stake consensus model with a 6% inflation rate. While the coin is infinitely inflationary it will have a predictable gradual inflation rate. It also employs the more tried and tested Proof of Work mining using the same algorithm as Bitcoin ( SHA-256 ). This means that miners of bitcoin can also merge mine with Emercoin and this can significantly improve the security of EmerCoin’s network.

This is all great but the big real future value for EmerCoin is its focus on attracting business users. This is shown by the quite significant announcement on September 27th 2016 that seems to have gone under the radar. Here EmerCoin announced it is being tested by the UN in Moldova reportedly to see how they could use it in managing their car fleet in emergency situations. While this doesn’t seem amazing at first, it’s the fact that the United Nations chose EmerCoin over other platforms that is so significant. This is especially interesting when you consider the United nations now owns the internet domain registration system taking over from ICANN on midnight of 30th September 2016. So if the company who owns the internet starts to test a platform that has a name registration system built in and this is 3 days before you take over the words name registration system, this could be a serious boon for EmerCoin.

Risks / Headwinds:

Just as with all other coins that deploy a Proof of Stake consensus algorythm this is an obvious scaling risk with EmerCoin also. Aside from this, the Russian government hasn’t exactly been supporting of Crypto Currencies and this factor could make it very difficult for a coin still in its infancy to grow significantly in the region. This is obviously a potential roadblock with Bitcoin too, but Bitcoin is a more well established and global network that can hold up to any shocks. Significant Government disruption for a small emerging platform could be a killer. The other major potential downside is the that the big news mentioned could turn to nothing. Perhaps the UN is just testing out blockchain under the radar (that is not bitcoin) to help understand the technology and give some of its team exposure to understanding the new emerging asset class and technology. As with all these other Alt Coins the network effect will be hard to garner and if one or two coins really become king there won’t be too much room for any other real big coins. That said this could be one of those big coins in Russia and that’s where we see significant upside, despite the risks.

Monero Logo

5. Monero

Potential Upside: 1000’s %

Justification: MONERO is a secure, private untraceable crypto coin that is fast becoming the dark web’s choice of currency.

Monero’s value rose significantly in 2016 and as “the trend is your friend” and it still has relativey low market cap there still seems a way to go on this little potential gem. It has a good enough name and has recently released a more friendly Graphical User Interface (GUI). It is easy to start mining with a CPU, although the latest CPUs are advisable, so there are lower barriers to entry for securing the network for rewards. The mining algorithm is very difficult but has the potential to be used by any ordinary individual without having to necessarily invest in expensive mining equipment. This of course has its drawbacks as it’s believed that malware is installed on many computers to mine Monero. The malware secretly uses up spare CPU capacity unbeknown to the infected host to mine for profit. This of course means that the current total network hash rate could be artificially high. This is because many miners may not realise they are not benefiting from their CPU usage. If a crakdown were to occur it could show the ‘real’ size of the network to be much lower. That said the big upside is that if Monero were really to catch fire and a future connected world really does have CPUs everywhere (eg in fridges, bikes, clothing etc etc ) then there would always be an incentive to get a more powerful processor. Therefore when any CPU is not being used for its primary Internet of Things purpose, it could mine Monero in its spare time earning the user Monero while securing the network.

The big attraction with Monero is that its fresher codebase is said to be fully private and if there continues to be a use for it on the dark web then adoption will grow organically. Not many other Alt coins have a real world use other than speculative investment and Monero can further capitalise on its initial success. In the end success breeds success and this little monetary treasure can continue to grow in popularity, usage and therefore price.

Risks / Headwinds:

Monero has been very volatile of late and despite being haiiled as the crypto for the dark web it has potentially fallen into the overhyped category. With the release of ZCash that supposdely offers bleading edge technlogy in terms of transaction anonymity this is indeed a threat to the throne of crypto for Monero. This is especially the case for those that have someting to hide or wish to protect their transactional privacy. Also if you add that a lot of  the hashing power could be bots harvesting infected computers and the algorithm did become prone to ASICS ( or already is) then this again could affect any network effect it currently has. Another headwind is that Monero has been written from scratch with entirely new code so it has not had the kind of stress tests that bitcoin has undergone. This means Monero could still have lurking vulnerabilities currently unknown. If anything is exposed here it could cause mass hysteria and therefore price volatility. If the commuinnity is not strong enough or lacks well funded development teams willing to restore confidence then it coud become far less significant over time. For now it seesm to have its place and is well recognised in the crypto comunity and should certainly form some part of any long term Crypto portfolio.

Published on: Feb 13, 2017

Click below for long term crypto investment numbers 4-1 .

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