A massive bubble? A passing fad? A scam?
Whatever the cynics out there want to call bitcoin, its BTCUSD, insane rally continues to befuddle the haters and enrich the crypto faithful.
Fear of missing out can have a powerful — and dangerous — influence on financial decisions. It’s playing out in a big way right now as many of those who’ve missed out on the digital currency craze kick themselves and frantically search for the next bitcoin — or something even better.
But does that even exist and is it worth the risk to invest?
While he’s still extremely bullish on what lies ahead for bitcoin, George Tung, co-founder of Cryptos R Us and a veteran of investing in cryptocurrencies, says there’s still plenty of upside opportunity in lesser-known coins.
“Will we see another coin with a market cap exceeding bitcoin?” he said. “Yes, I believe that is definitely possible within the next three to five years.”
Hitesh Malviya, the crypto consultant behind ItsBlockchain.com, says that bitcoin is obviously the place to be during bullish explosions like the one we’re seeing right now, but, in the long run, the big gains in cryptos lie elsewhere.
“The alts industry is new and it will take at least a few years to become mainstream,” he said, adding “we can see 10x gains — like bitcoin this year, in many alt-coins.”
But with more than 1,300 alt-coins — basically any digital currency that isn’t bitcoin — to choose from, it’s no easy task uncovering potential winners. Tung uses a four-part screener to determine which alt-coins may be worth a flyer.
1. Study the team behind it. “Where do they come from? Have they been involved with other cryptos before? Are they backed by anyone, and what kind of experience do they bring? The alt-coins that have done the best and have the highest market caps have the most proven teams.”
2. Take a look at the why. “How useful is this? Are they trying to solve a problem that doesn’t need solving? Some alt-coins coming out are simply ridiculous.”
3. Determine where they are in the process. “I look at the road map of the alt-coin and see how far along are they. Do they have a test-net or a beta? Are there new features being released? Are there soft or hard forks coming up?”
4. Assess the valuation. “Since alt-coins get pumped and dumped a lot, I look at the current market evaluation and see if they are priced right. A lot of alt-coins are priced way too high and I tend to stay away from them.”
With that in mind, here’s an overview of seven cryptocurrencies that analysts have said may be worth watching in 2018. Like bitcoin, all cryptocurrencies are subject to extreme volatility and risk -- so if you intend to invest, it’s well worth doing your due diligence and reading up more on each one.
Market cap, as of Dec. 25: $15.11 billion
Performance in 2017, as of Dec. 25: +7,004%
Who created it? Former Google GOOGL, -0.24% employee (and now notable star in the crypto universe) Charlie Lee
The skinny: Litecoin has been described as the silver to bitcoin’s gold.
Created by Lee back in 2011, it’s billed as an alternative to bitcoin. Without getting too wonky, Lee essentially aimed to cut the amount of time required to confirm new transactions and tweak the way bitcoin was being mined to ensure anybody could participate. “My vision is people would use Litecoin every day to buy things. It would just be the payment method of choice,” Lee once said.
Litecoin is also designed to produce more coins -- it has an 84 million coin limit, versus bitcoin’s 21 million. About 54 million coins are currently in circulation, versus bitcoin’s current 16.7 million circulating supply.
Market cap: $5.3 billion
Performance in 2017: +2,697%
Who created it? Much like bitcoin, Monero’s creator is anonymous.
The skinny: The appeal of Monero? Anonymity. With Monero, the details of every transaction, including sender, receiver and size, are recorded on a public ledger, but are obfuscated to reportedly make them untraceable. Use Monero, and, in theory, there’s no way for anyone else to connect the dots between the sender, receiver or size of the transaction.
Sound like an appealing coin to cybercriminals? It is. The hackers behind the global ransomware incident WannaCry, which infected 230,000 computers running Microsoft Windows, demanded payments in Monero.
That said, there are many more cases recorded of hackers demanding bitcoin, and Monero’s backers say the coin’s biggest use cases aren’t illicit. It would appeal, they say, to corporations who want to move money around without competitors knowing, or to anyone who simply doesn’t want their balance and transactions made public, such as someone doing business in a foreign country who doesn’t want to become a target.
Monero recently said 45 musicians, including Lana Del Ray, Sia and Dolly Parton, will be accepting Monero. Many will even offer discounts to those who pay with it.
There are about 15.5 million XMR in circulation, and, unlike bitcoin and Litecoin, Monero doesn’t have a fixed coin supply.
Market cap: $3.92 billion
Performance in 2017: +54,021%
Who created it? Da Hongfei , CEO of Onchain and blockchain evangelist in China, along with co-founder Erik Zhang
The skinny: Tung predicts Neo, dubbed the “Ethereum of China,” will explode if China eases its stance on ICOs and bitcoin. Ethereum is the clear No. 2 behind bitcoin in terms of market cap at $61 billion. So Neo obviously has a long way to go.
Founder Da Hongfei recently went on CNBC to soothe fears about cryptos getting overheated. “I would say that there is a bubble in this industry, but would say it’s OK,” he said. “Every technology that is so disruptive — there’ll definitely be bubbles, like the train or the automobile.” Neo has been around since 2014, when it was called “Antshares.” Yes, it’s been changed to reference the Matrix.
NEO’s circulating supply is currently at 65 million, out of a total of 100 million coins.
Market cap: $10.17 billion
Performance in 2017 (since start of trading in October): +1,528%
Who created it? Blockchain developer Input Output Hong Kong (IOHK)
The skinny: Tung believes that “this next-gen platform has the right team, dedication and money to create a real contender to Ethereum.”
The Cardano blockchain just launched a few months ago and exploded on the scene with massive gains in its coin, called Ada, in November to break into the top 10 cryptos in terms of market cap. At latest check it had slipped down to No. 13.
The project began in 2015 and billed itself as the first blockchain network backed by a “scientific philosophy” and built by leading academics and engineers through peer-reviewed research.
Cardano, while still a relative unknown, is apparently big on private transactions as well as responding to the needs of regulators, making it primed for mass adoption. Its CEO, Charles Hoskinson, says that Cardano tackles issues of “sustainability, interoperability and scalability” so that cryptocurrency can go from a “fun novelty” to something that could be used by billions of people and interface with legacy financial systems. Cardano’s framework is still in its very early stages (what the team refers to as its “bootstrap era”), and the next phase in its road map is set to launch sometime in the second quarter of 2018. That means its framework is still being developed, and it may take time for it to reach the full-fledged smart contract platform its leaders envision.
About 26 billion out of a maximum 45 billion coins are currently in circulation.
Market cap: $40.5 billion
Performance in 2017: +16,988%
Who created it? Web developer Ryan Fugger, businessman Chris Larsen and programmer Jed McCaleb
The skinny: Former bitcoin developers launched software company Ripple in 2012 and its digital currency, XRP, is seen by some industry types as bitcoin’s logical successor.
The New York Times once described Ripple as “a cross between Western Union and a currency exchange, without the hefty fees” because it’s not only a currency, but also a system on which any currency, including bitcoin, can be traded. “Ripple connects banks, payment providers, digital asset exchanges and corporates via RippleNet to provide one frictionless experience to send money globally,” its creators explained.
Ripple has licensed its blockchain technology to over 100 banks. And a new hedge fund recently announced it would be denominated in XRP. Its CEO recently told Fortune: “We’re not anti-bank, we’re not antigovernment, we’re not anti-fiat currency. For a while that took conviction to stay the course in the face of the more libertarian elements of crypto.”
The XRP circulating supply is currently about 38.7 billion out of a maximum supply of 100 billion... which is A LOT more than the rest of the cryptos on this list.
Market cap: $9.7 billion
Performance in 2017 (since start of trading in June): +446%
Who created it? David Sønstebø, Sergey Ivancheglo, Dominik Schiener, and Dr. Serguei Popov, a team of entrepreneurs, mathematicians and developers
The skinny: lota’s big draw is that it doesn’t have any trading fees, miners or blocks. For every transaction you make, your processing power is used to validate two other transactions, making every Iota owner also an Iota “miner.”
Essentially, Iota focuses on becoming the backbone for secure machine-to-machine payments in the Internet of Things economy and is unique in that it is hailed as the first crypto created without the use of a blockchain. Instead, it is based on a distributed ledger architecture called “The Tangle,” an innovation that is credited for allowing Iota to achieve three major crypto milestones: zero-cost transactions, offline transactions, and infinite scalability.
Word of its latest partnership with Microsoft just gave it a big boost and propelled it into the top tier of the most valuable cryptos.
The maximum supply of MIOTA is just under 2.8 billion, and the entire maximum supply is currently in circulation.
Market cap: $49.4 billion
Performance in 2017 (since start of trading in July): +684%
Who created it? Bitcoin Cash was created by a team of people who forked the bitcoin blockchain ledger. It is now controlled by multiple independent teams of developers.
The skinny: Bitcoin Cash is among the newest of the cryptocurrencies, developed in August of 2017 as a hard fork of bitcoin. What’s that? Essentially a new version of bitcoin that’s incompatible with bitcoin.
Bitcoin Cash was created as some users were frustrated by high fees and slow processing times. Because Bitcoin Cash has a greater block size limit, its creators say the cryptocurrency has more capacity to handle transactions with lower fees and faster confirmations. On the other side of that reasoning, though, are the bitcoin loyalists who believe that increasing block sizes endangers the cryptocurrency’s decentralized nature. The philosophical divide between bitcoin and Bitcoin Cash was aptly described by Forbes as “Cypherpunk Vs. Silicon Valley.”
The biggest challenge facing Bitcoin Cash right now is adoption: For it to be valuable, it needs to convince businesses to accept both bitcoin AND the rival payment network. It also needs to convince miners to participate in the transaction-clearing process.
In mid-November, Bitcoin Cash briefly topped Ethereum’s market cap to become the second-most valuable crypto. Since then it’s fallen back into third place. Its circulating supply is currently at 16.8 million, out of a maximum supply of 21 million.