4. Summary of other important coins & tokens.

Cardano

Cardano is a proof of stake blockchain platform founded in 2017, directly competing with Ethereum in the world of smart contracts. Cardano’s native currency is Ada, and it currently is the third largest cryptocurrency in terms of market capitalization. Cardano is open-source, and the Ada token is designed to ensure that owners can participate in network reforms through voting rights on new proposals.

Cardano’s founder is Charles Hoskinson, he was one of Ethereum’s eight co-founders, and he left Ethereum because of disagreements on the project’s vision and goals. Cardano’s advantage over Ethereum is its lower costs and faster transactions, but as mentioned earlier, it leads to decreased decentralization. Cardano also makes use of stake pools to validate transactions, while Ethereum 2.0 will not.

Its proof-of-stake protocol, called Ouroboros, distributes network control across stake pools, led by node operators with the infrastructure required to ensure a consistent and reliable connection to the network. For each slot, a stake pool is assigned as the slot leader, and is rewarded for adding a block to the chain. Ada holders may delegate their stake to a specific stake pool, increasing its chance of being selected as the slot leader, and share in the stake pool’s rewards.

As a 3rd generation cryptocurrency, Cardano brands itself as the most environmentally sustainable blockchain, and labels itself as a platform for changemakers, innovators, and visionaries. It’s team of developers, IOHK, is a very capable and professional company of academics, and while Cardano has a tremendously strong team behind it, it’s safe to say that their research and development remains centralized, no matter what Charles Hoskinson says. Today, Cardano is used by agricultural companies to track fresh produce from field to fork, while other products built on the platform allow educational credentials to be stored in a tamper-proof way, and retailers to clamp down on counterfeit goods. It remains to be seen what Cardano can actually do as a blockchain, because they’ve very recently updated the platform to support smart contracts, something that they’ve been promising since the start, in 2017.

Today, Cardano offers the most user-friendly experience on its blockchain. There certainly is a lot of hype around Cardano and its native token Ada, not coming only from its strong fundamentals, but from the price surge of the currency, because Ada is trading above $2 having recently reached $3, and it was trading as low as $0.02 in 2020, this is a crazy move and it got people’s attention, including mine.

Staking Ada is highly recommended, as it poses negligible added risk compared to purely holding coins in a wallet and has an APY of around 5%. There is no minimum amount to stake Ada and it is done on the blockchain, all you have to do is connect your wallet to a stake pool like AdaLite or ITC. Therefore, staking Ada on a centralized exchange like Binance is the wrong thing to do.

Do I think Cardano has the chance to surpass Ethereum on the long term? It has a tiny tiny tiny chance, yes. Do I think it will actually surpass it any time soon? Almost certainly not. To anyone labeling Cardano or any other smart contract platform as the “Ethereum killer”, please, let’s stay realistic, other platforms have a lot to prove, relatively. I really like Cardano, and I believe Ada will do great in 2022, but it’s no Ethereum & Ether.

Binance Coin

Binance is a unique ecosystem of decentralized, blockchain-based networks. The company has grown to be the largest crypto exchange globally, in terms of Volume. Binance’s biggest competitive advantage is its drive for development. While the company started only as a crypto exchange back in 2017, it has spread its services among numerous different spheres. Its mission is to become the infrastructure services provider for the entire blockchain ecosystem.

Binance Coin is a cryptocurrency launched by Binance (I think you already made the link). Initially, Binance coin (BNB) started as a traditional ERC-20 token on the Ethereum blockchain. Later on, the company introduced its own blockchain, and the coins started being issued from the Binance blockchain, secured by the Tendermint byzantine-fault-tolerant (BFT) consensus mechanism, with 21 validators (very centralized).

The Binance blockchain, called Binance Chain, has the same advantage as any Ethereum competitor, lower fees and faster transactions. We should also note that Binance (The company) holds around 50% of BNB’s supply, so it’s not only a very centralized blockchain, it’s a very centralized market. Nevertheless, I like BNB as a coin, as there’s nothing wrong with holding the largest exchange’s digital property.

Note that BNB used to pay most transaction fees on Binance’s centralized exchange, and all transactions on Binance DEX. (Binance’s Decentralized Exchange built on the Binance Chain).

Polkadot

Polkadot is another really interesting cryptocurrency, founded by Gavin Wood, who was also part of the eight Ethereum founders. Prior to developing Ethereum, he was a research scientist at Microsoft. Wood is the one who helped develop Solidity, the programming language for writing smart contracts on Ethereum.

Polkadot, also considered a 3rd gen crypto (launched in 2020), relies on the proof of stake mechanism, and allows users to develop their own blockchain that can connect to other ledgers, forming a parachains system. Polkadot is designed to operate two types of blockchains. A main network, called a relay chain, where transactions are permanent, and user-created networks, called parachains. Parachains can be customized for any number of uses, and feed into the main blockchain, so that parachain transactions benefit from the same security of the main chain. People consider Polkadot a Layer 0 blockchain, because we can build Layer 1 platforms on it. In my opinion, Polkadot is one of the best projects out there, along with Cardano (I don’t call Ethereum a project, it’s more of a monster).

Polkadot uses validator pools to validate transactions, and the staking rewards (on the blockchain, using a wallet) range from 12% to 16.6% per year, which is crazy. However, there are risks to staking, as some Polkadot stake pools have sometimes suffered from bad maintenance or misbehavior by the validators, which is why you always need to pick good validators to stake your DOT. Today, Cardano offers the most user-friendly experience on its blockchain. Nonetheless, I believe Polkadot is a really solid project that could yield very good returns with time.

XRP (Ripple)

XRP was founded by Ripple to be a fast, cheap and scalable alternative to other digital assets and traditional global monetary payment platforms like SWIFT.

The XRP Community, with Ripple (the company) as an active member, maintains RippleNet’s ledger, which processes transactions every 3 to 5 seconds, or whenever independent validator nodes come to a consensus on both the order and validity of XRP transactions, as opposed to proof-of-work mining like Bitcoin. Anyone can be a Ripple validator, and the list currently comprises of Ripple, universities, financial institutions, and others.

XRP is not a smart contract blockchain, it is not a layer 1 platform on which you can build and run applications on. Ripple has recently announced that XRP will upgrade to support DeFi and smart contracts, but I personally doubt that it will be a big success, as other chains have a considerable head start, especially Ethereum.

Ripple is also involved with a legal dispute with the SEC, with the latter filing a complaint saying that Ripple raised funds through the sale of digital assets known as XRP in an unregistered securities offering to investors. There are other complaints too, basically implying that Ripple’s executive made a lot of money illegally.

Apart from logical and obvious reasons, I personally believe that the SEC is also going after Ripple as a warning and a show of power to others who might or have done the same. Additionally, strong regulation is coming very soon to the crypto space; I will discuss this later on.

As for XRP as investments, I would personally not chase it, as it’s really in the hands of Ripple, a centralized company who’s acting for profit, from what I’m seeing. That’s without mentioning the SEC case. Is XRP’s price going to make a huge move in the future, probably, but I don’t invest in projects I don’t believe in, I would rather bet on Ethereum.

Finally, I would like to address the people I’ve heard saying that XRP’s price is going to $200 a coin. Today, XRP is trading at $1 a coin, with a $47 Billion market cap… a price of $200 gives it a market cap of $9.4 Trillion. Remember, Bitcoin’s market cap (today) is around $850B… you can decide for yourself if XRP can make it to $200.

Major Ethereum Tokens

The current top Ethereum tokens by market capitalization are the following:

1. ETH (Ether)

2. USDT (Tether Stablecoin)

3. USDC (Circle Stablecoin)

4. UNI (Uniswap governance token)

5. LINK (Chainlink labs)

6. WBTC (Wrapped Bitcoin)

7. MATIC (Polygon Layer 2)

Chainlink and Polygon are interesting projects on Ethereum.

The Chainlink network allows blockchains to interact with external data feeds, providing critical off-chain info needed by smart contracts to become the norm in digital agreements. The network gives data providers the ability to sell access to data, directly to chainlink, and this data then gets used by smart contracts on other blockchains connected to Chainlink.

The Polygon network is a layer 2 scaling solution that allows the Ethereum users to move around their assets in a faster to cheaper way. Polygon effectively transforms Ethereum into a multi-chain system that becomes fast & cheap as other blockchains like Polkadot and Cardano, while keeping the advantages of Ethereum’s vibrant ecosystem. The downside is, obviously, the compromise of decentralization, because as we said, there’s yet to be a cheap, secure and fully decentralized blockchain.

Hard Forks, Scams and Meme coins.

In Crypto, soft forks are changes or upgrades to protocols, with the currency remaining the same. Hard forks are radical changes to protocols that reject all older transactions, creating a new branch in the blockchain and a new currency.

Bitcoin Cash, Bitcoin SV and Ethereum are the popular hard forks. They came from well documented and popular events that happened in crypto, where a part of the community rejected the decisions taken by the other part of the community, creating a clash. This results in the opposition paving their way and creating a new blockchain. In the Ethereum vs Ethereum Classic controversy, 90% of the Ethereum community went with the new Ethereum, instead of the original which became Ethereum classic.

There’s been a lot of scams since the crypto space exploded, and the most popular one is BitConnect, which I recommend reading about. Long story short it was a ponzi scheme, and the founder (Satish Kumbhani) remains in big trouble. A lot of retail investors lost all of their invested money, and this should be a lesson to all future crypto investors, it’s essential to read extensively about a project before investing in it. In the end, if investor X does extensive research on crypto and still ends up buying a scam coin, it’s safe to say that investor X is an idiot. Nothing wrong with being an idiot, I’m just saying.

Meme coins and tokens are another branch of crypto that I dislike. This is a subjective point of view, but I have good reasons. Dogecoin, Shiba Inu, Dogelon Mars, all of that crap… Why would I put my money on a hype train driven by a meme? Am I betting that the meme will last forever in mainstream culture? A lot of these are pump and dump schemes, where the founder gathers a big amount of money with his friends to pump the price of the coin so that it gains popularity and momentum. This leads to idiots buying the token, driving the price even higher; this gives an opportunity for the founder and his people to sell their tokens; the token crashes and the people who bought it at high prices take the hit. The worst thing would be if the founders hold like 30% of the supply. This is totally legal today (someday it won’t be), and I’m completely against it, but if you want to take advantage of idiots while offering zero added value to society, go ahead. Dogecoin is not a pump and dump scheme, but you should know that someone holds 28% of the Dogecoin total supply. My recommendation is (not financial advice): don't buy Dogecoin, if that guy sells you’re in trouble.

To continue reading, proceed to the next section available in the home page: 5. Investing in Cryptocurrencies.