Disclaimer : This article does not constitute investment advice, legal advice, tax advice or any other nature and should not inspire any investment or decision whatsoever. All data comes from OnChain.fx (05/08/18 at 12H00).
For the past few years, the cryptoasset ecosystem has been growing exponentially. Many projects have emerged and it is not always easy to filter the signal from the noise when it comes to new crypto projects. This effervescence, legitimized by the innovative aspect of these new technologies (blockchain, tangle, ERC, Smart-contracts, etc.), can easily lead to confusion in the minds of neophytes.
In the long-term, we believe that many of these new cryptoassets will not survive, either because their technology is not innovative enough, or because the need they are trying to address is already addressed by more advanced crypto projects.
Today we offer you a quick overview of the cryptoassets that stand out on these conditions:
Created in 2009 by Satoshi Nakamoto, Bitcoin is based on an open-source software protocol. The first transaction between Fiat and Bitcoin dates back to 2010. The aim of the Bitcoin project is to a peer-to-peer cash system where transactions have no need for an external third-party (e.g. a financial institution).
It is an essential store of value in the sector. The bitcoin protocol is the project with the largest developer community, the largest capitalization, and the largest exposure in the media and academic publications. Because of its longevity in the community, it is the technology on which the community has the most perspective. It is therefore impossible and unthinkable not to include Bitcoin in our list of assets to watch.
Litecoin is a copy of Bitcoin, with some simple changes in the source code, such as the use of a different mining protocol, reduced transaction fees, and a faster block creation rate, with a block-time of 2,5 minutes instead of 10 minutes on Bitcoin. Scrypt is the algorithm chosen for mining. Scrypt was supposed to be ASIC-resistant, which would have ensured a more decentralized mining ecosystem, with less concentration for mining farms. Unfortunately, the first Scrypt ASICs appeared in 2014.
Litecoin has been reliable and stable since 2011. The team actively monitors the project and helps it to evolve according to the technical difficulties encountered. The team also adapts Litecoin to the technical evolutions of Bitcoin (Segwit & Lightning Network). Thanks to Litecoin’s technical prowess and the project’s strong support for decentralization, we have decided to add it in our short-list.
Ethereum is an open-source decentralized platform that offers its users the opportunity to create smart-contracts. Smart contracts are applications that run exactly as programmed without any possibility of downtime, censorship, fraud or third-party interference. One can exchange money, property, shares or any other value in a transparent way with a smart contract. The contract is a computer program listing the rules of an agreement between several parties, registered in a blockchain, which directly controls the digital assets.
The Ethereum white paper was published in December 2013 by Vitalik Buterin. In early 2014, the first ethers are offered during a presale. The Ethereum blockchain was launched on July 30, 2015.
Smart-contracts contain a very precise set of execution conditions, to avoid confusion and disputes between parties. These contracts are financed at the opening and at each use, via the cryptocurrency linked to the blockchain Ethereum: ether.
Ethereum is more than just a protocol. Ambitious, permissive and flexible, it opens the door to a whole new ecosystem of its own (ERC, ICO, Smart-Contracts). The team is strong, and many updates are expected. Like Bitcoin, Ethereum is absolutely essential and will remain one of the main assets of the ecosystem to watch.
TrueUSD is the first token created by TrustToken, a company founded in 2017 that offers a platform for the creation of tokens indexed on assets (dollar, gold, etc.). It is a product based on ERC-20 standard, running on the Ethereum blockchain, and whose value is indexed to a fiat currency, in this case, the dollar. The price follows the logic 1 TUSD = 1 USD, whatever USD variations.
This is a very popular hedging tool with investors and traders. Indeed, the market has long expected the emergence of a stablecoin allowing the payment of smart contracts without having to take the risk of fluctuations of the underlying asset.
TrueUSD is the second stablecoin. If we chose to put it forward rather than Tether, which is currently the first stablecoin in terms of capitalization and volume, it’s because TrustToken has had the stronger track record for transparency: they provide regular audits of their USD reserves, unlike Tether. The confidence generated by a stablecoin directly depends on the evaluation of its corresponding reserves.
MakerDAO is also a project allowing the creation and the management of a stablecoin, the DAI, launched at the end of 2017. The value of DAI is guaranteed not by reserves in fiduciary money, but by receiverships of Ethereum and other cryptocurrencies when creating each DAI token inside a smart contract, which can only be released when selling the corresponding DAI.
The MakerDAO project started in 2015. In addition to the DAI token, the project also issued MKR token. MKR fluctuates according to supply and demand and has a role close to a share, since it allows its holders to have an influence on DAI’s monetary stabilization mechanisms, and perceive a “governance fee” when DAI tokens are used (0.5% per year). MKR is a utility token, a governance token, and a recapitalization resource for the Maker system.
The team has a high technical level, as well as very good knowledge of financial mechanisms and economic interests. The project has been in production for one year and has proved resistant to the strong fluctuations encountered on ETH. We decided to put this project forward for several reasons: the use of smart contracts to manage the security of the collateral for each creation of stablecoin seems like an excellent idea and the use of the MKR token for the governance of the internal mechanisms brings a great intrinsic value, very similar to that of a share.
OmiseGO technology aims at decentralizing financial flows and providing widespread access to traditional financial tools. This technology is for all individuals, banked or unbanked. The OMG token (ERC-20) validates transactions in the corresponding blockchain. The OmiseGO protocol uses a PoS (Proof of Stake) algorithm, which consumes less energy than Bitcoin or Ethereum.
The OmiseGO project was launched in July 2017 via an ICO by the founders of the payment company Omise (Thailand – 2013). OmiseGO is followed by many well-known advisors like Vitalik Buterin and Gavin Wood (founders of the Ethereum protocol) and Joseph Poon (founder of the Lightning Network).
They offer a solution for companies wishing to create a wallet running on the OmiseGO protocol. The next stage of development concerns the link between these wallets and the OmiseGO decentralized exchange.
The OmiseGO team is qualified and has been working on payments since 2013. The project is ambitious and has notable advisors in the field. It is also the most advanced project working with the Plasma protocol. Advanced technology, highly reputable advisors, and growing partnerships with companies are the reasons for including OmiseGO in our list.
Decentraland is a decentralized video game project. The company, created in June 2015, launched their token, MANA, in August 2017, which is used to buy and sell plots of a video game map. Currently in 2D, developers are aiming for the integration of 3D and rely on VR to achieve a game like “second life” where goods and services can be exchanged for MANA.
The Golem network provides access to a supercomputer, consisting of the computing power made available by users. Golem is in charge of connecting computing resource suppliers and computing resource seekers. Consumers pay producers through the Golem token. Golem makes it possible to perform a wide variety of tasks using this supercomputer, from the generation of special effects rendering via machine learning to the realization of scientific calculations.
The project began in August 2016 with the publication of Brass, the alpha version of Golem. In November 2016, the company offered a presale at an ICO. The Golem team is recognized and competent, with an ambitious project. They have an implementation that works, active since April 2018, allowing everyone to gain GNT tokens with his computer by leveraging its unused resources. The use of distributed computing power exists since the STI@Home project, Golem adds a particularly interesting remuneration system. At the time where many utilitarian tokens are more or less useless, we think that this one can have an interesting potential.
The Augur marketplace offers its users the opportunity to open prediction markets based on real and dated events (ie: a result of a football match or an election), on which it is possible to bet on the one of the issues via the exchange of shares in Ethers. Following the closing of the event, the owners of REP will be able to confirm the outcome of the event via a Proof of Work mechanism.
The Augur project started in 2014. In April 2015, Augur’s first smart-contract is published on the Ethereum network. The ICO launched in August 2015. In March 2016, the beta was released. Finally, tokens sold during the ICO were distributed in October 2016. The final stage, the mainnet was released on 9th of July of 2018.
Augur is one of Ethereum’s very first ICOs, with a highly respected and technical team following an ambitious project. Augur’s applications are very diverse (especially in the field of insurance). The prediction markets field is expanding, which increases the interest we can have for this token.
Stellar was founded in 2014 by Jeb McCaleb, the founder of Mt-Gox and co-founder of Ripple. The development is supported by a non-profit foundation (Stellar Development Foundation).
Stellar wants to compete or even replace the currently used SWIFT interbank system. Transactions on the Stellar network are almost instantaneous and fees are low. It allows to exchange the native assets XLM, but also all types of assets in the form of IOU. This is where the value proposition for financial institutions rely on. It is important to understand that the user does not have to hold an equivalent amount in XLM to send an IOU on the network.
Stellar distinguishes itself from Ripple by a different technical approach and a less concentrated distribution of the token market. This technology, gives more power to validator nodes and market makers, who can, for example, freeze user accounts. On the other hand, everyone can become a validator, unlike Ripple.
As ambitious as Ripple, Stellar’s project seems more trustworthy, better distributed and more virtuous than its direct competitor. Stellar’s extreme ambition makes it a high risk but high potential reward project, to be considered with caution.
TheIOTA project was founded in 2015, and is a part of the Qubic project born in 2012. Its main architect is Sergey Ivancheglo, former founder of the NXT platform. The ICO and the first beta version are offered the same year. In 2017, the IOTA Foundation is founded.
IOTA technology is based on the concept of DAG (Directed-Acyclic Graph), and does not rely on a Blockchain, but a Tangle instead. This Tangle is not composed of blocks linked together and validated by miners. IOTA is therefore very different from the other technologies presented above. Transactions are validated by users who wish to issue transactions in their turn. The IOTA network aims to be decentralized (no oligarchy of minors), no transaction costs (no minors to pay), and scalable (thanks to the parallel validation of transactions by other users). These features make this network particularly relevant for Micro-transactions and IoT-oriented use.
Despite an interesting vision, the network is far from achieving its objectives. Network security is based on a validator node – Coordinator – as long as the network has not reached a critical size. Qubic’s code is not available and it’s hard to know where the foundation is on it. The project leaders are not afraid to use new and therefore risky tools on production, with the risk of creating vulnerabilities.
IOTA is a particularly ambitious project, which offers a considerable field of action by its innovative foundations (Tangle). Although often criticized for its technical choices, and with reason, the project seems to stand out enough copies of Bitcoin and Ethereum that appear every day to be put forward.
These projects are, in our opinion, the ones that currently stand out for their technical properties, for their innovative aspect, and for the performances they could offer for a portfolio of cryptoassets with a desire for diversification. They correspond to what we think any wise investor should know and follow in order to have a global view of the current market.