The very vast majority of cryptocurrencies are overpriced, “me-too” (not technically differentiated) and have dubious use cases or are too complicated to actually be useful. Here is Cryptonomy’s take on key ones that are worth investing in.
For everyone with the slight interest in cryptocurrency, one of the biggest questions is: What currency is going to be the next Bitcoin?
Friends, casual acquaintances and even journalists often ask me about cryptocurrencies. These conversations tend to circle around three main questions:
Here you can find a useful guide to what I believe are two next biggest things in cryptocurrency and how you can get your hands on them. But first, let’s start with the last question.
When people ask me why they should own cryptocurrencies, my response is always:
Let’s turn this around; why own fiat? Over the centuries, there have been many attempts at fiat based economies and they have always collapsed; evidence suggests it’s not a case of ‘if’ but ‘when’. Our entire global economy is fiat based, so from this point of view, things don’t look too good.
I think it is crucial that all my friends, acquaintances, indeed everyone in my local and global economy has a fall-back position if the currency they use on a daily basis disintegrates, as in these countries.
As with all investments, the key to a good strategy is diversification. Never have all your money in one space whether that’s fiat, property or even crypto.
So if you have decided you want to put a little money into cryptocurrencies, I will next tell you what I am investing in and how to get in on the action. But, before I reveal my list, here is the boring but essential preamble:
Now that we’ve got the boring disclaimers out the way…
Recently there has been a huge spike, likely a bubble, in cryptocurrencies. The very vast majority of cryptocurrencies are overpriced, “me-too” (not technically differentiated) and have dubious use cases or are too complicated to actually be useful.
In this scenario, I believe value investing is the key. So I have focused on cryptocurrencies with the following attributes:
Finally, here are the two that I think are smart investments: Particl and MAIDSAFE.
Still in development, Particl is attempting to build a decentralised eBay. If the developers achieve what they set out to do, it has the chance to completely replace eBay with something that, at a glance, seems to be a technically superior offering.
At its heart, Particl is a blockchain application. It allows its users to post eBay-style listings by paying in the blockchain’s local currency, PART, creating therefore, a demand for PART. Users can bid and pay in any currency the merchant is willing to accept. It is also designed to be self-policing; items that the community find dubious are removed through a voting system. So items such as stolen goods will be removed.
Particl is relatively easy to buy.
Remember: Never leave any funds on an exchange for very long as they are technically on loan to someone else and can go missing, and always backup your wallet’s private keys.
Why invest in MAIDSAFE?
MAIDSAFE was conceived completely independently of Bitcoin. It’s design is so different it doesn’t even use a blockchain. Arguably, it was planned before Satoshi even started thinking about Bitcoin and is, therefore, a totally separate technology.
MAIDSAFE attempts to rebuild the internet in a more decentralised, privacy-conscious and scalable way. Many people take a look at MAIDSAFE and dismiss it as just a file storage protocol. But it’s actually a fundamental protocol that can be used to build any internet-based service. If it works, the services that can be built from it will be things like decentralized versions of Google, Facebook and Skype. If MAIDSAFE is able to achieve what its designers have envisaged, it has the potential to replace a lot, if not most of the internet we use today. The proposition is somewhat like being able to invest in the internet as it was in the mid 80’s.
Arguably, one of the reasons MAIDSAFE is so undervalued at the moment is that it is pretty complicated to get a hold of – as you can see from the many steps in my step by step guide below. This will change when the platform launches and the wallet comes into existence. However, the complexity offers an advantage to the canny investor willing to take the time to acquire it now.
Currently, a few proxy MAIDSAFE tokens are available on the market to trade in a pre-launch capacity. These will later be converted to the real tokens at a 1:1 ratio when MAIDSAFE launches.
These proxy tokens have been provided as a type of “coloured coin” called an Omnicoin, which is essentially a token tracking protocol which exists inside the Bitcoin blockchain. When MAIDSAFE is sent, a modified Bitcoin transaction is created with a special field to encapsulate the MAIDSAFE it contains. So you’ll need a special wallet that can speak to this coloured-coin protocol.
For the first part of the sending process – getting your MAIDSAFE off the exchange – the exchange will automatically handle the coloured-coin formatting. So if you send your MAIDSAFE to a new Bitcoin address from the exchange, the transaction will be correctly formatted.
Later on, when you want to redeem your proxy MAIDSAFE tokens – either when the final system launches or to trade them on the exchange again – you will need to send them from a wallet that can understand this coloured-coin protocol. The current recommended wallet for this is Omnicore. Setting up Omnicore can be quite a time intensive process as it requires you to download the entire Bitcoin blockchain (100+ GB). Luckily, to get MAIDSAFE you don’t need Omnicore, you’ll only need it later when you want to send out your MAIDSAFE again.
Below is the process I have devised to buy and hold MAIDSAFE. However, there are other guides available so take a look online and see what other people are recommending.
At the time of writing you can buy MAIDSAFE from the following exchanges:
I recommend using Omnicore – a client wallet that runs locally on your machine – and not the Omniwallet which is a website. This is because Onmicore can keep your keys private, where as the Omniwallet website potentially risks exposing your keys to an outside party who can then steal your MAIDSAFE. If you want to dig deeper, this link explains the difference between Omnicore and Omniwallet.
There are literally hundreds of cryptocurrencies, so this is by no means a definitive or complete guide. There are probably quite a few cryptocurrencies out there that are underpriced, technically differentiated and actually useful that I have no doubt missed. Sadly I don’t have a crystal ball, but these are two cryptocurrencies I am currently investing in.
I view this as a 5 to 10-year strategy to diversifying my investiments, so it’s not going to be a get rich quick scheme and it’s not something I’d trade in and out of on a weekly or even monthly basis. And remember you may not need to cash out back to fiat when you decide to use your crypto as more and more people are accepting crypto as payment every day.
Disclaimer: at the time of writing I held, MAIDSAFE and Particl.
Johnathan Turrall
CEO
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