When cryptocurrency stocks first made their debut, many didn’t know what to make of this most niche of niche sectors. However, the few that did in those early days recognized that the underlying blockchain platform had the capacity to change the world. Through its decentralized, peer-to-peer transactional network, it was possible to conduct business outside the realm of centralized monetary authorities.
Of course, that doesn’t appeal to government bodies, which want their cut of taxable revenue and transactions. However, once the cat is out of the bag, it’s extraordinarily difficult to stymie or suppress innovation. Eventually, the people will adopt what systems they want. Increasingly, many have found incredible value and convenience with cryptocurrencies.
Therefore, I’m more than confident that the digital reward tokens that the blockchain birthed will easily stand the test of time. However, taking a guess at which specific cryptocurrencies will outlast the others is a difficult task. In that circumstance, I don’t have the kind of confidence that computer programmer John McAfee obviously has.
Back in the summer of 2017, McAfee put “himself” on the line, forecasting an outrageous price target for one of the most popular cryptocurrencies. So bold was he that he declared he would eat a particular part of his body. Known in polite circles as the “Richarding,” McAfee has until Dec. 31, 2020 for the blockchain market to bail him out.
Otherwise, bon appétit, I guess.
For those who were hoping for must-watch TV, the Department of Justice will have a few words to say regarding McAfee’s alleged tax evasion scheme, which in part involved the hiding of cryptocurrencies. So, more than likely, McAfee will not be singing in a higher octave anytime soon.
Nevertheless, I bring up this interesting case because in a backhanded way, it confirms the staying power of cryptocurrencies. I mean, I believe in some of my high-conviction trades, but I would never put myself on the line like McAfee did. As well, the DOJ certainly believes in the value and power of the blockchain markets. Otherwise, it wouldn’t bother chasing this crazy cat.
Still, the challenge remains: which cryptocurrencies will still be around years and decades from today? Here are my picks for which virtual currencies will stand the test of time.
- Bitcoin (BTC)
- Ethereum (ETH)
- Ripple (XRP)
- Bitcoin Cash (BCH)
- Litecoin (LTC)
- Tether (USDT)
- Monero (XMR)
In the technology sphere, if you’re not innovating, you’re dying. Under this context, the king of cryptocurrencies and the one that started the entire blockchain revolution, Bitcoin, is surprisingly public enemy number one.
For one thing, it’s evident that the original founder(s) of Bitcoin didn’t anticipate the sheer volume of demand that the reward token will garner. Instead, it would appear that the virtual currency was brought to life to prove that peer-to-peer decentralized transactions could occur. Unfortunately, the infrastructure is dated relative to present standards. Because so many people use BTC, transactions take forever.
But no matter how unwieldy Bitcoin is, it has something that no other virtual currency can claim: first-to-market advantage. Although the underlying blockchain platform has proven itself, the death of any publicly traded asset is lack of interest. Fortunately, BTC doesn’t suffer from that problem. Indeed, the token is synonymous with cryptocurrencies.
True, other blockchain systems are levered to exciting innovations and applications. However, Bitcoin started it all. For that, I believe it will be relevant so long as the sector is.
Currently ranked as the second highest-valued alternative cryptocurrency or altcoin, Ethereum has obvious speculative benefits. For a while now, Ethereum has been the Robin to Bitcoin’s Batman. While it’s possible that this could change in the future, what I’m generally confident about is that ETH is in this game for the long haul.
That’s because Ethereum isn’t just a cheaper-priced alternative to BTC. Rather, some fundamental differences distinguish ETH from other cryptocurrencies. Primarily, the Ethereum blockchain’s development team focused on addressing the shortcomings of Bitcoin; namely, that it mostly focused on economic transactions.
But the power of the blockchain allowed for a completely trustworthy digital escrow system. Basically, two transactional parties can get together and use the Ethereum blockchain to facilitate smart contract. In this manner, the (human) parties can eliminate the need for an intermediary as the blockchain system would play that role.
It’s not just technobabble either. According to Cointelegraph.com, the Depository Trust and Clearing Corporation and four banks – Bank of America (NYSE:BAC), Citigroup (NYSE:C), Credit Suisse (NYSE:CS) and JPMorgan Chase (NYSE:JPM) — successfully traded credit default swaps on a specially designed blockchain system utilizing smart contracts.
Clearly, the blockchain can do much more than transfer coins from one place to another. And Ethereum is leading that charge, making ETH a confident long-term proposition.
Many fans of cryptocurrencies, if not most of them, will roll their eyes whenever someone mentions Ripple. And eyerolling is the least offensive response you can get. There are quite a few folks in the virtual currency community that do not appreciate the big money interest associated with XRP.
Mainly, this is because unlike so many other cryptocurrencies, individuals cannot mine Ripple tokens. To provide a very brief background, mining involves utilizing specialized computer equipment to solve complex algorithmic problems. Whoever is the first to solve the riddle gets to add transactional blocks of data to the blockchain. In return for their participation in the target blockchain network, they receive a reward token.
Again, this is a very basic description of mining. But the bottom line is that individuals can be their own bankers; hence, the allure of the decentralization element.
However, that’s not what goes on with Ripple. Instead, the supply of the XRP tokens is centrally controlled, which goes against the spirit of the blockchain innovation. In many respects, I understand crypto advocates dislike for XRP.
Nevertheless, the Ripple blockchain also demonstrates the mainstream integration of this technology. Primarily, Ripple enables lightning quick cross-border payments that could replace the current antiquated system. In my opinion, that’s a plus no matter how you look at it.
Bitcoin Cash (BCH)
As I mentioned above, though the Bitcoin architecture represented a paradigm shift – the Big Bank of transactional technology, if you will – it didn’t address the scale issue. Again, the founder(s) were apparently much more interested in making the system work and did not anticipate that BTC would become a global phenomenon.
To address this, Bitcoin developers proposed making administrative changes to how the blocks of data were stored on the blockchain. But competing solutions quickly turned into a debate between opposing factions. Unable to resolve their differences, Bitcoin Cash was born as an offshoot of the original Bitcoin blockchain. This process is known as a hardfork.
As with the mining concept, I’m only providing a very basic explanation. To this day, hardforks are a tough concept to understand because no comparable example exists on Wall Street. For instance, hardforks aren’t dividends as the latter represents distribution of corporate profits to shareholders. And because it’s so perplexing, you might think that Bitcoin Cash won’t last.
Indeed, when the hardfork occurred, many were skeptical about the viability of BCH. So far, Bitcoin Cash has stood the test of time and it may continue to be relevant.
Mostly, BCH earns its keep by facilitating quick peer-to-peer transactions, something that is beyond Bitcoin at this point. As well, Bitcoin Cash enjoys some of the brand appeal of the original virtual currency, making it a surprisingly robust token.
Years ago, Litecoin was the only altcoin. By default, LTC assumed the number two slot and enjoyed the myriad marketing benefits of Bitcoin to entrenched association. But Litecoin didn’t exist just for existence sake. Instead, this blockchain platform was developed to address the scalability challenge of BTC. In this manner, LTC was incredibly forward-looking.
Admittedly, that hasn’t been Litecoin’s valuation as of late. With alternative blockchains like Ethereum muscling their way into the arena with innovations that extend beyond peer-to-peer payments, LTC lost much of its luster. Nevertheless, long-term investors shouldn’t lose sight of the fact that, as of this writing, Litecoin ranks tenth in terms of market capitalization.
Frankly, it has outlasted many other altcoins that were previously in the top 10 but are now far below their peak valuations. In my view, that’s got to count for something.
In addition, LTC may enjoy a psychological effect that could help it foster the growing need for micropayments. Thanks to Litecoin’s reasonable price point, it’s more convenient for everyday transactions. Further, its original focus on scalability should make it relevant for second-layer solutions.
Easily one of the riskiest cryptocurrencies you can own, Tether is absolutely something you should not be exposed to unless you know exactly what you’re doing. I mean it. Despite its high market cap – currently ranked as the third-most valuable blockchain token – USDT is something that you don’t want to mess with.
Which is funny because USDT is known as a stablecoin, or stable-value cryptocurrency. In this case, USDT mirrors the price of the U.S. dollar, and the coins are issued by a Hong Kong-based company called Tether. On the surface, that doesn’t sound too awful because virtual currencies are notoriously volatile. The many double-digit swings make them unreliable as a store of value.
However, USDT, because it’s tethered to the greenback, eliminates such volatility concerns. Still, Tether the company has never faced an audit and still hasn’t to my understanding. Therefore, it’s unknown whether the organization has the dollar reserves it claims it has.
I like what others have to say, that USDT is a “confidence game.” If confidence is lost, Tether becomes a hitcoin with an “s” in front.
But the concept of stablecoins is an intriguing one. And so far, no other stablecoin has managed to garner the volume and engagement that USDT has. Therefore, it’s probably going to be around for a while, but it’s still crazy risky.
For most folks, cryptocurrencies represent a convenient, exciting alternative to boring old stocks. As I mentioned years ago, anybody with internet access can trade cryptos 24/7. Simply put, you don’t have that kind of access with traditional investment vehicles.
But as with any technology, a dark underbelly forms to take advantage of the innovation for nefarious purposes. In the world of cryptocurrencies, this underbelly is Monero.
On the surface, you wouldn’t think anything of it. Like other cryptocurrencies, XMR offers convenience and confidentiality. But where Monero separates itself from other blockchain tokens is that this system adds multiple layers of privacy; hence, XMR is known as a privacy coin.
While standard cryptocurrencies facilitate private transfers, they often feature public ledgers. Theoretically, then, with enough effort, it’s possible to glean information from the gobbledygook of transactional code.
But with Monero, there are no public ledgers as the entire information infrastructure is kept private. As well, randomization algorithms can make financial investigations a nightmare. Thus, it’s not surprising that the IRS offered a $625,000 reward for anyone who can crack Monero’s code.
As you can imagine, XMR is a perfect vehicle for illicit activities, essentially making it the bad boy among virtual currencies. Unfortunately, there will always be demand for criminality, making Monero possibly the most cynical investment ever.
On the date of publication, Josh Enomoto held a long position in BTC, ETH, XRP, BCH and LTC.
A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare.