A cryptocurrency renaissance is underway, leading even the least relevant digital currencies to accrue great value. The Dogecoin (CCC:DOGE-USD) revolution took the joke coin from 1 cent to 73 cents almost overnight. The result was hundreds of copycats, some of which also saw huge gains, like Shiba Inu (CCC:SHIB-USD). Meanwhile, the more serious players inflated in a huge way; Bitcoin (CCC:BTC-USD) soared to over $64,000 dollars, and Ethereum (CCC:ETH-USD) reached a high of over $4,600. However, not all coins and tokens are created equal. Investors need to wise up to which cryptos to sell … before it’s too late.
Of course, the gains that the asset class has experienced aren’t sustainable. I hate saying it as much as the next person, but Dogecoin really did not have a reason to rocket as high as it did. As InvestorPlace’s Thomas Yeung puts it, the coin will need major codebase improvements and maybe even a benefactor to fund changes to the blockchain if it wants to sustain gains like it saw earlier in the year. And there are countless other cryptos in the same boat.
So, what cryptos are not worthy of remaining in your portfolio any longer?
It’s the cryptos without inherent utility, a classic example of “survival of the fittest.” Who would buy a product if they’re unconvinced? Or, even worse: Who would buy a product that’s just a cheap imitation of something already in existence?
- Shiba Inu (CCC:SHIB-USD)
- Ethereum Classic (CCC:ETC-USD)
- BitTorrent (CCC:BTT-USD)
- Bitcoin Gold (CCC:BTG-USD)
- Stellar Lumens (CCC:XLM-USD)
- SafeMoon (CCC:SAFEMOON-USD)
- Monero (CCC:XMR-USD)
Cryptos to Sell: Shiba Inu (SHIB-USD)
There’s no denying that meme cryptos are fun. You can throw some dumb tokens in your wallet and send them to your friends for a giggle. However, things are rapidly approaching unfunny levels. These joke currencies are in over their heads, promising to “change the world” without a legitimate plan in place. Shiba Inu is one such token; it promises to deliver a whole world of DeFi popularity, but it can’t outrun its meme status.
SHIB has its fair share of bulls; even InvestorPlace’s David Moadel and Josh Enomoto think investors should be taking a chance on the crypto. However, I think those potential SHIB funds are better spent elsewhere.
Take a deep dive into the Shiba Inu whitepaper. What exactly is the currency’s end goal? It is a part of a very robust — and frankly, impressive — token ecosystem. But there’s nothing to be done with these tokens. You can farm them, you can stake them, you can vote with them. However, there’s no end goal but to gain value.
There’s an inherent problem with the arbitrage model of cryptos. We’ve seen it with SafeMoon and we will see it with SHIB. A token whose only purpose is to go up in price is only driven by investor sentiment and trading volume. Token burning will only take place as long as other users are actually moving tokens. What is there to do whenever interest dives? Prices stagnate or drop. This model isn’t sustainable. The best thing you can do is take whatever gains you have found and get out before people get tired of the dog-themed joke cryptos.
Ethereum Classic (ETC-USD)
Ethereum Classic is a cryptocurrency that, unlike SHIB, does have legitimate functions. With DApps on the Ethereum Classic network, one can use bridges to move crypto to other chains, spend crypto in real-world instances and authenticate transactions with ease and efficiency. So, what is the downfall for Ethereum Classic? It’s all in the name.
Ethereum Classic was born as a result of a network hack in 2016. Many people were unsatisfied with Ethereum’s changes to the blockchain in the aftermath of this hack. As a result, Ethereum Classic forked off of the Ethereum chain and became its own network. Ethereum Classic brands itself as the “original” Ethereum. As such, it remains largely unchanged from how Ethereum operated prior to 2016 and has none of the upgrades that the main chain has implemented since.
The reason Ethereum Classic is not fit for your portfolio is twofold. One is that it has had five whole years to grow at the same pace — or at least a similar pace — as ETH. It hasn’t done that. And while it has laid largely stagnant, ETH has rocketed in value and in market capitalization to become the second-largest cryptocurrency of all time.
Ethereum is the Ethereum network. The writing is on the wall — ETH is now the flagship, and Ethereum Classic has become the “diet” product.
The second problem, which stems from the first, is that its gains are mostly speculative buys from crypto pumpers. The crypto saw most of its gains at the height of the meme-coin madness, when investors were throwing a little bit of money at everything to see what would take off. It sure doesn’t hurt that it has “Ethereum” in the name, allowing it to ride on Ethereum’s popularity.
Cryptos to Sell: BitTorrent (BTT-USD)
If you were downloading a lot of content from the web in the early to mid-2000s, you likely know BitTorrent. The platform is a community in which users upload large files, which are then shared and copied piece by piece among users. The result is a service where larger files can be distributed without bogging down networks.
Well, in 2018, blockchain media network Tron (CCC:TRX-USD) acquired BitTorrent for $140 million and gave it a crypto makeover. Users can now exchange BTT tokens for faster download speeds as a result, and through BitTorrent, they also get access to blockchain product DLive.
DLive is a blockchain content-sharing platform, where creators can monetize content without having to share with the network. The biggest draw to DLive is that it’s a censorship-free content platform. Users can go to the platform to check out anything and everything they want, without falling under the rules and regulations of popular content platforms like Reddit and YouTube. Much of BTT’s use is tied up in staking on the DLive platform; BTT stakers earn 5% on all transactions made on the platform.
However, DLive has been suffering this year as a result of the Jan. 6 insurrection at the U.S. Capitol Building. The platform has become increasingly popular among far-right extremists, disenchanted with social media platforms’ hard stances against extreme ideological content. Using DLive, extremists were able to stream content within the Capitol on Jan. 6.
Accordingly, DLive is instituting a string of guidelines and prohibitions on certain types of content on the platform. InvestorPlace’s Josh Enomoto says it nicely; these guidelines, while noble in their own right, “defeat the purpose of a censorship-free platform.” There’s nothing on DLive that you can’t get already on YouTube anymore. As such, users will simply return to the more robust and convenient option. Less traffic will translate to fewer transactions, which will disincentivize BTT staking, which will make its core function largely obsolete.
Bitcoin Gold (BTG-USD)
Another case of mistaken identity, Bitcoin Gold is the too-similarly named hard fork of Bitcoin from back in 2017. Four years ago, major hard forks felt increasingly common. Decentralized Autonomous Organizations (DAOs) were falling out of vogue, so communities that had split factions just saw one side fork off into its own cryptocurrency.
Bitcoin Gold was spawned as a way to make Bitcoin a more user-friendly experience. The Bitcoin Gold developers promise BTG to be a network for experimentation, allowing users to develop products while working with a protocol similar in structure to Bitcoin’s. The Bitcoin Gold team says it is not vying for the label of “the real Bitcoin,” like Ethereum Classic might be doing with its progenitor. Rather, it emphasizes being a play space.
One of the big issues with Bitcoin Gold is the same naming problem Ethereum Classic has. Whether or not it’s trying to distance itself from Bitcoin, it is profiting on having a similar name. In fact, at the height of the Ethereum and Bitcoin boom this spring, ETC and BTG were trading higher in tandem, suggesting investors were specifically seeking out discount versions of the two crypto giants.
When Ethereum and Bitcoin crashed, these “discount plays” crashed harder. Now, as the mainstream plays begin to build momentum, these cryptos are struggling to get back off the ground. I don’t see these offshoot cryptos growing and building a name for themselves when they continue to align their identities with other, more successful digital currency plays.
Cryptos to Sell: Stellar Lumens (XLM-USD)
Stellar presents a noble case for itself. The blockchain network wants to connect the world and allow users to send money anywhere. Its end goal is a frictionless way for any person, regardless of banking status, to be able to wire their money internationally.
Sound familiar? That’s because Stellar is operating toward a very similar end goal to one of the largest cryptocurrencies in the world. XRP (CCC:XRP-USD), the crypto of Ripple, is six times larger than Stellar, and it also exists to seamlessly support international money transfers. Stellar was actually born from a Ripple employee who left the company.
The difference between the two cryptocurrencies is mostly in their target demographic. Stellar seeks to unify the unbanked, allowing those without access to traditional financial services access to a money-moving service. Ripple works mostly with global banks, allowing them to transfer money among clients at very low cost.
Stellar falls flat when you start to compare it to Ripple and think realistically about the future of crypto. Ripple performs to a high degree, with impressive scalability and low fees, and is inking partnership after partnership with institutional clients around the world. The network has a market cap of over $57 billion to boot. Stellar’s market cap rests at just $9 billion. It doesn’t have partnerships guaranteeing revenue.
Ripple holds all the cards in this corner of the crypto market. It’s only a matter of time before it starts offering services to individuals on top of its institutional clients and drives the final nail into Stellar’s coffin. Stellar can only bide its time and live it up as long as Ripple remains embroiled in its lawsuit with the U.S. Securities and Exchange Commission (SEC).
SafeMoon is representative of an unsavory trend witnessed at the height of altcoin madness. Yes, it is a meme coin in the same sense as Shiba Inu, but that’s not why it has landed on this list. SafeMoon is on this list because it has failed to live up to its promises and it is on its last legs. It’s a story warning investors of falling for grandiosity.
When SafeMoon came along, its developers and its investors used a lot of larger-than-life ways to describe the crypto. “SAFEMOON is not just another crypto,” some said, adding in the occasional, painfully cliche “it’ll change the world!”
The illusions of grandeur bled into the developers’ road map, where they promised to develop all sorts of products — wallets, NFT (non-fungible token) games, an exchange, an office in Africa — most of which have since only been on Twitter. A SafeMoon game has appeared on the SafeMoon website, a wallet is now in its beta stage, and several PhotoShop mock-ups of what the exchange would look like have popped up on Twitter.
SafeMoon is the perfect example of why having a product first is what matters. Investors bought into the token thanks to its promises, and now the token is plummeting. In fact, it’s down nearly 160% from its all-time high. You don’t buy a car based on a pencil drawing of the exterior, do you? No, you take it for a test drive and see if it’s the right product for you. Crypto is the same way.
Cryptos to Sell: Monero (XMR-USD)
Privacy coins are among those most discussed by investors today. With the crypto crackdown occurring in China, and regulations on crypto seeing discussion on Capitol Hill, it seems as though the government will be turning its prying eye toward your crypto holdings. Those who are especially worried about that are buying stakes in privacy coins like Monero.
Monero is one of the oldest privacy coins available. Its whole purpose is to help users keep their transactions completely anonymous. It also aims to be wholly decentralized. Users are able to complete transactions without needing to trust a single other user on the network. This differs greatly from most other cryptos, where trust is required to validate a transaction.
Monero works well; in fact, it might work too well. The cryptocurrency is reportedly one of the most used privacy coins in committing crimes. Its status as “fungible money,” meaning money that can’t be traced back to where it came from, makes it a favored tool for laundering ill-gotten currency. That’s not all, either; the untraceability of its payments make it favorable for those looking to buy illicit pornographic materials, among other contraband.
It’s this status as a criminal’s favorite currency that should steer you clear of Monero. And I’m not giving a soapbox lecture here about moral upstanding, either. Regardless of the morality of what Monero’s being used for, it’s also being studied by police forces and government bodies around the world. People want to crack the code of how Monero works, so they can invalidate its primary function. The Internal Revenue Service (IRS) is seeking out developers who can make Monero-tracing tools in order to catch tax evasion. It’s just a matter of time before somebody figures it out and develops a Monero-proof crypto tracker, making the crypto worthless.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.