By Katharine Wooller, Managing Director, Dacxi UK and Eire
Newcomers to crypto face a bewildering amount of choice, and even a quick google in the name of research can lead a savvy investor into a rabbit warren of conflicting information.
The crypto industry is seriously over-crowded, and at the time of writing, Coinmarketcap details 5705 cryptocurrencies. Alas, not all coins are created equal, and as a maturing industry, it is due a period of serious consolidation. Whilst it is a fact that crypto is not viable if local traditional currencies are fit for purpose, this huge number of cryptos cannot survive in the long term.
It is interesting that today the top 3 coins make up around 70% of the daily traded volume, with the institutional investors showing interest in a short list of coins (Bitcoin, Ethereum and Litecoin). Crypto as an investment strategy is gathering momentum – indeed some of the world’s largest hedge funds and asset managers are finally waking up and taking them seriously.
All crypto fans are on the look-out for maximum return, and keen to identify “the next big thing”. Early adopters see the best growth, indeed those who brought bitcoin, saw a 1318% return in 2017.
Crypto coins are best seen as individual communities. Digital currencies are simply a way of transferring value; hence why you often here crypto referred to as “internet money”. Underpinning any coins long term prospects is the use case (the problem being “solved”), and as a secondary issue the community using it.
‘The Crowd’, co-creates value through creating demand; for many of the immature coins, you can’t monetise it today, as we don’t know what it is yet! This is best demonstrated by the first crypto boom, where more hype than substance propelled more than 50 coins to a market cap of $1bn. At one point during these heady times, Ripple’s co-founder, was richer, on paper, than the founders of Google and Facebook.
Even within crypto circles this is poorly understood. Indeed, there are in reality only a few uses cases: payment currencies, utility tokens, and security tokens. Whilst the industry is potentially worth billions, which coins will triumph is as yet unclear. Unfortunately, most coins are a pure “pump and dump” – there is often no incentive, beyond raising funds for an initial ICO, for a coin issuer to ensure the long-term health of their coin.
Community coins, however, retain an ongoing interest in the utility of the coin, as it underpins an ecosystem.
Uniquely in crypto, Dacxi has created a coin with seven separate use cases, to create an internal economy, used in a global network of national crowd venture platforms. It provides decentralisation, the prime benefit for crypto, and the value remains in the hands of the coin holders and it is designed to benefit the crowd, not the product or platform.
The whole world is on the look-out for the next ecosystem, and funding local businesses from a global crowd provides a potential market of billions in currency. Crowd funding is established, as is crypto: putting the two together will be an explosive combination.