Beyond Bitcoin: The Alt-coin Market and Taking Advantage of Emerging Technology
When it comes to crypto-market dominance, Bitcoin is king. With over 40% of available market share wrapped up by BTC, itʼs safe to say that the original blockchain still dictates the ebb and flow of the market. And yet if we look beyond the top spot and cast our gaze toward the rest of the market, we see an ever-increasing field of over 1,000 coins, all with their own aims, utilities, and potential. This is the alt-coin market, a world where investing often means getting on at the ground floor of a project rather than the penthouse.
The Alt-Coin Market is Utility-Based
Nowadays, itʼs easy to forget what function Bitcoin was meant to fulfill. Satoshi Nakamotoʼs first words about Bitcoin were that it was an ‘electronic peer-to-peer cash system.ʼ With fervent speculation and traders constantly falling in and out of love with it, Bitcoinʼs value has more peaks and valleys than the Himalayas, making it seem prohibitively volatile for use in the way Nakamoto originally described.
While the majority of speculators do battle over BTC, many of the smaller projects which make up the alt-coin market are making significant inroads toward niches and use cases that would make Satoshi proud.
Bitcoinʼs usefulness as a medium of exchange is a clear, evident function of not only BTC but currency in general. However, not all coins and the projects they are representative of behave as currency, and their uses are as diverse as their names. Utility tokens refer to a type of coin that exists within a cryptographic environment for the purpose of enabling that environment to function. Think of an arcade game: all it needs is the deposit of your token to be played. Without your token deposit, the game is simply on standby.
Utility tokens
Utility tokens are often required as the gas of a larger system or platform. Ethereum, for instance, is a smart-contract enabled platform which uses a native token, ETH, as the systemʼs “gas.” Developerʼs build applications on top of the Ethereum platform and these applications issue their own Ethereum standard coins (referred to as ERC20 tokens). In order to trigger the smart-contracts required by the applications to function, or to send and receive ETH or other ERC20 tokens, users are required to have an amount of ETH standing by in their wallet to cover the transaction cost. This standby ETH is consumed by the network as gas and fulfills its utility within the Ethereum ecosystem.
Broadly speaking, utility tokens are simply tokens which are meant to have some form of use within their respective systems. A major form of utility in the cryptocurrency world comes from validation. Validation is the term used in cryptography to refer to the act of distributed, decentralized servers each validating a particular event or transaction on the blockchain in order to agree or disagree with the truthfulness of that particular event or transaction. Each of the servers, or nodes, validating the network must put down a stake of that particular networkʼs tokens in order to earn their place as a system validator. In reward for “staking” tokens and securing the network, validators receive a return on their invested, staked tokens. Blockchainʼs which function in this way are known as proof-of-stake systems.
“TeslaCoin is a proof of stake blockchain which aims to disrupt global energy markets by discovering and accelerating energy solutions projects.”
Teslacoin proof of stake
TeslaCoin is a proof of stake blockchain which aims to disrupt global energy markets by discovering and accelerating energy solutions projects. The TeslaCoin platform, TeslaStarter, acts as a marketplace connecting angel investors with ideas, teams, and emerging energy companies that need kickstarting. The platformʼs native token, TES, is a utility token which is used as the TeslaStarter currency and for staking. Users who wish to secure the TeslaCoin blockchain and receive an annual ROI for their work simply load their TES into the TeslaCoin Core Wallet and start staking. In contrast to Bitcoin, forms of passive income such as staking in the TeslaCoin network are common to alt-coins.
ICOʼs Offer Investors an Early Way into Emerging Technologies
Initial coin offerings, or ICOʼs, are the river which feeds the ocean of alt-coins. With every passing day, a new ICO is crowdfunded or introduced for the first time. In 2017 alone, $6 billion was spread over 872 ICO projects. That number is set to double, with over $5 billion spent midway through 2018 across 865 projects. The 2018 metrics are all the more impressive given the year has been spent, so far, in the grips of an epic bear market cycle. One can extrapolate from the data that, despite there being very shaky confidence in the established crypto market and the projects contained therein, investor exuberance toward new and emerging projects hasnʼt subsided.
A major premise for ICO investment is getting into a project on the ground floor. Whereas established alt-coins such as Icon, OmiseGo, Zilliqa, and others have inflated to billion-dollar valuations, ICO projects represent what investors hope is the bottom floor of a long elevator ride to the aforementioned penthouse. Those investors certainly arenʼt deluded: The Zilliqa ICO has provided, to date, a 20,500% return, and even that is tame in comparison to other sensational returns. Neo, formerly Antshares, has provided early investors over 100,000% ROI. Not every ICO is destined for such heights, but the search for the next Neo or Ethereum has ICO investors on a never-ending search for emerging technologies with comparable promise and, hopefully, Bitcoin-like returns.
Scalability is, bar none, the most desired emerging technology solution in blockchain today. What scaling refers to is a blockchain networkʼs ability to validate transactions at increasing speeds in order to accomplish real-time transactions. These speeds are measured in transactions per second. So far in 2018, ICO projects that have focused on delivering “high-tps” platforms have fared best, signaling the desire of investors for the next alt-coin technologies to be fast, efficient, and at least on par in terms of scalability with centralized, traditional systems like Visa.
The ICO marketʼs embrace of scalable blockchains may also be a rebuke of Bitcoin. Nearly a decade on from its inception and BTC confirmation times are still notoriously high. The network itself is only able to handle up to 6 transactions per second, whereas new alt-coin properties such as Quarkchain are setting figures in the thousands. Despite Bitcoinʼs ongoing dominance in terms of market share, one thing is certain: The alt-coin and ICO markets are picking up the slack and are poised to shake up the world as we know it.