After my Ethereum investment grew 45x (as per Sep 21, 2016), I decided to do a similar research on alternative cryptocurrencies.
Since an advice without skin in the game should not be taken seriously, I invest a significant amount of personal money into all the projects listed here.
I think of pouring money into cryptocurrencies as an accessible scheme of a venture investment. U.S. regulations prohibit an investor from purchasing ownership interests in companies that are not publicly listed on a stock exchange — unless he / she has at least $200K of a yearly income. This is very unfortunate and closes those great instruments from the general population.
Cryptocurrency investment, on the other hand, is not currently regulated by SEC — or similar agencies. Keeping this in mind, investing in Ethereum development in middle-2014 has been extremely similar to a venture investment. And, well, it played out — allowing ETH team to grow rapidly.
Any investment may grow by a huge factor. Or, it may become worth nothing. It’s your take whether to follow the advice, or to ignore it. There are many cryptos out there which are just sophisticated ponzi schemes decided to enrich their creators. Similarly, currencies which do not bring any innovations to the table have been excluded from the list.
The simplified list
Ethereum: Had 40x growth rate over the last two years. Allows to build fully-functional applications on blockchain without middlemen. Extremely promising currency, solid team (take a look at what Vitalik Buterin is doing right now). #2 crypto right now — but still 1/10 of the Bitcoin value. So even while being conservative, thinking that any crypto would not grow higher than BTC, it may grow 10x. Still 10x is a small amount — compared to other solutions on the market. So, not extremely yummy for a mid-game. Long-term, I am keeping most of the cash here.
Monero: Anonymous / private Bitcoin. Now, you may think, “What are you talking about, the BTC is anonymous already?” — which is a very unfortunate albeit popular misconception. All BTC transactions can be seen by the public. For example, by giving out your wallet address to someone, the person is able to see all the payments you’ve received and sent. The black market (drug dealers and weapon manufacturers) created a solution for this: basically a software that mixes your coins with other coins. Nevertheless, the software needs to be trusted and may not work correctly. This is pretty bad when your freedom depends on it. Monero has the mixing system built-in — which makes it very delicious for any kind of black market. This is how the currency got its first big growth boost — basically a popular darknet market adopted it. Moreover, the transaction privacy is a necessity for any kind of widely adopted currency, which makes me think it may even overtake BTC. The market capitalization of Monero is currently 1/100 of BTC, which makes it a better investment in my opinion. This is where I put most my of my “new” investment batch in.
Factom: A blockchain-based system that’s optimized to store millions of realtime records with a single hash. Useful for all kinds of business apps. Runs on top of Bitcoin.
Counterparty: A simple description of it may sound like an “Ethereum competitor backed by Bitcoin blockchain”.
Siacoin: Distributed data storage. An alternative to Box, Google Drive. The big corporations would not have any access to your data in this point.
Lisk: A JavaScript-based Ethereum competitor that aims to make the deployment and development easy. Interesting solution for an internet of things device from a simplicity perspective.
Ripple: A protocol which basically allows to reduce financial transaction fees by a huge amount (to a couple cents) — and makes the settlement almost instant. Already backed by some VCs and used inside big banks. The currency itself though is different from others: it’s premined and centralized.
STEEM: A decentralized platform which allows to reward content creators easily.
Zcash: crypto, which aims to solve the same problem Monero does. Some venture capital is pouring in. I am unconvinced — a simple backdoor at this point can compromise the whole system in the future. Nevertheless, my personal thoughts don’t matter here — what the market thinks is much more important; i’d probably pour some cash once the inflation rate would become stable.
The investment process
The most simple way of investing is buying the Bitcoin with real money on any exchange, then selling the BTC for any currency from the list.
I’ve used Poloniex to buy BTC and other currencies; which has all the pairs from the list.
I would advice to not keep any significant amount of assets on an exchange. After buying the currency of your choice, send it to a wallet without an internet connection. Remember to do some googling and research to ensure your storage is solid and secure.
Prepare yourself to not short the investments with yet another market panic. Biggest points in an investment game are awarded for enduring discomfort.
The article has been translated: На русском