My take on altcoins
As my readers have noticed, I am not a big fan of altcoins. I have a distaste for the concept that enriches quacks and dumpers, I have never seen much long-term viability in them, and I have little time compared to money, and following the pump-and-dumps that all altcoins (as well as Bitcoin!) are prone to, would take far too much time compared to the meager gains achievable in the illiquid markets. I don't even trade Bitcoin except the major swings, and those only with a fraction of my holdings.
It has not gone unnoticed in the altcoin circles that I would be a great marketing asset, but I have declined all offers until now. The reason is that the coins have been bad, obvious pump and dumps, and even though I would have made some gains participating in them, my readers would have likely made a loss, and not only is that an unrighteous way to make money, I don't even need it, since I believe in the long-term success of crypto, and of Bitcoin, and have enough of them to take care of all my needs in the future.
The
classical altcoins do not offer anything relative to Bitcoin, except maybe a different hashing algorithm. An important thing to remember is that there is no long-term market niche for two coins with the same algo. The hashing power of the larger coin is constantly threatening to destroy the smaller one. Even if that does not happen, there are network effects in play that favor the larger coin and suppress the smaller.
The
2.0 coins are in development and offer interesting new features. These coins tend to be fully premined, though. It would be more prudent to call them "shares". I have started many companies so that in the beginning I own all the shares, and I try to raise money and enlarge the ownership by offering them to the public. There is nothing wrong with that, but it is not a way to distribute these wide enough for them to ever function as a currency. It is akin to monetizing your ideas, generating value out of nothing, and I believe these coins are doomed to fail for this reason alone, not to mention that as startups, their failure rate is anyway 70-90%.
A new category that has just surfaced in 2014, are the
privacy-enhanced coins. Although these are new, and much development is needed and is going on, the value proposal is appealing: unlike Bitcoin, which I believe is already well analyzed so that the enemies of privacy can attribute a name to most of the large addresses, these coins can offer true privacy and anonymous holdings and transactions. Not all of them, and not perhaps yet, but the potential is there. They are also seeing some price action.
Please consult the
Cryptocurrency market cap when reading on. Note that I am comparing the prices relative to BTC only, so most of the coins may make gains in dollar terms even though I am bearish on them in BTC terms, once the next BTC bubble comes.
LTC
is the leading scrypt coin. On the one hand, the emergence of scrypt ASICs may provide a support to LTC's stagnating price (like SHA256 ASIC's did to Bitcoin in early 2013), on the other, it may be that they are just used to mine whatever is the most profitable coin to sell, and the proceeds are used to buy BTC. Typically LTC shoots up at the late stage of a BTC bubble. Therefore I am bearish on LTC just now, but it might be a buy when it hits 0.01, in anticipation of a leveraged rally with BTC.
DRK
This coin is centralized to be mined by masternodes. I have also heard that the developer of this coin is misrepresenting the truth concerning premine, and that he holds 2 million coins (out of 4.3M). This is a reason to be very cautious. Also DRK is in no way cheap, and there is not yet much use for it, so it is all marketing and speculation. I would not buy it now, as I did not when it was 10 times cheaper.
NXT
is 100% premined to a few executives in the beginning. It is a startup, and not a currency, and I don't believe it will ever be. Invest accordingly.
DOGE
is one of the 2 coins (other was AUR) where I saw some merit. This was when it had just come, at 35s. Now I believe it is in a terminal decline, since there are no markets for all-around coins except BTC. A further threat is that DOGE's inflation is quickly slowing, making its network very vulnerable. I advice to sell out on this one.
XRP
is pronounced crooked by a few of its developers, who have recently left the company. Even though there never was any reason to buy those, selling them is my advice if you have any.
MSC
100% premine. I have to admit that I don't know much that they are doing, but I have little belief that this coin can beat BTC in value appreciation, and there is a high risk that it will just fail. If you ever need MSC for any purpose, just buy it then.
BC
is designed a 100% premined pump&dump get-rich-quickly coin, which I did not touch when it was introduced to me in the early days of the first pump. Stay out (unless you like to be on the receiving end).
QRK
is also a secretly premined coin, which I believe is already in a terminal decline after the original pump was successful.
XPM
is surprisingly pricey still. Don't buy it.
AUR
Even though I was interested in this before the great pump in March (and would have made up to 100x gains if I had bought), now it is in a "following" mode after crashing back. If I moved to Iceland, I would probably start using it. Not an unconditional "sell" though.
MRO (Monero)Okay, there was a reason why I wrote on alts. Cause I have just made my first altcoin investment ever! Monero has a trait which pretty much all other alts lack: slow and geometrically decreasing issuance. At present, only 5% of MRO is mined, and even after 4 years there will still be 20% left to be mined. There is no premine, and the community consists of several people
Furthermore, it is at least currently a CPU coin, since the hashing algorithm is designed to make it difficult to implement for GPU let alone ASIC. These things make it "fair" so that there is no way to amass large stashes except by working for them in the competitive mining or buying in the open market.
The market for the coin is very active and extremely liquid. There was an
OTC market in the beginning. MRO was listed in Poloniex 5 days ago and the reception has been good. It has been the most traded coin ever since despite having a market cap of only 1-3 M$! Up to 10% of the outstanding MRO changes hands daily in Poloniex, mitigating the extreme volatility that is plaguing many alts with concentrated ownership.
And now comes the main point: The coin has a feature, which is not implementable in Bitcoin - privacy! It is called
CryptoNote, and means that all transactions are mixed in a protocol level. This is imo the most advanced privacy that is currently found in crypto universe, although I am sure that some disagree and let them teach me how I am wrong
The coin is probably circulating quite widely already. New mining is about 30kMRO per day (
BTC180), which is about $100k (!) and the price is rising (despite that). This is not a pump and dump coin, because the inflation takes care that new coins are constantly coming to the market. A word of warning though - the market cap may seem lucratively small, but the total issuance of MRO is 20 times the current, which is a little less than that of BTC. Therefore it is easy to compare the relative valuations by just comparing the prices. At 0.006 BTC currently, MRO is not the cheapest coin around (1:166 of BTC). I would advice to not buy hastily, and not participate in bubbles (if any). Mining is also an option.
This is the first altcoin I bought, and I did it during the time when it had been listed in the exchange. My relative position is less than in BTC though, so if only one remains, I would still do better if it is BTC
ADD: Relative position means: (my holding)/(total issuance).
