Altcoins like safemoon and dogecoin aren’t going to the moon and you could lose all your money, analysts say

Close-up photo of a woman buying cryptocurrency through a smart phone app that is also showing the growth graph.
Investors are searching for the next bitcoin and ether.

  • Altcoins like safemoon and dogecoin serve little purpose and are highly risky, analysts said.
  • Safemoon bills itself as a decentralized finance token that is set to skyrocket in price.
  • Yet analysts warn it could be a “pump and dump” scheme that hurts late investors.

Investors should be very wary of alternative cryptocurrencies such as safemoon and dogecoin, many of which are unregulated, highly volatile and could cause buyers to lose all their money, analysts have said.

The breakneck rally in various altcoins has drawn in an army of retail investors, who are hunting for the next bitcoin. Dogecoin had rallied 470% in the month to Friday. Safemoon, a token launched in March, had risen 1,320%, boosted by celebrities such as Jake Paul and Lil Yachty.

“Gains are being fueled by frenzied chat across social media with influencers jostling for position to push their favoured coins,” said Susannah Streeter, market analyst at investment company Hargreaves Lansdown.

“But like a slot machine, the coins being pushed into circulation are very much a speculative bet and investors should only dabble if they have money they can afford to lose.”

Both dogecoin and safemoon have cooled since touching all-time highs earlier in April, with trading volumes down sharply. A plan by dogecoin supporters to send the token soaring even higher recently faltered.

Regulators stress that anyone investing in cryptocurrencies is taking a risk and should be prepared to lose all their money, given that given that the digital assets do not have inherent value like stocks or the uses of the dollar or gold.

But analysts say buyers might want to be more cautious with some cryptocurrencies than others.

Whereas bitcoin has drawn in big institutions and its market value is more than $1 trillion, relatively little is known about many altcoins that have been soaring in price.

The creators of safemoon bill it as a decentralized finance token that is destined to rocket in price. A key part of its design is that it penalizes people for selling with a 10% charge, half of which is distributed back to holders and half of which is burned, according to its website.

Edward Moya, senior market analyst at currency platform Oanda, said: “Many view it as a pump-and-dump coin. Safemoon’s initial buzz started off as many anticipated it will have a similar rise like dogecoin. It seems unlikely safemoon will ever make it to the moon.”

Streeter said the token’s set-up “sound[s] fresh alarm bells.” She said “its model appears to be geared towards helping early holders of the currency get rich, as others pile in after them, pushing the price up further.”

She added: “Traders buying in late with expectation of celestial rewards are likely to be sorely disappointed when the price falls back to earth with a bump.”

Safemoon’s creators did not respond to requests for comment.

Bobby Ong, the co-founder of crypto analytics platform CoinGecko, said the problem with most altcoins is that they do not have any use cases.

He argued that bitcoin is gaining weight as a form of digital gold, which people can use to hedge against inflation, although Goldman Sachs has questioned this argument. And he says ether is the fuel that powers the Ethereum network, on which non-fungible tokens and other applications can be built.

By contrast, dogecoin is “a call option on meme culture,” he said. “If you believe that memes are going to be a big thing then, yeah, dogecoin would be something interesting… but by itself there’s really not much [of a] use case for dogecoin.”

But Ong added: “To say that all 6,000 altcoins are useless is unfair.” He said he is broadly supportive of tokens that are part of the decentralized finance movement, which aims to use blockchain technology to create safe financial contracts without the need for central parties like banks. Ong cited uniswap and aave as two examples.

Moya said coins like solana were becoming more popular as people try to find competitors to the Ethereum network. “Solana’s meteoric rise is based off the belief its high performance is so much faster than Ethereum, it could become the altcoin of choice for widespread adoption.”

However, even tokens or coins that have more obvious purposes are liable to fail. According to the Coinopsy website, close to 2,000 cryptocurrencies have failed in the past.

Streeter said: “Volatility is the name of the game in the crypto world, with coins on a rollercoaster ride from week to week, and predicting the point at which demand subsides and prices begin to fall is very difficult, if not impossible.”

Read the original article on Business Insider

From Solana to Chainlink to Chiliz, here are 15 altcoins headlining a world of tokens that extends well beyond bitcoin – and what they’re all used for

The photo shows physical imitations of cryptocurrency
  • Bitcoin may be the most know cryptocurrency, but there is a world of altcoins out there with their own specific uses.
  • Apart from currencies, these cryptoassets have various utilities from “proof of stake” to decentralized finance.
  • Insider collected the most common types of cryptocurrencies and 15 examples from a wide world of digital assets.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

Investing in cryptocurrencies has been synonymous with investing in bitcoin, especially for those new to the digital asset space. Bitcoin, after all, is often regarded as the first modern cryptocurrency, founded by an anonymous developer under the pseudonym Satoshi Nakamoto in 2009.

“We think bitcoin had the first-mover advantage,” Ian Balina told Insider. Balina is the founder and CEO of Token Metrics, a data-driven investment research platform for cryptocurrencies.

Today, bitcoin boasts of a $1 trillion dollar market capitalization and enjoys the support of 22 public companies, according to data by CoinGecko. These include major firms from MicroStrategy to Tesla. Not included in that number are major corporations adopting bitcoin such as Goldman Sachs, Bank of New York Mellon, and PayPal.

Ether comes in at a close second. The global and open-source platform for decentralized applications that runs on the ethereum blockchain, is the runner-up to bitcoin with a valuation of $318 billion. Many analysts predict it will surpass the king of cryptocurrencies down the road, citing ether’s ability in storing computer codes that power contracts and applications.

Beyond these two, there is a wealth of crypto assets in the nascent space all with different utilities.

“We’re thrilled about the growing adoption of crypto beyond bitcoin,” Greg King, CEO of Osprey Funds, a crypto asset manager that launched Osprey Bitcoin Trust, told Insider. “Investor and market appetite continues to grow for funds providing access to some of the most exciting coins and tokens.”

While cryptocurrencies are difficult to separate into neat and comparable categories, London-based fintech entrepreneur Viktor Prokopenya said the underlying popularity metrics can be borrowed from more traditional asset analysis. He named market capitalization, price volatility, and momentum as examples.

“I believe we will see an increasing disregard for traditional portfolio theory and a reduction in diversification by many retail investors,” he told Insider. “Of course, this could work out for the better but conventional prudence is advised.”

Insider, with the help of experts, lists here the five most common types of crypto uses with 15 examples of coins from across the space.

1. Currencies

This is the most commonly known utility of cryptocurrencies. Several companies have allowed the purchase of their products using cryptocurrencies such as Tesla car, while dogecoin can be used to buy Dallas Mavericks’ tickets and merchandise. Other currency examples are litecoin and bitcoin cash.

2. Stablecoins

A stablecoin is a type of cryptocurrency that is backed by a reserve, which could be a cryptocurrency, a fiat currency, or a commodity. For instance, tether is pegged to the US dollar. USD coin-created by Coinbase and Circle-and dai are also both pegged to the American currency.

3. Proof of Stake

This is a mechanism that regulates the process of transactions between users, ensuring that these are verified and added to a blockchain’s public ledger. PoS was born out of another popular algorithm, Proof of Work. Both have the same goal of reaching consensus in the blockchain, Binance Academy explained, and only differ in the process.

Examples of cryptocurrencies that use PoS are ether (decentralized applications), cardano (academic research), and solana (blockchain applications).

Read more: A 29-year-old self-made billionaire breaks down how he achieved daily returns of 10% on million-dollar crypto trades, and shares how to find the best opportunities

4. Decentralized Finance

Also known as DeFi, this is an umbrella term for various applications that use public blockchains and crypto assets to disrupt the traditional financial sectors. DeFi is an alternative to a system that is tightly controlled and held together by decades-old infrastructure, according to a website funded by the Ethereum Foundation.

DeFi, an industry now worth over $66 billion, is a major reason for ether’s recent record-breaking week during the end of April.

Other cryptocurrencies that use DeFi applications according to Balina are: uniswap, a decentralized exchange for trading ethereum-based tokens via an automated order book; chainlink, a decentralized oracles network for bringing off-chain data onto the blockchain; and aave, a decentralized lending platform.

“In the last few years, we have seen DeFi also take up a significant spot within any listing category,” Ben Weiss, CEO of bitcoin ATM operator CoinFlip, told Insider – adding that many factors remain to be seen after the London upgrade in June.

Weiss continued: “I would expect the DeFi space to grow as the momentum of both DeFi usage as well as innovation is growing in the billions of dollars every other day. Decentralized market makers like uniswap and pancakeswap changed what it means to be liquid and crypto accessibility in general.”

5 . Non-Fungible Tokens

NFTs are unique digital assets secured on a blockchain supported by ethereum. Each NFT has its own signature, which can be verified in the public ledger and cannot be duplicated. When people buy NFTs, they gain the rights to the unique token on the blockchain, and not the artworks, collectibles, or tweets linked to the NFTs themselves.

Many of these are built on ether, Osprey said, but flow, tezos, and algorand also support NFTs.

“The potential applications of NFT technology are virtually endless,” he added. Other examples are theta network (video streaming blockchain) and chiliz (sports industry).

Read the original article on Business Insider

Forget dogecoin: Here are 5 under-the-radar altcoins you need to know

altcoins ripple litecoin

  • Notwithstanding the boom in bitcoin, altcoins are also finding gains.
  • “Altcoins are good for diversity in your investment portfolio,” said Tally Greenberg of Allnodes, staking and hosting platform for cryptocurrency investors.
  • Insider gives you a brief look at avalanche, cardano, polkadot, cosmos, and the graph.
  • Sign up here for our daily newsletter, 10 Things Before the Opening Bell.

As bitcoin cements itself center stage as the world’s most popular cryptocurrency, flanked by the likes of ethereum and dogecoin, there’s a group of alternative coins rising on the periphery out of mainstream focus: avalanche, cardano, polkadot, cosmos, and the graph.

They’re all newer, more volatile, and smaller by market capitalization – and also offer higher possible returns, said Tally Greenberg, head of business development at Allnodes, a staking and hosting platform for cryptocurrency investors.

“Altcoins are good for diversity in your investment portfolio,” she said. “They are different from commodities and stocks. Therefore, they do not correlate with other traditional investment assets.”

Greenberg added that investors can get higher returns with altcoins, and can also earn some passive income through staking, a method where an investor holds or locks her cryptocurrencies to receive rewards. But the most compelling reason for Greenberg to invest in altcoins is the unique blockchain infrastructure that accompanies them, which she says offers immense future upside.

Antoni Trenchev, co-founder and managing partner of Nexo – a financial institution for digital assets – agreed that altcoins are slated for significant rallies this year.

“More and more alt-coins are getting on traders’ radars,” he said. “They are also putting ethereum under pressure as the top [decentralized finance] dog is becoming heavily congested due to the influx of users, developers, [decentralized application], DeFi protocols, and the [non-fungible token] craze.”

Harold Montgomery, managing director at digital payments platform Wirex, believes in the future of altcoins as well.

“These new currency systems will overcome the scalability and transaction speed limitations of bitcoin and ethereum which currently hinder their usefulness,” Montgomery said. “They will support billions of transactions, sometimes of very small size, enabling global commerce.”

Yet for some, including Mike Venuto, co-portfolio manager of a $1 billion ETF that focuses on blockchain technologies and companies dealing with cryptocurrencies, altcoins are still nascent.

“I think they are interesting ideas, but too early,” he said. “Many of these altcoins have great concepts but the protocols to support them need more adoption before they can succeed.”

Venuto added that even bitcoin is still in the process of establishing its own infrastructure. The same goes with ethereum.

Read more: The investing chief of a crypto hedge fund breaks down why he thinks bitcoin will achieve a $5 trillion market cap by 2023 – and shares 2 emerging areas of the asset class that he’s bullish on

Pankaj Balani, CEO at Delta Exchange, a digital asset derivatives exchange, shares the same skepticism, although is slightly more bullish when it comes to polkadot and cardano.

“We have seen bitcoin gain close to six times on the back of institutional participation,” Balani said. “The trend has however not been the same for altcoins. Though in some cases the absolute returns might be higher most of the coins have started to move only in January.”

Still, the rise of altcoins is drawing some attention for a couple of reasons. Insider gives you a look at five altcoins that are gaining traction:

1. Avalanche

Avalanche is a new blockchain that can process more transactions than ethereum at a much faster rate but at a lower cost. Greenberg said sees it as “a promising technology that does more for less.” For instance, if ethereum can support 30 transactions per second, avalanche can do the same for 4,300.

Why is it important? Greenberg points to the rise of new services such as decentralized finance or DeFi, and to the existing infrastructure for such projects.

2. Cardano

Cardano is also a new blockchain that positions itself as a positive global change, especially with its goal of providing access to financial services in developing countries. Greenberg also said it is more energy-efficient than bitcoin.

Why is it important? For Greenberg, investing in Cardano is for those who believe in its philosophy and approach. Further, the blockchain, she said, regularly updates and “seems to be on track in meeting their projections, which underlines consistency in the blockchain’s overall health.”

Read more: A Norwegian billionaire who just set up a $59 million unit to invest in the bitcoin ecosystem breaks down his 3-fold strategy – and shares why he believes the digital currency is ‘a solution rather than a problem’ to many of its perceived challenges

3. Polkadot

Polkadot is a Swiss blockchain born in the midst of a global pandemic. Jeffery Wang, head of Americas at The Amber Group, a cryptocurrency company, referred to it as “one of the most highly anticipated next-gen blockchains” as it enables developers to build their own blockchains and connect them with each other.

Among other reasons, Wang said Polkadot overcomes the scalability issues that are present in Ethereum. Greenberg and Wang noted that Polkadot is meant to complement Ethereum, not compete with it.

Why is it important? It is a new but promising technology that many dApps developers seem to be keen on, Greenberg said. She also added that the ability to communicate with many blockchains is crucial and encourages investing in polkadot if one believes in the future of decentralized applications.

4. Cosmos

Similar to Polkadot, Cosmos is an ecosystem of blockchain that offers interoperability, allowing an exchange of data between different blockchains. The blockchain of cosmos, however, Wang said, is independent and has its own consensus mechanism and validators to secure itself, unlike polkadot and ethereum.

Why is it important? Wang said investors who put money in cosmos are those that are looking for a solution “to help the entire blockchain sector advance by bringing different projects together,” not necessarily those who are looking to find a “winning blockchain-takes all scenario.”

5. The Graph

The Graph, only a few months old, is a decentralized and open-source indexing protocol for blockchain data, Wang explained. It is not as established just yet, but is called the “Google of Blockchains” by its advocates since the platform can be utilized to search for any data through simple queries.

Why is it important? – While it has little to show, for now, Greenberg and Wang believe that there is huge potential with the graph, particularly with how it can be used to index all blockchains and decentralized applications. The graph’s technology, Greenberg added, is already in use by Uniswap, which is a decentralized exchange.

Read the original article on Business Insider