As you already know, the most talked about cryptocurrency is Bitcoin, but believe it or not, there may be others. Cloakcoin representative/analyst
Harry Sidiropoulos answers a few questions on the topic.
Which Cryptocurrency will give you the best return in 2018? Usually, when people ask this question, they likely mean which cryptocurrency to speculate on in terms of its market value. However, there’s more ways to earn with cryptocurrencies than just speculation. Cryptocurrencies have many different designs and so, they can also give you returns in different ways. I normally categorize coins in the following manner:
- Market value coins
- Interest rate coins
- Profit sharing coins
Depending on what you’re trying to achieve, the answer to which altcoin will give the best return also changes. Let’s have a closer look at what I mean.
Market Value Coins
This is the most common category of token investment. The main idea is to buy a token that is expected to rise in value and then either hold or sell it at a profit.
All aboard - The train hype
Investors that concentrate on this category are most concerned with:
- Are people likely to be hyped about this token
- Does the altcoin project have a capable marketing team / strategy?
- Does the altcoin have a large and dedicated community to pump its value?
- When is the token is listed on(major) exchanges
- Fundamental and technical analysis
Most of the tokens in this category usually only have a promise or an idea for the investor. In better cases, the project may have an MVP (minimum viable product). In the best cases, the project already has a working product that you can use- but their price is likely to then already reflect that.
The tokens have functions in addition to the market value of course, but they may not interest the investor at all. The biggest gains are usually made from undervalued altcoins that (thanks to the above) caught the speculation speed train. Holders are also hoping that the project solves a real-life problem, so that the token remains useful and upon which they can speculate in the long-term
Interest Rate Coins
A more wholesome way to earn revenue from cryptocurrencies is through investing in coins that give holders an interest rate for owning it. This is also called staking or minting and it’s the form of mining used in Proof-of-Stake cryptocurrencies (read here, if you’d like to learn more). Staking is an environmentally friendlier and more cost-effective form of generating new tokens.
In addition to earning from the interest and market value of the token, the investor also serves the noble cause of securing the blockchain and activity of all its users through the staking.
Investors that concentrate on this category are most concerned with:
- What is the planned inflation rate of the cryptocurrency that forms the investor’s interest rate?
- Does the token project solve a real-life issue so that it will be needed?
- Is the project capable of realizing its goal?
CLOAK, a privacy coin project from 2014, is an example of an investment of this type. Cloakcoin is a privacy coin project. If the wallet containing CLOAK is staked into the service of their blockchain, the project rewards every single coin holder with 6% of their holdings per year. This is possible because CLOAK does not use Master Nodes, like most other Proof of Stake coins. Creating a blockchain without Master Nodes achieves a more fair and distributed blockchain that gives the advantage to all its investors, big and small.
Compare that to DASH, where you need 1000 DASH to function as a Master Node. At current price, you only benefit, if you’re an early adopter or able to invest 1 million dollars. There are even more gains if your wallet secures Enigma transactions. The 1.8% charge taken from using Enigma’s extra layer of anonymity in transacting is divided amongst all participating nodes(wallets).
What is the planned inflation rate of the cryptocurrency that forms the investor’s interest rate?
The interest rate serves an important function for Proof of Stake currencies. The interest rate, in other words, is also the planned inflation of the cryptocurrency or the number of tokens by which the circulating supply grows each year.
CLOAK grows by 6% each year. Consequently, all its investors that hold staked wallets also earn 6% on their amount of CLOAK. It’s noteworthy to mention, that there are economists concerned about the deflationary nature of Bitcoin and other hard capped cryptocurrencies. It is widely accepted in economic schools of thought that, at least in the current economic system, that a deflationary currency would bring the growth of our economy to a halt. And cryptocurrencies with a hard cap include no planned “growth”, which is another way to say, no inflation (further discussion on the nature of this claim is out of the scope of this answer).
Investors concerned over this may find CLOAK very attractive because the annual inflation in CLOAK unwittingly bridges this economic concern with cryptocurrencies. This inflation also supplies CLOAK’s attractive return of interest in addition to its market value that is many times higher than is possible through any other traditional investment product.
Does the token project solve a real-life issue so that it will be needed?
CLOAK is one of the few strongly privacy driven cryptocurrencies out there. And privacy is the last human right we have forgotten to fight for. As quoted by Edward Snowden: “Arguing that you don't care about the right to privacy because you have nothing to hide is no different than saying you don't care about free speech because you have nothing to say”
Yet, freedom of speech is inarguably important to most of us while privacy is(relatively) willingly surrender. Our privacy is being infringed by governments with the pretext that it’s necessary for our security. But data suggests government agents, like the NSA, have not achieved better security from restrained privacy.
The case for privacy driven projects, like CLOAK, is quite strong. Check out a video on the topic.
BOTTOM LINE: proceed with caution, invest at your own risk, hope for the best, and prepare for the worst.
For more info:
Harry Sidiropoulos