Crypto Asset Classes – The Next Bull Run
The sheer number of ICO projects and tokens vying for your attention and investment is dizzying. The challenge for the conscientious investor is how to sift through the noise to find the projects that are truly worth: first your attention, then your money. It is of crucial importance then, that investors a) carve out the time to scrutinize new projects that come onto their radar and b) learn how to use that time effectively. There are simply too many projects to go through all of them, and using a random scattergun approach isn't good either. The question is how to develop heuristics (mental shortcuts) to dismiss some projects right off the bat, while selecting others for further exploration. To do this, the best thing an investor can do is to understand the different crypto asset classes and how each of them might fit into the crypto, blockchain tech. and wider technological or financial landscape. This post on HackerNoon is a great primer on the subject from a more technical perspective. What follows in this post is a brief overview of three of the most common types of token, put into an investment context, which interested investors can use as a platform for further exploration. Utility Tokens Utility tokens are those which attempt to meet a very specific need. Often, they're examples of a platform believing that it can better serve a specific use case by conducting operations on a blockchain, either through greater incentivization of behavior on the platform or through the benefits of immutability or open source transparency. An investment in a utility token is a bet that the network around that token will grow, and that the token itself will capture value. This can happen through encouraging platform users to stake their tokens in order to receive greater platform privileges, like discounts or bonuses. Doctor Smart (DSTT)and Tutellus (TUT) might be considered examples of utility tokens. Digital Commodities Digital commodities are tokens which represent the right to a digital consumable resource, such as compute power or file storage. Examples include Filecoin (FIL) for file storage or Leonardo Render (LEOS) for compute power. Many believe that blockchain technology will revolutionize cloud-based models of digital consumables through properly incentivizing people to connect their hardware to the cloud, thereby closing the so-called 'Cloud Gap' - the gap between the amount of useful hardware in the world and the amount that is available to the cloud. This would give those who need to use such consumables access to them quickly and affordably without having to pay to set up and maintain their own local hardware. An investment in one of these tokens, such as Leonardo Render, is a bet on increased platform usage, and that value will accrue to the token. Again, look for mechanisms in a platform's tokenomic model that will encourage price appreciation as adoption grows, such as Leonardo Render's incentivization of staking in order for users to access discounts, and for GPU hardware owners to access the network. Appcoins Appcoins are like utility tokens in that they confer the right to access or use of a particular service, but they're different in that they're used to interact with that one application itself as opposed to facilitating a more peer-to-peer relationship between platform users. The previously mentioned post on HackerNoon describes the different as a many-to-one (appcoins) vs. a many-to-many relationship. One example includes Cereal, which incentivizes users who want to access a Cereal loan to hold a number of CRL tokens in order to access beneficial repayment terms, such as lower interest rates and longer repayment periods. An investment in an appcoin is an investment in the app itself - potential customers must scrutinize the company's fundamentals, including its team, partnerships and products. Do they have a track record? Do they have strong partnerships that will help them achieve what they need to? Do they have product-market fit? In Conclusion There are more crypto asset classes, which we may well explore in a future post. For now, Cryptonomos' advice to investors is to keep learning, and to try to learn in such a way that helps you to better invest the time you have available to devote to the space. Heuristics - mental shortcuts - are important. We may be biased, but we believe one of the best shortcuts investors can use is to sign up to the Cryptonomos platform. Cryptonomos vets every team it comes into contact with for their track record and expertise, and every project for a realistic chance of achieving product-market fit. Signing up takes 5 minutes, but KYC and AML procedures can take a few days to clear. The next time a bull market comes around, investors may need to act fast. Sign up to be part of our investor base today to hear about our projects before anyone else.