During 2017, crypto markets set the new standard for easy profits. Just about every coin or token realized amazing returns. “A rising tide lifts all boats,” as they say, and late 2017 was a flood. Surging prices created a positive feedback loop, attracting ever more capital into crypto. Unfortunately but inevitably, this runaway market led to massive malinvestment. Money was thrown indiscriminately into all kinds of dubious projects, many of which won’t bear fruit.
In the current bearish environment, hype and greed are replaced by critical evaluation and caution. Particularly for those who’ve lost money, marketing promises, endless shilling, and charismatic spokespeople are no longer sufficient. Good, fundamental reasons for buying or holding a coin are once again paramount.
5 Coins to Watch for in 2018
There’s never been a better time to re-evaluate and rebalance a crypto portfolio. Based on their solid fundamentals, here are five coins I feel are worth holding through or perhaps buying up at their current depressed prices (which, fair warning, could go lower).
#1. Bitcoin (because of its decentralization)
The number one spot belongs to Bitcoin (BTC), which remains the market leader across all categories. Bitcoin has the highest price, the widest adoption, the most security (due to Bitcoin mining’s phenomenal electrical consumption), the most recognizable brand identity (which forks have tried to appropriate), and the most active and rational development. It’s also the only coin so far that’s represented in traditional markets in the form Bitcoin futures trading on the American CME and CBOE.
Bitcoin remains the prime mover; the performances of all other coins are highly correlated with Bitcoin’s performance. My personal expectation is that the gulf between Bitcoin and most—if not all—other coins will widen.
Bitcoin has several promising innovations in the pipeline, soon to be incorporated as additional layers or soft forks. Examples include the Lightning Network (LN), MAST, Schnorr signatures, Mimblewimble, and more.
LN, in particular, is expected to open up a whole new range of applications for Bitcoin, as it allows for tremendous scaling, microtransactions, and instant, secure payments. LN is growing steadily as users test its various possibilities with real bitcoins. As it becomes more user-friendly, it can be expected to greatly benefit Bitcoin’s adoption.
#2. Litecoin (because of its persistence)
Litecoin (LTC) is a clone of Bitcoin with a different hashing algorithm. While Litecoin doesn’t feature any more anonymity technology than Bitcoin, surprising reports have revealed that Litecoin’s adoption on darknet marketplaces is now second only to Bitcoin. While a privacy-focused coin such as Monero would seem far more suitable for the role of buying illicit goods and services, perhaps this comes as a result of Litecoin’s longevity: it was launched in late 2011.
Another factor in Litecoin’s favor is that it integrated Bitcoin’s SegWit technology, meaning that Litecoin is prepared for LN. Litecoin may thus benefit from atomic cross-chain trading. In other words, the secure peer-to-peer trading of coins without any third party (i.e., exchange) involvement. As Litecoin keep its code largely synced to Bitcoin, it’s well-positioned to benefit from Bitcoin’s technological progress.
#3. Ethereum (because of smart contracts)
Ethereum (ETH) has a couple of big issues right now. First, governments are cracking down on ICOs, and with good reason: many have proven to be either fraudulent or failures. As most ICOs run on the Ethereum network as ERC-20 tokens, the ICO craze in the last few years has brought a lot of value into Ethereum. If sensible regulations are passed to protect investors from scammy projects, Ethereum may reclaim some legitimacy as a crowdfunding platform.
The second major issue facing Ethereum is its long-delayed switchover to a new hybrid Proof of Work/Stake system. Ethereum GPU-mining is currently profitable, but Bitmain just announced Ethereum ASIC miners, which will likely impact GPU miners’ bottom lines. It remains to be seen whether this will force the PoW change—and just how successful any such change will be.
If Ethereum can weather both these major issues—regulatory and mining—it will have demonstrated significant resilience. If not, there are multiple competing currencies stalking its shadow, such as Ethereum Classic (ETC), Cardano (ADA), and EOS.
#4. Monero (because of its anonymity)
Although its adoption on darknet markets isn’t all that could be hoped, Monero (XMR) remains the premier privacy coin. Its reputation and market capitalization are still beyond those of its rivals—and for good reason.
Monero’s code requires less trust than the Zcash’s “trusty” key ceremony, and it had a fair launch, unlike DASH. That Monero recently changed its PoW to defeat the development of an ASIC miner for its algorithm confirms the coin’s commitment to mining decentralization. A significant drop in its hash rate is being reported due to the new, ASIC-resistant version. This could well present an opportunity for GPU and even CPU miners to move back to Monero. The new version of Monero, 0.12, also contains other improvements, which demonstrate that Monero is continuing to develop along sensible lines.
#5. Vertcoin (the wild card)
Similar to Litecoin, Vertcoin (VTC) is a Bitcoin clone with a swapped-out hashing algorithm. The Vertcoin team has vowed to change the algorithm should ASIC mining be developed for it. The idea is that this will keep mining more decentralized by locking out big monopoly miners/producers. Vertcoin is a low-value coin without meaningful adoption. Like Litecoin, it has the potential to benefit greatly from the success of the Lightning Network.
In addition to testing atomic cross-chain swaps, Vertcoin’s team is developing a product called LITBox. This hardware device will allow users to automate Lightning Network operations. This could prove to be a big deal, as configuring a Lightning node currently requires a lot of technical know-how. If the device makes it to production and allows easy LN access, it could be a hot seller. LITbox will support Bitcoin, of course, but also Litecoin and Vertcoin by default, so it could do a lot for the adoption of those coins.