Before investing in cryptocurrencies, consider THIS

Martin D. Weiss, PhD, and Juan M. Villaverde

If you visit cryptographic websites or ask an average observer, you may get the impression that there are thousands of “cryptocurrencies” in the world.

Big mistake!

Yes, they are all digital assets. And yes, on a quick look, they look similar.

But only less than a tenth of them are real cryptocurrencies.

So before you invest an extra cent in crypts, you need to understand these differences as well as some other important nuances.

There are basically two types:

The first group of digital assets are what we consider to be real cryptocurrencies. We call them “coins.”

These include Bitcoin, Ethereum, Ripple, EOS and others – these are digital money that may one day function like dollars, euros and yen today; but which are at the same time more transparent, more efficient and with better financial discipline.

By their nature, they are simply information stored on the hard drives of computers that follow the rules set by special software. But that in itself should come as no surprise. The same goes for money in your bank accounts, brokerage accounts and life insurance policies.

What makes crypts unique is that this information is not stored on a central server and is not owned by any organization. It is automatically copied and saved to countless computers around the world; it is almost hack-proof, accessible to anyone, and ideally no one controls it.

These coins live in so-called “public blockchains” or, more generally, in “public shared ledgers”. There are hundreds of them. And there are serious development teams behind many.

The second group of digital assets is not cryptocurrencies. Most people call them “ICOs”. We call them “tokens.”

In some respects, they really look like coins. But with a few exceptions, which we will discuss in a moment, they are nothing more than financial donation bills.

These tokens are advertised as corporate shares. But they are actually more like bonus points or coupons.

Nevertheless, their publishers collected 2017. and 2018. in them more money than all the world’s venture capital companies combined.

There are thousands of tokens, and the vast majority of them are insolvent or pure fraud.

Don’t ignore variations and exceptions!

No compartmentalization or grouping is really as easy in the world of cryptocurrencies as analysts like us sometimes make an impression. There are always variations, exceptions, and things that just don’t fit anywhere. Here are the most important ones for you:

Centrally controlled coinid. The best example of this is what is happening in banking.

Banks and other financial institutions are huge, centrally managed, highly regulated companies. It is only natural that digital assets for them – which are open to everyone and not controlled by anyone – are, to put it mildly, inconvenient and, in some opinions, unacceptable.

“How should we sign a contract with no one?” they ask. “And who do we turn to if an error occurs somewhere?”

Ripple is a leader in providing hybrid solutions to these companies. Ripple’s coin, called XRP, is technologically like other coins. But it is run and maintained by Ripple’s company. They offer banks not only the benefits of increased security, efficiency and speed, but also a specific organization to deal with.

Tokens for coins. Most of the tokens that exist in the world today will always remain tokens and nothing else. But some special-purpose tokens are very different: They have a specific date in the near future when they will be exchanged for real coins.

Here’s an example of how it works: The EOS is a very advanced coin that’s faster and easier to expand than Ethereum. 2017. In June, his sponsors announced that they would come out with a new coin in 2018. in June. But they had to find capital to fund the development of the coin.

So they organized an ICO offer for EOS tokens on the Ethereum network, raising $ 4 billion. Then, when 2018. year 2. EOS’s own “core network” came out in June, they replaced Ethereum-based tokens with real EOS tokens.

Hence the question: Was the Ethereum-based EOS a token or a coin? Our cryptocurrency rating model treats him as a coin.

Security Tokens. The biggest problem with ordinary tokens is now obvious: Most investors thought they had the opportunity to share in the success of the company, as with ordinary shares.

But too many of them were simply made of money. They did not receive any shares, no dividends and no right to protest against this situation. They did not even receive protection against outright theft.

But now the industry has found a new solution. They write new elements into the software, including investor rights and protections. They register tokens as securities. And so they are creating something that could one day become a digital stake.

There are only a handful of them at the moment. But they will soon become the norm and they will replace the current tokens.

Our tip: Keep away from typical tokens. And always bet on our highest rated coins.

The best,

Juan and Martin

NB! It is still possible to join the Estonian Weiss Cryptographic Portfolio in the last 5 days! For more information and to join, click here.

Article – Weiss Ratings

Translation: Lucreds Plus OÜ