Looking at the ICO market alone, there have been a total of 1,161 ICOs in 2018, at the time of writing, with total funds raised reaching a whopping $7.18bn.
In 2017, there were a total of 875 ICOs that raised $6.213m, an average $7.1m raised per ICO, compared with this year’s $6.18m. Going back to 2016, there were just 29 ICOs that raised a total of $90.25m, equivalent to an average $3m per ICO.
The growth is been exponential and with it, the number of altcoins that exist with little to no hope of ever going mainstream have also seen a sizeable increase, creating a minefield for prospective investors looking for a suitable investment that would be more of a long-term position than the short-term speculative trades that have fuelled the cryptomarkets over the last 12-months.
In the selection process of an altcoin, there are certainly some basic steps that are worth following, as one of the most important things an investor needs to do is to strip away possible scams and projects that will never get off the ground. After all, the ICO market is still largely unregulated.
Some of the key steps in peeling away the cryptomarket layers in search of a viable altcoin include:
- Successful Initial Coin Offering: It goes without saying that selecting an altcoin that failed to successfully raise the required funds during its ICO are probably best left untouched, when considering the sizeable number of altcoins to choose from.
- White Paper: The quality of the white paper, not just in terms of the team’s goals, but also what they are trying to achieve and why, with the appropriate technological detail is essential. A lack of a white paper or one with little detail that provides prospective investors with little on what will be on offer and how funds raised will be used should also be avoided.
- ICO Rating: There’s no harm in reviewing analysis of the altcoin’s ICO and then assessing how the team has performed since fundraising, with successful completion of milestones, with little to no delay, a demonstration of strong capabilities to deliver the blockchain to market.
- Sponsors and the Team: By viewing the altcoin’s website, you can evaluate the level of experience the team has and who stands behind the team, full bios being a must. In addition, regular updates on progress against the project roadmap will provide some insight into an altcoin’s prospects down the road.
- The Offering, its Value, and Outlook: As is the case with any investment, it ultimately boils down to supply and demand. While the broader market largely tracks itself, driven by news and altcoin inclusion onto exchanges, the value proposition will become a major influence on the outlook for an altcoin and there have been some examples of altcoins outperforming the broader market due to successful adoption in the real world. Looking for solutions and product offerings that are likely to be adopted should be a consideration.
Looking across the broader market, there are a number of interesting altcoins that could see widespread adoption in the real world, and whose progress to date ticks the boxes set out above. Of the majors:
Ripple’s XRP (“XRP”): From the major altcoins in existence, Ripple’s platform has garnered the most interest to date, with Ripple delivering almost instantaneous cross-border money transfers with minimal fees. Ripple is in direct competition with financial institutions that have already begun to test the various platforms on offer. Transaction times are at around 4 seconds and transaction fees being equivalent to $0.004.
Stellar’s Lumen (“XLM”): Unlike true cryptocurrencies, the Stellar platform was developed to support cross-border transfers of value, including but not limited to payments. Chained conversions support multi-currency transactions, with Stellar’s Lumen being an intermediary currency. The Stellar network searches for the best available exchange rate on offer, which could either be a simple exchange from U.S Dollar to UK Sterling or via a chain, U.S Dollar to EUR to Swiss Franc to UK Sterling. Stellar’s Lumen is the intermediary between each individual link of the chain or between direct exchanges. Transaction times of between 2-5 seconds certainly put this high on the choice of platforms for cross-border transfers of value.
Litecoin (“LTC”): As a true cryptocurrency and in competition with Bitcoin to become the chosen alternative to fiat currency. Faster transaction times, a larger number of coins and early adoption by the market to remit cross border at speeds far greater than those on offer at financial institutions support longevity and relative price stability in more volatile market environments.
Looking across the rest of the altcoins, there are some value propositions that deliver interesting solutions to the real world, though significant uncertainty will deliver sizeable swings in price until there is some degree of traction. Some smaller altcoins by market cap, but nonetheless interesting include:
Civic (“CVC”): Developed to facilitate the better management of digital identities, incorporating blockchain verification technology to secure and protect the transfer of personal information. With so much data theft from the World Wide Web, a viable solution to identity protection is needed.
GIFTO (“GTO”): Developed to deliver a virtual gifting model, where the network is able to purchase virtual gifts with GIFTO tokens (GTOs) to transfer value to content creators on YouTube, Instagram or any other content / social media platform. The team behind GIFTO has already delivered Uplive, an existing non-blockchain platform that generates significant income for tens of thousands of content creators from their fan base.