What to invest in? What coin to hold? are very common questions when you first enter the market. You want to buy something, set it aside, and wait for the results, but then you end up trading daily or weekly. If you’re just starting out, you should read from the first guide to investing in coins. It is essential before reading this article, providing step-by-step instructions for you.
Turning back to your original intention, long-term coin investment. Seriously investing, using a small amount of capital, buying and forgetting about it, waiting for breakthrough developments with practical applications or economic benefits from the coin, not just empty promises like currently.
We will divide them into individual groups, and then you can refer to the article: Classifying coins by group to choose individual coins accordingly.
This article is the author’s personal assessment of the future long-term development of current “coins.” On coinmarketcap.com, there are more than 2M cryptocurrency coins. In fact, there are even more tokens because creating a Token (coin) has never been easier.
Most of them are ‘trash.’ Of course, we will have a major cleansing like the ‘dot com’ era (losing 90 – 95% of total value) to move the market into new stages: The Application Phase of cryptocurrencies.
Contents
Classifying Coins by Purpose
We commonly refer to all digital currency/Tokens as coins. It’s fine, let’s keep calling it that for convenience compared to the cumbersome Cryptocurrency or Crypto Token. In reality, calling it ‘coin’ means only a few were created with the purpose of being currency. They are increasingly rare. To classify coins according to the founding criteria, we can divide them into:
- Coins for payment and asset storage purposes: BTC, LTC, BCH, ZEC, Dash, XMR, etc.
- Platform coins for deploying other projects: ETH, Ada, BNB, EOS, Matic, Sol, Dot, etc.
- Stablecoins: USDT, USDC, DAI…
- Storage wallets
- Coins that implement a specific solution or need
- Tokens for fundraising by the issuing entity
- Coins operating decentralized finance (DeFi) models
- Tokens that verify assets (NFTs)
Looking at the list of 8 issues above, perhaps all coins are necessary. Indeed, they are necessary for those purposes but will be significantly filtered out.
Bitcoin – Asset Storage
Bitcoin is unlikely to become currency, if not impossible. But from a storage perspective, perhaps nothing is better than Bitcoin. Safe, secure, limited, easily portable, and convertible to cash. Bitcoin can be compared to gold; they are great for storage, but not convenient for daily transactions and payments. At a market cap of $1.15 trillion, Bitcoin still has enormous potential to surpass gold as the best storage option.
Thus, Bitcoin has a quite solid position, and its future path seems bright and promising. If Bitcoin reaches half the market cap of gold, it would be priced around $300K, and around $500K to equal and surpass gold. In the long term, this opportunity is significant in terms of occurrence likelihood and profit margin.
Assuming with Bitcoin currently: % Profit Margin: 60K => 300K (+400% or X5) and 60K => 500K (730% or X8)
Likelihood of achieving the goal: Quite high
Risk involved: Moderately high
To assess an investment opportunity, we have 5 basic ranks:
- Monitor
- Should invest
- High investment level
- Must invest
- Life-changing opportunity
Balancing these three criteria, we can rank it at level 2 or 3. Overall, the feasibility seems quite bright, and the other two factors, ROI (%) and risk, will determine which rank BTC should be in. Suppose BTC is priced at 20K, its rank could become 3 – 4 due to the significantly increased ROI. As the price increases, the ROI efficiency decreases, pushing down the opportunity rank.
Even if it takes 10 years, a 5x return is still a very good investment performance. However, we have other investment options (such as Stocks) that may offer higher or equal efficiency with less risk, so BTC’s investment rank is at 2 – 3.
Security Token Group
This could be company shares digitized on the blockchain to apply the advantages of this technology. Or tokens raising capital for companies, projects that function like stocks. (ICO, IDO, IEO, etc.) currently will enter the legal framework instead of freely raising funds and then easily deleting channels and disappearing.
Security tokens (issued by the company itself) open a new chapter for the economy. A company can easily access global capital, and an investor can directly invest in a company on the other side of the globe (Instead of just being able to trade with CFD contracts like now).
We can also easily track information on holdings, manage shares without worry: No need to worry about the chairman Trinh Van Quyet secretly selling shares again. Electronic voting, dividend distribution at the speed of light.
Blockchain now plays the role of providing technological solutions for raising, managing, and trading shares. Commonly referred to as securities.
This form has not yet appeared but will become dominant in the future. This type is recommended at levels 3 – 4. It can be considered that we invest in securities, with global companies. At this point, the only concern is which company. The development of this Token group is easy to imagine, as it is linked to profit-generating companies.
Social Token Group
This group of Tokens/coins will only have value within that community. Its value depends on actual benefits (benefits with convertible value or generating money) and the size of the community. These tokens will be issued by major public companies. They can be combined with DeFi or many other functions to make the community benefits the most attractive.
Companies that operate genuinely and now combine Blockchain to distribute benefits and attract users will explode.
Similar to security tokens, but social tokens expand further in sharing more benefits to network participants. Imagine holding a Token of FB: You can transfer between FB users (like money), pay advertising costs, integrate FB Pay into your sales page, and exclusive benefits from sharing revenue, etc.
Current exchange coins are a type of social token. It is also one of the rare coins that actually generate real profits (from transaction fees). BNB’s use of profits to buy back Tokens and “burn” them is similar to businesses using profits to buy back outstanding shares (a form of profit-sharing with shareholders). This function is similar to security tokens, but in addition, it has many exclusive internal benefits, so it is classified in the social token group.
Exchange coins can be considered a very good investment model. But you should focus on a good ‘leader.’ Don’t forget that the world’s largest exchange market share or top popularity has changed owners continuously for 10 years. Former ‘heroes’ can be wiped out (MTgox, BTC-e) or decline (Gemini, Kraken, Bitflyer, Bithumb, Poloniex, Bittrex, Bitfinex).
Platform Token Group
This group is a middleman. It will survive in situations:
- There are many projects operating on it
- The projects operating on it generate real profits so that the platform Token can have benefits.
Thus, it will indirectly profit from other projects. To invest in this group, you need to research a bit about the advantages of each platform. Many platforms will be eliminated or unable to develop. Technology & community currently, in the future, will determine the value of a platform.
Investment recommendation level 2. Good platforms will still bring significant benefits in the future. However, it should be understood that platforms focus on technology, and they will continuously ‘change blood’ and weed out.
Solution Token Group
Most solution tokens will die. Because they cannot really generate money or profit. Only a few % may survive and become super explosive.
Solution tokens can be understood as tokens that precisely solve one thing, a specific need. It will be very challenging to find real users (users, not investors) and balance it to generate profit.
Overall Assessment
The market will still exist, developing day by day, bringing infinite global connectivity. But coins will change a lot. For long-term investment, except for BTC, with any group above, you should only use capital of under 15% of assets.
Strict management from regulatory agencies (SEC) of countries will make the market more transparent, healthier, and more developed. We will have ‘prodigies’ of the future even more than what Dotcom did. But many of them, scam projects or those that cannot generate real profits, will be left behind.
For short-term transactions (Trade), you don’t need to care about this information. We should focus on technical charts, volume, etc.
I hope this article can give you some perspectives on the types of coins, coin groups that are likely to rise in the future, to have high efficiency in the future.
