Crypto Investments 101: Lessons Learned and What Comes Next

Thousands of cryptocurrencies have been launched in the past few years, usually amid massive fanfare and promotional campaigns, only to fail and fade away as investors and community members shun them. 

A recent report by Coinopsy, a website dedicated to tracking such failures, indicates that there are now nearly 2,400 “dead coins” from projects that have been long since abandoned.

Even though the crypto market is booming, with its total market capitalization currently hovering around $2 trillion, an enormous number of crypto tokens, primarily under the broader category of “hype coins,” have failed miserably. 

Invest In Use-Cases; Not The Hype

Hype coins are the byproduct of the flashy and speculative traits of the crypto market. Almost every day, dozens of “hype coins” are launched, where developers promise a world of riches to would-be investors. But, as the results clearly convey, most of these projects usually end up poorly.

It plays into an impulse to want something for nothing, leveraging the notion that everyone wants to find an angle to cash in on the crypto market’s hype. Most projects that fall under the category of “hype coins” share one common attribute: the developers of these projects had spent much of their time strategizing their marketing campaigns and too little time designing use-cases for their platforms and accompanying coin or token utility.

Time and again, you will see new coins with fancy names popping up on social media platforms, backed by a group of hucksters and shillers that leave no stone unturned to lure potential investors into thinking that, just like Bitcoin, this new coin will also go to the moon. 

Pursuant to the point, “meme coins” have flooded the blockchain ecosystem in recent years. Although the majority of these meme coins don’t have any use cases, intrinsic value, or strong fundamentals, they are known for their ability to create hype and excite people about crypto. Underscoring this reality, many young investors entered the crypto scene due to the popularity of meme coins and the related meme-fest on Twitter, Reddit, and other social media platforms.

That said, the fundamental question still remains: should you invest in “hype coins,” especially when most of them offer very little value and near-zero potential? 

Although the final decision rests on the investment thesis, seasoned investors ordinarily recommend investors stick to putting their hard-earned money into projects that have a wide variety of use cases and long-term potential. Hence, you’ll often hear people highlighting allocations to Bitcoin (BTC), Ethereum (ETH), and probably a few other cryptocurrencies – usually the ones that rank among the top 100 by market capitalization – are the best investments.

But why?

There are several reasons behind this approach. For instance, the value of Ethereum’s ETH token skyrocketed in recent years because of its smart contract technology, which supports activities like decentralized finance (DeFi) and decentralized applications (dApps). Following Bitcoin’s rise to fame, Ethereum entered the scene, bringing several new features that the legacy Bitcoin network didn’t offer. As a result, developers and investors flocked to Ethereum, ultimately driving its value past $3,000 in just a few years from its humble beginnings of $1.25 in 2015.

As the number of dApps and decentralized finance DeFi projects grew on the Ethereum network, the value of the ETH token soared to new highs. However, this growth also led to scalability issues, rising gas fees, and slow throughput rates. Due to these hurdles, a range of layer-2 scaling solutions emerged, some of which now rank among the top ten cryptocurrencies by market capitalization. At the same time, a new wave of third-generation blockchain networks entered the market, offering to address all of the obstacles that the existing networks faced, which, in turn, drove the value of these tokens to record heights.

Historically, projects that support a wide range of use cases and have a predefined roadmap have done well. For instance, following the rise of Bitcoin and Ethereum, utility-driven projects like Binance Smart Chain, Polygon, Polkadot, Solana, Terra, Ripple, and several others have made their way into the top cryptocurrencies by market capitalization.

Investing For The Future

It is crucial to understand that each new wave of technological advancement introduces promising futuristic solutions designed to solve existing technical problems. For instance, the current blockchain ecosystem is plagued by scalability, security, and decentralization-related issues, commonly referred to as “The Blockchain Trilemma.” Accordingly, it should come as no surprise that most of the up-and-coming blockchain projects aim to solve the issues mentioned above.

Ferrum Network is one such project spearheading the new wave of blockchain projects designed to solve the problems of existing blockchains. Ferrum Network aims to solve the problem of blockchain interoperability by providing a multi-chain infrastructure. By design, it delivers embedded advantages over existing chains and interoperability solutions, primarily in terms of scalability, security, speed, and cost.

The future of blockchain relies on interoperability, and several projects are already working on the multi-chain approach. To that extent, Ferrum’s infrastructure, paired with its deflationary tokens, provides the infrastructure for facilitating multi-chain smart contracts while at the same time allowing individual blockchains to share data and value among each other seamlessly.

Ferrum has a strong roadmap and is among the handful of projects that witnessed massive growth in 2021. At the time of writing, Ferrum Network’s ecosystem is growing at an unprecedented rate, with the team successfully forging over 30 new partnerships with the Iron Alliance. Meanwhile, more than 150 clients are using Ferrum’s blockchain-as-a-service (BaaS) solution, and over two dozen projects have already been incubated, suggesting that the Ferrum Network is well-equipped for longevity.

If you are looking for stable investments to diversify your portfolio, it is always positive to back out the perspective to see beyond the hype curtain. Worry less about investing in overly-hyped coins because investing in blockchain infrastructure has become a value-added choice for most investors in recent years and will continue to remain so for the foreseeable future.