The market for both Bitcoin and altcoins is pointing toward a recovery, barring another bout of panic. At this point, newcomers may be more aware that assets do not only appreciate, but go through painful corrections. Still, there are several coins and tokens with increased appeal, which, however, may hold pitfalls.
Bitcoin, possibly Ethereum, and Litecoin, may be considered mainstream enough, and with a different risk profile. But other hot assets deserve a second look, as weaknesses in their technology or adoption may lead to losses.
Here are some of the most hypes digital assets, with their respective weaknesses:
Ripple (XRP): The network relies on a system of servers, which are nothing like miners. Server operators are hardly known in the community, and the project is targeted toward banks. Ripple has no suitable wallet, and either relies on Ledger Nano S, or storage on exchanges. In terms of trading, the market price is severely affected by hype, and the weight of Asian trading is overwhelming.
EOS: Seemingly going against the market, this coin is currently in the stage where investors are preparing for a snapshot coming in May. Afterwards, balances will not be counted toward the main net. There have been talks of concerted market manipulation for EOS, as well as a connection between auction and market prices. There is also the accusation that the EOS token will serve no purpose on the EOS network, except for buying staking rights.
Cardano (ADA): The platform promises a lot, but for now, only its blockchain layer exists, without the complex functionalities promised for the future. Also, ADA is in the spotlight for Western investors, but is still mostly available on Asian exchanges, and the volume on Binance is relatively low. The asset fluctuates in price, and has added 55% in a week in April, getting to $0.24. The ADA asset has a proprietary wallet, but some problems, glitches, and scams with the mobile wallet have discouraged users.
Stellar (XLM): An asset being attractive for its potential for speedy transactions. Stellar is, in fact, the open-source, user-oriented alternative to Ripple. While Stellar has a blockchain, it will also have a series of validators. This is the biggest risk, since the Stellar consensus plans to re-introduce trust and control in a system supposedly trust-less. That is, in the Stellar network, nodes will have a form of collision, or even a form of node cartels, to vote on the correct ledger version. Some believe this is the biggest weakness of the project, which indeed may ensure fast transactions, but defeats the purpose of crypto coins.
IOTA (MIOTA): With the hot promise of the Internet of Things, MIOTA is an in-demand coin. However, the hype has fallen away, and even trading is sporadic. For now, IOTA remains risky, as wallets are uncomfortable, trading is limited to Bitfinex and Binance, and the real-world adoption is in fact years away. IOTA is only used as a means of payment on niche services.
TRON (TRX): The coin is in-demand, for its up and coming main net. In the future, TRX may have a dual-coin structure, and build an entire ecosystem not unlike NEO, or QTUM. However, at the moment, TRX is in its token phase, and its price is led by speculation. Also, the TRON network is still in development, and the project may take years to deliver results, while the price fluctuates and leads new buyers into losses.
Verge (XVG): This is the second wild run for the coin, this time leading only to $0.09. XVG showed it is prone to hype, and while the project is active, it has yet to prove itself as delivering results. Network problems, big promises, as well as speculative greed, make this project potentially very harmful for newcomers, especially buying at a relatively high price, later to see losses.
For the community, almost any digital asset can be said to have faults and be overrated. With the rapid price growth in December, some coins gained prominence way beyond the strength of the project, and another bull rally may cause the same phenomenon. It is best to do your own due diligence, for risk-free handling and trading.
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