CLASSIFICATION

Cryptocurrencies

Bitcoin, Litecoin, Dash, Monero, ZCash

Tokens

Ether, Golem, Factom, Status, Aragon

Digital Shares

BitShares, AntShares, DigixDAO, MakerDAO, Lykke

Digital Assets

The emerging class of Digital Assets have properties of currencies (medium of exchange and store of value), shares, IoUs, voting card, tokens, points, access key and more. While the cryptocurrencies and markets boomed, for many of them a diverse variety of risks and challenges persist. Coupled with the chaotic, easily manipulatable markets, the choice of the right assets to invest in for long term becomes as challenging as trying to game the markets in the short term. Below we pose challenging questions to the top 5 digital assets by market capitalisation (as of July 2017):

  1. Will Bitcoin‘s governance stalemate handicap its ability to evolve? If Bitcoin, due to fixed limited supply, is considered to be digital gold, how may the prospect of splitting Bitcoin into 2 competing chains (and thus suddenly doubling the global supply of the supposedly fixed limited asset) influence the price of the asset as well as trust of investors in similar projects?
  2. Can Ethereum resolve its scalability issues before emerging self-professing “better than Ethereum” platforms such as Tezos, EOS and Stratis compete away its advantage as first-mover in the smart contracts domain? How will success or failure of all ERC20-tokens and their projects influence the perception and value of Ether?
  3. How can Ripple create trust amongst investors, when it arbitrarily froze the vast majority of its tokens supply driving the price higher and higher? What happens if this freeze is over? How can it persuade investors that Ripple tokens have value when banks may use their blockchain without the need to hold tokens?
  4. Can Litecoin create a lasting momentum after adopting Segregated Witness and Lightning Network? How long will their competitive advantage last and what additional functionalities or features can bolster its acceptance as global currency?
  5. Can Ethereum Classic move beyond their narrative of choice that we are Ethereum, but without rewinding the clock? What real innovations can drive success of Ethereum Classic in the longer run, especially given Ethereum’s rapidly expanding base of corporate partners and startups ecosystem?

Many similar questions can be posed to other cryptocurrencies and tokens. While the euphoria lasts, many questions are likely to be ignored and dismissed. The management of these projects can afford that, given that their ICOs make them instant millionaires, so whatever the long-term outcome is, they will remain well-off. For a shrewd investor, these questions are paramount in their assessment of long-term potential of digital assets. For the short- and intermediate-term opportunities, a variety of investment tools can be useful. They are described in the next section.