Cryptocurrency prices are in decline across the board. The wise guys with blue check marks in their Twitter bios, and agents that get investor gurus on the financial news shows, are all patting themselves on the back with “I told you so”. Serious investors should not be listening to these drama queens. We all know crypto is a wild ride. Patience is a virtue, remember. “Hodl” the line.
For 2022, one of the biggest stories in crypto investing is going to be the blockchain players that are expected to eat into Ethereum’s market share, and grow into hundred dollar or even thousand dollar coins.
Every investor is chasing that theme as a way to diversify their cryptocurrency portfolio.
We already know who the main “Ethereum Killers” are.
For the most part, it’s Solana (SOL), Avalanche (AVAX), Polkadot (DOT) and Cardano (ADA). After writing “The Rise of the New Blockchains” about developer and investor sentiment for these four players, I was reminded that there are many more blockchain projects trying their luck in the same space.
There’s Hedera, an enterprise-focused decentralized blockchain with a $4 billion market cap. Major corporations own it, like Tata and Wipro of India, and Google and IBM in the U.S. So if you don’t like corporations, then maybe Hedera isn’t the place. But if you believe corporations are going to get into blockchains, and they are, then maybe this is another alternative to Ethereum as an investment.
Hedera is not going to break anyone’s bank. One Hedera (HBAR) goes for just $0.23. It’s up 133% over the last 12 months as of this weekend.
Ben Constanty, CEO at Smartlink, a Vancouver-based company, says they are building a suite of decentralized finance (defi) apps on Tezos, a proof-of-stake blockchain with a current market cap of $2.6 billion. Constanty brings up the issue of the “overheating blockchain” — my term. This is something that Elon Musk brought up after going all in on Bitcoin last year, allowing people to buy Tesla cars in BTC, and opening Tesla’s Treasury to buying BTC. But, due to too much energy mining BTC, and Musk is a climate guy, he gave up on the idea of hoarding Bitcoin.
Constanty thinks more energy efficient blockchains that are not burning down the house will draw investor attention. (Think ESG types.)
“There is the discussion about the carbon signature of blockchains, and Tezos, among other alt blockchains, ace Ethereum with lower energy consumption,” Constanty says. “Plus, Tezos now has a growing number of artists, entertainers, and game development companies like Ubisoft using Tezos for their NFTs.”
Tezos (XTZ) is priced at around $3 and is down a little over 4% over the last 12 months.
Another one of the “climate conscious” alts, if this is even a term, is the NEAR blockchain. It bridges to Ethereum. Everscale is another smaller name not often tossed around, says Vlad Ponomarev, CEO of Broxus, one of the companies behind Everscale, a decentralized ecosystem based on the Ever OS platform. The platform is supposedly capable of processing millions of transactions per second and claims to have around 1,000 developers building on it now.
“As developers, we decided to focus on the Everscale network for several reasons, and one is because it has a solid and passionate developer community,” says Ponomarev in an emailed response to questions about Ethereum alternatives. “The governance of the network is distributed among professional, institutional investors and developers and there is no ICO, so there is no investor pressure,” he says, though Everscale is tradable. Their ticker is EVER.
Developers might be happy with it, but investors have lost money on EVER over a 12 month period and since its launch in October 2020.
“They’re not trying to build up hype,” says Ponomarev. “It’s better for the network in the long run.”
Ethereum: Can it be Dethroned?
The lesser known blockchains are all competing with the better known alternatives, which are largely competing with the granddaddy of them all, Vitalik Buterin’s Ethereum.
Good luck with that, is all anybody can really say. This is a new world. We don’t know if in the future Ethereum would buy up Tezos, or any of the other smaller companies that are doing better on speed and scalability. In August, Polygon (MATIC) bought the Hermez Network (HEZ) in a deal estimated to be worth $250 million. It was the first deal of its kind between two blockchains.
A lot of newer projects are launching under an initial decentralized exchange offering (IDO) and often require a launchpad to help raise funds and awareness of their start-up. Ethereum fees make this almost unviable for smaller players and so developers have turned to alternatives, including one not mentioned here yet — Binance Smart Chain — to launch their projects, notes Rutherford Atayobo, co-founder of play-to-earn blockchain game called Sin City Metaverse, in an emailed correspondence.
Still, the real, big alternatives are going to get all the attention from developers and investors. This is where the money flow will be.
Nigel Green, CEO of the deVere Group, is picking Cardano.
“Cardano is likely to be a challenger to Ethereum as not only can it be used as currency, but its blockchain can also be used to build smart contracts, protocols and decentralized applications,” he says. “It is said to be significantly more scalable than Ethereum. Cardano will also pose a challenge to the all-mighty Bitcoin,” he thinks.
“Those who invest in digital assets know that one of the secrets of successful investing is diversification,” Green says. “Investors will want their cryptocurrencies diversified and this is likely to eat into Bitcoin’s market share.”
If it eats into Bitcoin’s market share, what about Ethereum’s then?
“A lot of developers have chosen to work on Cardano rather than Ethereum,” says Ken Olling, co-founder and CEO of MELD, a defi protocol based in Oslo being built on Cardano.
“Cardano comes from research labs, with highly peer-reviewed research papers for their design. They do walk slower this way, but the end result is phenomenal. Cardano has very fast transaction speed, and very low transaction fees,” Olling says.
Ethereum’s network is still the largest. Buterin’s blockchain is hitting all the milestones on its roadmap, and its dominance persists in the DeFi and NFTs sectors and smart contracts utility.
“The future of the blockchain industry is not about one blockchain outperforming all others,” says Konstantin Boyko-Romanovsky, CEO of Allnodes Inc., a cryptocurrency hosting and staking platform. “It’s about many blockchains working together towards providing innovative technological solutions of various scales and scopes. As Ethereum approaches the merge, which will bring it to a scalable, greener, proof-of-stake model, the network continues to grow and improve. That should help maintain Ethereum’s standing as a leader in the blockchain space.”
Even Cardano users have respect for Ethereum. I asked Olling where he thought Ethereum’s price was going this year despite all the aggressive competition.
In true crypto-believer fashion: “Moon,” he says.
Sorry, haters. Bitcoin is up today, too.
Disclaimer: The writer of this article owns Cardano, Polkadot and Bitcoin.