Three types of digital currency risk analysis
In the last article, I divided my understanding of digital currency into three levels.
The first category is that its value and consensus have been strongly recognized, there is almost no controversy, and it has been transmitted from inside the circle to outside the circle.For example, Bitcoin and platform currency, this type of currency is the least amount in the entire digital currency field.
The second category is that there is already a consensus, but the actual use value is still being proved, or the so-called "use value" has not yet allowed us to see the actual effect.Such as Ethereum, EOS, cross-chain, etc. This type of currency is slightly more than the first type, but it is also very small in the entire digital currency field.
The third category is that consensus has not yet been formed. The design goals and scenarios of such coins are not necessarily understood or recognized by people in the industry, or even if they are understood, there are great differences. Their value is more difficult to judge. Such coins account for the vast majority of the current market.
These three types of digital currencies are not only different in value perception, but also in the risks they contain and the difficulty of controlling these risks.
The risk of the first type of digital currency is the easiest to judge, and investors can easily judge the risk and take countermeasures based on changes in various factors.
Bitcoin is basically the least risky of all digital currencies, There are only two risks that can make Bitcoin go to zero: one is that the global government prohibits Bitcoin transactions, and the other is that the Internet is completely paralyzed, otherwise the possibility of Bitcoin going to zero is almost impossible. If Bitcoin goes to zero, none of the other digital currencies will be safe.
The risk of the platform currency is basically only related to the government's regulatory policies and the operation of the platform, as long as the regulatory policies are loose and the platform operation is stable, the risk of the platform currency, especially the platform currency of a large exchange, being zeroed is very small.
Since the value of the second type of digital currency is still in the process of realization, whether its value can finally be realized and meet everyone's expectations is affected by many factors. Therefore, the risks involved in this type of digital currency are higher than those of the first type of digital currency. There are many more and the control of risks is also much more difficult.
Take Ethereum and EOS as examples. They both belong to public chains that support smart contracts, and they are also the two biggest competitors in this field. How these two contenders end up, whether one wins, the other fades away, or both can coexist forever, only time will tell.
But one thing is clear, at least one platform will survive in this field, becauseThe application of smart contracts is just needed for the application of blockchain technology.
The third type of digital currency contains the most types and is the most complex, so the risk is also the greatest. Some of them are once star projects, but were gradually eliminated in the competition; some were once favored but later proved to be pseudo-demand in practice; some are just emerging in a certain segment , but the significance of these subdivisions and the potential value are currently difficult to judge.
This field even includes some air coins and MLM coins that temporarily confuse a considerable number of investors.
Due to the different risks contained in these three types of digital currencies, different investors have different perceptions and control of these risk factors. Next time, I will share how to deal with the investment of these three types of digital currencies according to their own risk tolerance.
