Digital currency classification investment strategy
It has been more than 11 years since Bitcoin was launched in 2009 and the digital currency has developed to the present. After 11 years of development, digital currencies have been greatly enriched and developed in terms of both quantity and type, forming a complex and huge ecology.
For this ecology, some senior industry players, such as Erik Voorhees, CEO of the famous digital currency exchange Shapeshift, divided these digital currencies into four categories according to their investment value: Bitcoin, Ethereum, other valuable digital currencies, and junk coins.
What's unusual about this classification is that it lists Bitcoin and Ethereum into a separate category.
Bitcoin is now the well-deserved "King of Digital Currency". It is far ahead in both price and market value, and its market value accounts for more than 60% of the total digital currency market value. Therefore, Bitcoin is listed separately as a category.
Ethereum is the well-deserved No. 2 in the entire digital currency field. Although Ethereum ranks second in terms of market value, I think its development potential is far greater than that of Bitcoin.
The development of Bitcoin has gradually become a symbol, and it no longer has too much technical significance and reference value for the entire digital currency or blockchain field. In recent years, the only technically brighter technology of Bitcoin is probably the Lightning Network, but this is hardly worth mentioning compared with Ethereum 2.0 and various second-layer expansion technologies that Ethereum is developing.
Not only is the technological progress and innovation of Bitcoin incomparable to that of Ethereum, but looking around the entire digital currency circle, it is almost impossible to find a second project that can match the depth and breadth of technological development of Ethereum, so Ethereum It is no exaggeration to list it as a separate category.
In addition to Bitcoin and Ethereum, in previous articles, I have analyzed other digital currencies such as privacy/anonymity coins (such as Monroe, Zcash), exchange platform coins (such as BNB, HT, OKB) And the recently emerging coins in the Ethereum DeFi ecosystem (such as Maker, COMP), etc.
No matter what application field they belong to and what technology they use, these coins can generally be regarded as applications exclusive to a certain field, and have unique advantages and values in their respective subdivision fields, so they are all classified as one. kind.
This type of currency is inferior to Bitcoin in terms of status and awareness, and inferior to Ethereum in terms of the depth and breadth of ecology and technology, so they rank behind Bitcoin and Ethereum.
The above three types of coins are ranked from high to low in terms of reputation and value, and they are all worthy of investment. Apart from these three categories, a large number of digital currencies with unclear values and unclear application scenarios, and digital currencies issued for various other purposes all belong to the last category—garbage coins with little value.
Among these four types of currencies, there is basically no big obstacle for investors to understand Bitcoin and Ethereum. Even novice investors who have just entered this field know that Bitcoin and Ethereum are worth investing in; There is a big difference between the cognition of the third category and the fourth category.
Many novice investors suffer from investing in the third and fourth types of currencies: they mistakenly regard some types of garbage coins belonging to the fourth type as the third type of "valuable digital currency" and bet on them. A lot of money, and ultimately lost everything.
I suggest investors who have just entered the industry and are inexperienced to focus on Bitcoin and Ethereum for the time being, and not to step on unnecessary pits by mistakenly investing in the fourth type of garbage coins because of cognitive bias. Wait until after a period of learning and exploring to explore which may be the third type of valuable digital currency.
