Opinion | Why do I believe Ethereum and Bitcoin are the two most important cryptocurrencies

Ryan Sean Adams, founder of cryptocurrency investor Mythos Capital, is a hardcore fan of Ethereum. He has written that ETH is underestimated because he believes that ETH is a currency-like value store, exchange medium, and account unit function—specifically, he can participate in his article published before the chain, "Reissue Ethereum: Only when ETH To become a currency, Ethereum can succeed." Recently, Ryan Sean Adams once again wrote that Bitcoin and Ethereum are currently the only two cryptographic assets with "commodity currency" attributes, which is an important value.

Written by: Ryan Sean Adams, founder of cryptocurrency investor Mythos Capital

Bitcoin forks and Ethereum ICO have spawned a lot of cryptographic assets, and we are no longer able to return to the era of a single cryptocurrency. I estimate that all assets will eventually be "tokenized" in some way.

But which assets can accumulate real value?

More importantly, you should distribute your own cryptographic wealth.

The “bankless” philosophy we say is actually quite simple: you hold most of your encryption wealth in cryptocurrencies, especially crypto commodity money, ie Ethereum and Bit. currency.

What is a commodity currency?

Commodity money means that the value of such funds comes in part from its use as a commodity, in part from its use as a currency – a representative currency with no intrinsic value itself, or a legal currency as defined by government regulations. A sharp contrast.

  • Commodity currency: gold, silver, copper, cigarettes, shells
  • Representative currency: bank notes, checks, US dollars (when the US dollar is supported by gold)
  • Legal tender: Renminbi, US dollar, British pound, Euro, Japanese yen

The difference between commodity currency and a common commodity is the currency premium. A pure commodity is valuable only by practicality, and a commodity currency has value as both a practicality and a currency . Any value above the practical value of a commodity is a currency premium.

The currency premium of a commodity is driven by the combination of expectations that in an economy it is considered to be a future value store (SoV), transaction medium (MoE) and/or account unit (UofA). Fit. The economy served by this commodity currency can be small in scale, such as cigarettes in prisons; it can also be large in scale, such as gold in international trading in the “Golden Age”. The value of commodity currencies such as gold is partly due to its use in the electronics industry, but most of it stems from its use as a hedge against the collapse of the legal currency system. The value of gold is based on the simple fact that many people bet that other people will use it as a tool to store wealth.

If we regard "currency" as an adjective, it may be helpful to understand the above concept, that is, " monetary ". In this way, gold is more monetary than silver, and silver is more monetary than brass. Each asset is actually located somewhere in the "monetary" spectrum, and monetary itself is a social construction .

There are many other factors to consider, but these are enough to understand what is the encryption of commodity currencies: the encryption of commodity currencies, with both practical value and currency premium. One of the best currencies has the highest level of monetary.

(Note: Some people think that Bitcoin is not a commodity because it is not practical, but I don't agree with it. Bitcoin is practical because it can be used to pay for transactions on the Bitcoin network. This is a kind of Practicality.)

Cryptographic currency portfolio

If you want to gain potential value added to an encrypted asset, I recommend a combination of cryptocurrencies consisting of three asset types:

1. Currency-type bets – the monetary nature of such assets has strong growth potential and is the reserve currency of open finance, such as Ethereum (ETH) and Bitcoin (BTC);

2. Row-like bets – such assets can gain growth potential at the banking level of open finance, including encrypted banking and currency agreements such as MKR, BNB, etc.;

3. Stabilizing currency betsstable currencies anchored with the value of the legal currency, such as DAI, USDT, are mainly used to hedge risks and are used directly in the encryption ecosystem.

At the heart of the idea of ​​a cryptocurrency portfolio is that one or more cryptocurrencies will become the base currency of a parallel non-sovereign financial system (worth trillions) , and the monetary system can spawn a whole new set of Encrypted banking and currency agreements can be empowered by the latter two.

The cryptocurrency portfolio allows you to reach the monetary and banking layers of this parallel monetary system , both of which have the highest potential for value added.

Encrypted currency is my main investment theme in the encryption industry.

What percentage of each of the three asset types should be in the cryptocurrency portfolio? In fact, it all depends on you. First, you need to determine how much of your current net worth is invested in cryptocurrencies, and how much future income will be invested. After that, you can decide how to allocate in the three types of encrypted assets. These two issues are beyond the scope of this article.

If you don't consider the specific percentage, most of the cryptocurrency portfolio should be placed in the "currency bet", a small part in the "bank bet" , and only if you expect to get alpha income in the currency bet At the time, the "bank-like bets" and "stable currency bets" played a role in the ecosystem, and the purpose was to hedge the risk of other bets.

So, at this point in time, what are the good cryptocurrency portfolios?

The answer is not complicated.

We can do a simple exercise to see which of the top 15 crypto assets in the market capitalization have the characteristics of the commodity currency:

  • 1. BTC – Yes, has the potential to reserve assets and is currently used as currency;
  • 2. ETH – Yes, with reserve asset potential, currently used as currency;
  • 3, XRP – no, centralized distribution, can not be used as currency;
  • 4. BCH – may be available;
  • 5, LTC – no, no need for bitcoin forks;
  • 6, USDT – no, stable currency, not commodity currency;
  • 7. EOS – may be, but seems too central to maintain its currency premium;
  • 8. BNB – somewhat complicated, but certainly a bank-like bet option;
  • 9, XLM – no, centralized distribution, rarely used as currency;
  • 10. ALGO – No, the project has not yet started and cannot be used as currency;
  • 11, ADA – No, the project has not yet started, can not be used as currency;
  • 12. XMR – Yes, but it is difficult to see its mobility path;
  • 13, LINK – no, not a commodity currency;
  • 14. LEO – No, but it is definitely a bank-like bet option;
  • 15. TRX – No, too central, unable to maintain a currency premium.

As the only decentralized commodity currency, Bitcoin and Ethereum stand out from the list above. Only these two currencies have the characteristics of liquidity, decentralization and banking industry, which may become the reserve currency in the field of encryption finance. Bitcoin is currently undergoing financialization through the encryption banking industry, while the financial process of Ethereum is mainly carried out through currency agreements.

So far, only Ethereum and Bitcoin are assets in the encryption field that meet the good monetary requirements I set . Of course, the situation will change in the future, and I will evaluate it every quarter.

Of course, you may have different opinions. Or you want to choose a more speculative cryptocurrency in your portfolio, or even a currency premium for Bitcoin or Bitcoin. It doesn't matter, you can allocate the investment accordingly according to your own ideas.

However, it should be noted that the appreciation of crypto assets comes more from the commodity currency and the currency premium associated with it . Therefore, currency bets are the most important part of your portfolio. They are the choice of your long-term investment, the foundation fund for running a project, and the first stop for you to go to the bank model.

Please make your wise choice.

My choice is Ethereum and Bitcoin.