There are few aspects that would determine the success of a cryptocurrency. We are here to outline these aspects to help you become the next Bitcoin.
- Demand – this is the most important aspect of any business. A business is successful when it satisfies an existing demand or is able to create a new one. Similarly a new cryptocurrency should have enough demand to stay in business. These currencies are inherently limited in supply, thus the only way to raise the prices is to increase the demand. Now this can be done by marketing the special features and functionality of the cryptocurrency. Advertising its speciality will not only build demand but also help create a community.
- Functionality – having a cryptocurrency with unique functions and features really makes it stand out from the competition. Offering something that the competitors do not, drives up the demand and increases the cryptocurrency’s chances of being successful.
- Ease of Conversion – if the process lags, the coin will be transferred slowly. The coin that can be transferred easily and be converted to other currencies as well will be preferred over the rest.
- Mode of Acquisition – a crypto coin can be acquired either through mining or by purchasing or trading for them. A third method is via a reward system, wherein the individual is rewarded with coins upon completion of the tasks. The easier the process of acquisition, the more will be the demand for the coins. It is common knowledge that mining becomes tougher the deeper one mines, whereas trading for coins is relatively easy as long as there are willing buyers and sellers.
- Community – this is one of the most important aspects in building a successful cryptocurrency. The community’s acceptance validates the coin and enables its growth. Through a strong and faithful community, the crypto can ensure that they rapidly grow and reach investors far and wide.
- Cyber Security – a major requirement to be a successful cryptocurrency is to have a safe and secure protocol in place. The cryptocurrency market is equivalent to the cash market which gives rise to cyber crime. These hackers will attempt to drain out the wallets. Two of the biggest cryptocurrency hacks occurred in 2018, Coincheck and BitGrail. The former suffered a loss of $534 million while the latter lost $195 million.
To ensure their investors and community members that they are genuine, the developers and founders should lock the liquidity via a liquidity locking service. The community members will be ensured that the chances of a rug pull are minimum and the developers do not have any selfish motives.
- Token Supply – another means of ensuring the trust of the community would be to inform them of how the tokens are distributed, this information can be disseminated through the whitepaper. This piece of information would help them to gauge whether the owners have the control or does it lie with the community. It needs to be fairly distributed in order for them to believe the project is genuine.
Let’s have a look at the journey of two different cryptocurrencies.
- Safemoon – shortened for “Safely to the Moon”, this newly launched token seems similar to other cryptos available in the market but it also aims to stabilize the price. As of May 24th they possessed a market cap of $2.2 billion and has been steadily growing since its launch. According to their published whitepaper, it has a total supply of 1 quadrillion tokens of which 223 trillion are burned. The project seems a bit suspicious as the majority of the liquidity is owned by the team but the owners have clarified their roadmap and stated that they aim to even start their own exchange. Additionally they envision creating a crypto education app by the fourth quarter of this year and will establish a SafeMoon Scholarship by the end of this year.
The ingenious protocol it employs, discourages trading of their coins and attempts to fix the price volatility issue. Investors selling their coins are fined a 10% penalty tax fee and 5% of these fees are distributed among existing holders. These rewards to holders differentiate it from other cryptos on the market. The SafeMoon coin price has been quite volatile since its launch, peaking in April. It is too soon to say whether it fulfills its aim of removing price volatility.
2. Shiba Inu – nicknamed the DOGECOIN KILLER, this token was launched in August 2020 by Ryoshi. Clearly from its nickname, it can be inferred that it is a joke or meme coin launched to be a direct competitor to Dogecoin. It is listed on ShibaSwap, their own decentralized exchange.
Recently the founder of Ethereum, Vitalik Buterin, received nearly half of the supply of Shiba Inu from its developers. This is a kind of tradition carried out by most Ethereum based tokens. But in early May he decided to burn 90% of his Shiba Inu holdings and the remaining 10% would be donated. That would mean that nearly 40% of Shiba Inu tokens have been burned which would leave 410 trillion coins. In their woofpaper, a dog themed whitepaper, they claim to “outpace the value of Dogecoin, exponentially, without ever crossing the $0.01 value”. Point to be noted that their coin is valued significantly lower than that.