If you think the stock returns have been impressive this year, take a closer look at cryptocurrencies, which truly have been the gift that continues to be offered. The aggregate value of all digital currencies has increased by 196% this year, through the late evening of December 21, and by more than 1,500% since the crypto market hit its pandemic low in March 2020. .
While many usual suspects have been responsible for this nominal increase in market value, it is the coin Shiba inu (CRYPTO: SHIB) this has captivated crypto investors.
Shiba Inu soared in 2021, but could drop next year
According to data from CoinMarketCap.com, investors were given the opportunity to invest in SHIB for $ 0.0000000073 per token at midnight on January 1. In more than 11 months, six zeros have been removed. Based on a per token price of $ 0.00003334 at the time of writing, the Shiba Inu coin has generated a cumulative return of over 45,000,000%! In other words, an investment of just over $ 2 would have made people millionaires, based on a 45,000,000% return.
There are many reasons why retail investors have rallied around Shiba Inu this year. These include the listing of SHIB on a growing number of exchanges, the launch of the decentralized exchange ShibaSwap, the arrival of SHIB at its first major merchants and, without a doubt, the fear of running out. (FOMO). It is also much more difficult to short sell in the cryptocurrency space, compared to the stock market, which has created a short-term natural buying bias for Shiba Inu.
While it is undeniable that these gains in 2021 were historic, they are also almost certainly fleeting. This is because Shiba Inu is lacking in all of the important categories that crypto investors should care about. It offers no competitive advantage over other payment coins, has shown no real differentiation (social media pumping is not sustainable differentiation), and has extremely limited utility, with fewer than 390 merchants on the market. accepting as payment method.
Additionally, historical precedents have made it clear that life-changing gains in the crypto space are always followed by epic reversions. With a gain of over 45,000,000% in less than a year, it makes sense that a 99% rollback will follow.
These digital currencies may revolve around the SHIB in 2022
While there is reason to believe that Shiba Inu will be one of the worst performing cryptocurrencies next year, the following trio of digital currencies all have the potential to spin the SHIB.
Although avalanche (CRYPTO: AVAX) doesn’t come close to Shiba Inu’s winning percentage this year, he left SHIB in the dust when it comes to market value. In 2022, I would expect this gap to widen considerably.
What makes Avalanche such an intriguing smart contract-based blockchain network is its speed and compatibility. Smart contracts are protocols that help verify, facilitate, and enforce a contract between two parties.
As for the first, Avalanche is an exceptionally fast network. Its main project page notes that it is capable of over 4,500 transactions per second (TPS), with transaction finality of less than two seconds. It’s just a fancy way of saying that transferring money, files or data takes less than two seconds. Comparatively, the two big ones, Bitcoin (CRYPTO: BTC) and Ethereum (CRYPTO: ETH), process only 7 TPS and 13 TPS, respectively, and take around 60 minutes (for Bitcoin) and 6 minutes (Ethereum) to complete transactions. As a reminder, Shiba Inu is an ERC-20 token built on the Ethereum blockchain, which means it is subject to the low TPS and latency that sometimes affects the Ethereum network.
However, it is the compatibility of Avalanche’s blockchain network that attracts investors even more. You see, the Ethereum virtual machine is already running on the Avalanche blockchain. This means that developers of decentralized applications (dApps) on the Ethereum network could easily move their projects to the Avalanche network to pay lower transaction fees and enjoy faster execution and scalability. .
Recently everything about dApp development and / or the metaverse has been unstoppable in the crypto space. But don’t overlook the potential of finance-driven, blockchain-based payment networks. A good example of one that can go around in circles around the SHIB in 2022 is Stellar (CRYPTO: XLM).
Using the existing infrastructure, validation and settlement of cross-border payments can take up to a week. It’s not very effective, although it’s something consumers and businesses have been used to for decades. With Stellar, the fiat currency is converted into a network protocol token (XLM, known as Lumen), sent to its destination, and converted back to the fiat currency of its choice. This whole process only takes a few seconds, even across borders.
It’s also an incredibly inexpensive way to transfer money. The average transaction cost on the Stellar network is only 0.00001 XLM. Based on its closing price on December 21, it would take around 370,000 trades before a user even accumulates $ 1 in fees. Compare that to the wire transfer fees you will pay your local bank and you will see how much of a bargain Stellar’s blockchain network can be.
Another thing to note is that Stellar has real world partnerships. The Stellar Development Foundation collaborates with Visa and digital financial services provider Tala to bring finance-focused blockchain solutions to emerging countries. He also worked with IBM and a dozen banks in the South Pacific region to test blockchain-based cross-border payments.
Now, if investors want something truly invisible that can go around Shiba Inu in 2022, consider Qtum (CRYPTO: QTUM), which is pronounced like “Quantum”, for the curious.
Qtum narrowly clings to its place in the top 100 cryptocurrencies by market cap. But it is a very intriguing blockchain project that offers clear competitive advantages. And when there are nearly 16,000 digital currencies listed on CoinMarketCap.com, having a competitive edge is a must to stand out.
What makes Qtum so interesting is that it brings together the best aspects of Bitcoin and Ethereum into a single blockchain project. It builds on the security of Bitcoin’s UTXO model and combines it with the aforementioned Ethereum virtual machine. The end result is a highly secure blockchain that can support smart contracts and therefore should have no trouble attracting dApp developers.
The Qtum blockchain also deploys what it calls the Account Abstraction Layer (AAL). Without getting too technical, AAL allows Qtum to regularly introduce smart contract upgrades that will work with Bitcoin’s UTXO model. In other words, it will remain backward compatible, regardless of the complexity of smart contracts on the blockchain.
With a lot of partnership potential, Qtum should be able to easily outperform Shiba Inu next year.
This article represents the opinion of the author, who may disagree with the âofficialâ recommendation position of a premium Motley Fool consulting service. We are motley! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.