Over long periods, the stock market is virtually unrivaled in the returns column. But over the past two years, equities have repeatedly been overtaken by cryptocurrency returns.
Since the coronavirus crash in March 2020, the widely followed S&P500 doubled in value on March 2. But according to CoinMarketCap.com, the aggregate value of all digital currencies has catapulted more than 12 times to $1.94 trillion since hitting its March 2020 low.
Although branded cryptocurrencies are responsible for the bulk of this nominal increase in market value, they are high-flying tokens like shiba inus ( SHIB 4.41% ) which got all the attention.
Despite surging in 2021, Shiba Inu is bad news
Last year Shiba Inu was virtually unstoppable. At its peak intra-annual gain in late October, its value was up more than 121,000,000% from where it started in 2021. It eventually ended up around 46,000,000%. Unsurprisingly, these historic gains made Shiba Inu one of the most searched cryptocurrencies in the United States last year.
A number of factors have worked in SHIB’s favor, including increased visibility via new crypto exchange listings and the launch of decentralized exchange ShibaSwap in July 2021. Shiba Inu is also benefiting from certain crypto market dynamics (e.g. , minimal short selling activity and no derivatives/options to bet with against SHIB) as well as excitement over the many upcoming upgrades and product launches of the ecosystem.
But despite SHIB’s success, it’s impossible to ignore its flaws. For example, Shiba Inu does not have clearly defined competitive advantages. At the moment it is nothing more than an ERC-20 token built on the Ethereum (ETH 5.57% ) blockchain. In simpler terms, it is a payment coin. There is no shortage of cash coins among the approximately 18,000 digital currencies listed on CoinMarketCap.com. Without real differentiation, SHIB will have an almost impossible task of standing out in a crowded space.
To follow up on that, it’s not even a particularly popular payout coin. While Shiba Inu is extremely popular on social media platforms, only 641 mostly obscure merchants accept SHIB as a form of payment. That’s a drop in the ocean when you consider that there are over 32 million businesses in the United States alone and north of 500 million entrepreneurs worldwide.
Historical precedence would also suggest much lower Shiba Inu future points. In previous cases where payment coins or protocol tokens on payment networks have generated historical short-term gains, they have almost always lost 93%-99%+ of their value within 12-26 months of their release. respective peaks. A similar fate likely awaits Shiba Inu.
This Crypto Duo Offers Much More To Investors Than Shiba Inu
To be fair, many cryptocurrencies (not just Shiba Inu) are unlikely to live up to their frothy long-term valuations. But the can to be significant winners in the field of crypto.
As I scoured the digital currency landscape in March, two cryptocurrencies stood out as significantly better buys than SHIB.
The first cryptocurrency to buy in a snap on Shiba Inu in March is avalanche ( AVAX 6.40% ). As of March 2, it was the 10th largest crypto by market capitalization ($20.6 billion).
Avalanche and its blockchain network based on smart contracts – smart contracts facilitate, verify and enforce the negotiation of a contract between two parties – offer three very clear advantages that should allow it to succeed over time.
For starters, Avalanche’s network is fast. If you want to send money, data, or files over the Avalanche blockchain network, your transaction will complete in less than two seconds. Compare this to checkout-oriented payments Bitcoin ( BTC 7.86% ) or smart contract rival Ethereum, where transaction finality averages 60 minutes and six minutes respectively.
The second reason Avalanche stands out from the crowd is its ability to scale. Fast block finality is only relevant if the network in question can handle a large number of transactions at once. Bitcoin and Ethereum are only capable of 7 and 14 transactions per second (TPS), respectively. Meanwhile, Avalanche can handle over 4,500 TPS, according to its developers. Although still some distance from the payment processor Visawhich is capable of 24,000 TPS, Avalanche has shown that it can scale faster than virtually any other blockchain network.
But the real dangling carrot for Avalanche is what’s included on its network. The third advantage is the incorporation of the Ethereum Virtual Machine (EVM) on its blockchain. EVM is what software developers use to build decentralized applications (dApps) on the Ethereum blockchain. Since Avalanche offers superior speed and scalability, as well as lower transaction fees, compared to Ethereum, the inclusion of EVM should encourage dApp developers to come to its network.
Recent dApp protocol revenue data suggests that this is happening. According to TokenTerminal.com, Avalanche has brought in $41.6 million in dApp protocol revenue over the past 90 days. But based on the $17.6 million generated in the past 30 days, its three-month run rate is now closer to $53 million.
The second cryptocurrency that can be bought with confidence in the blink of an eye instead of Shiba Inu in March is IOTA (MIOTA). IOTA is certainly a more low-key crypto, with a market capitalization of just $2.2 billion.
What makes IOTA so special is the uniqueness and efficiency of its network, as well as the fact that it has practical and real-world application.
Unquestionably, what stands out the most about IOTA is that it is not a blockchain-based network. Instead, its developers use what they call the “Tangle”. The Tangle is a directed acyclic graph (DAG) that requires each new transaction to confirm two previous transactions. As the network grows and more transactions are validated, these validation lines begin to look like a tangled web. This is how the developers created the “Tangle”.
There are a number of advantages to relying on DAG as opposed to blockchain. For example, blockchain-based networks require user votes to generate and validate blocks. These are cases where delays can slow down a network or make it more expensive. With no validators needed, the IOTA network is designed to become more efficient with each passing transaction. On average, payment transactions are completed in seconds.
Even better, the DAG solution ensures that transactions on its network are (drum roll) free! This is a significant competitive advantage over most existing cryptocurrency networks and payment infrastructures.
Equally exciting, IOTA introduced staking in December 2021, which allows IOTA holders to earn passive income in the form of new tokens. One of these new tokens, Assembly, will offer free transactions based on smart contracts when it launches on its network later this year.
A final reason why IOTA is a much smarter buy than Shiba Inu in March is its real-world use case. In February 2021, IOTA announced a partnership with a well-known IT company Dell Technologies (DELL 1.85% ). Three years ago, Dell launched its Data Confidence Fabric (DCF), which aimed to follow the journey of data from the edge of the cloud to its destination. IOTA helps with scaling and securing Dell’s DCF, as well as recording the trust rating of this data in its Tangle. This is one of the many reasons why IOTA belongs in your wallet long before SHIB.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.