salarko/iStock Editorial via Getty Images
We are value investors, which puts us in scant company in crypto where a lot of strange things go on. While much of crypto is fueled by get-rich-quick fervour, where realities of long-term demand like utility and scalability go often ignored, there are ways to play the crypto phenomenon that are more traditional. Thanks to our data science capabilities, and actual hands-on experience coding smart contracts (albeit simple ones), we do recognise that there is a certain elegance and genius underlying the mechanisms of blockchain and the ideal that the networks that make commerce could be based on it. While we still think there are long-term risks like quantum computing, which interact with political risks connected to China, investors would nonetheless be remiss to deny both the technical achievements within blockchain, as well as the underlying network effects that are fueling parts of the crypto market much like the 'meme stock' craze.
While network effects would be a foolish way to justify unmitigated hot-potato speculation on terrible tokens, there are genuine ways in which network effects can create business value and fuel real and enduring demand for certain assets within crypto. We think that cryptogaming is a very legitimate purpose, where blockchain actually lends itself, rather than limits, the design models for many popular games. This is still a very nascent world, and we think it could grow massively, together with NFTs, and that Binance Coin (BNB-USD), correlated to activity on the BSC infrastructure, is the lowest risk way to play a long-term growth in crypto utility.
Now that we're at the beginning of 2022, it's a good moment to reflect on the performance of crypto in 2021, and discuss what could happen in the coming years. First of all, we have just experienced a meaningful reversal in the performance of coins in general. This reflects the phenomenon that while some in the investment community view crypto as an end-of-the-world hedge, it is a risk asset and when the market becomes spooked, these coins actually decline a lot, as opposed to something like Gold.
Seeking Alpha
Bitcoin (BTC-USD) came down hard from almost $70k a few months ago to just above $40k now, which has been driving much of the cryptocurrency market movements. Cardano and the connected Ada (ADA-USD) has been trading down meaningfully as well, which tracks the NFT phenomenon quite closely due to the importance of Cardano communities in driving NFT movements.
Seeking Alpha
Ethereum (ETH-USD), another major platform for DApps, has been more resilient.
Seeking Alpha
Similarly, Binance has been much more resilient as well, which begins to paint a very relevant picture for our investment thinking within crypto. Coins that act as resources for conducting commercial operations on prolific, higher utility platforms like Binance Smart Chain and Ethereum are the ones that are showing more resilience, due to their more infrastructural positioning. Meanwhile, coins that are connected to more speculative thinking about the markets and fiat currencies, or are simply being traded by whales, are much less resilient in a risk-off environment.
Seeking Alpha
As far as our crypto thinking goes, we are not interested in any play that involves the thesis that a particular cryptocurrency will become a good store of value just by existing. We think that Bitcoin falls in this category, and the decentralised, unscalable and non-existing governance that surrounds it as a coin makes it untenable in party with the world economy. We think that coins that have utility by being a necessary resource in running smart contracts on a widely used blockchain are the ones that are most likely to become mainstays. In turn, we think that the most widely used blockchain will be the one that doesn't take the wild west approach to the world of crypto, but is actually governed in a way that allows it to be regulated and also scaled.
As far as governance and scalability goes, Binance with its two blockchains takes the cake in our opinion, and is a very strong contender in becoming a chief platform. The governance and consensus protocol is not particularly decentralised, but it does achieve speed and scalability which is critical to its position as an exchange and center of DApps and blockchain-based commerce. The speed can be attributed to its unique consensus protocol, where BSC uses proof of staked authority (PoSA) which hybridises a proof of authority and delegated proof of stake approach. There are validator candidates who need to be identified by Binance, which then get voted on by delegators every 24 hours to determine the top 21. All these actors are compensated with BNB when they propose blocks, which is non inflationary, and the funds come from fees earned from transactions in the block. Ethereum has tens of thousands of validators, so only having 21 seriously reduces the amount of redundant computation. The ability to identify validators could become a critical element that differentiates Binance, because they can retain the fundamental principles of a consensus protocol while also being able to monitor what interests are able to validate blocks. Moreover, Binance is working to make its platform more regulator friendly all the time by introducing means to identify users who use the exchange, critical since it is still in friction with regulators due to its role as an exchange and its implicit influence on citizens and their investing. Also, data being public on the blockchain allows data analytics and other operations that can help track and deter illicit activity even in concerted efforts across Binance accounts.
Development skills for Ethereum also happen to be very transferrable to development on Binance, so in addition to factors mentioned above such as better scalability and a more feasible path to becoming government sanctioned, Binance has a shot at becoming its own economy for businesses and people looking to do commerce with unambiguous and tractable blockchain smart contracts. By already being one of the largest hubs in the crypto world, with BNB being one of the largest coins by market cap, they are already benefiting from network effects and preferential attachment that supports winner-take-all dynamics. We think that cryptogaming is a phenomenon that will take place on the platform that is the most prolific. While Ethereum has a certain dominance in the DApp space, Binance with its many useful apps related to trading and farming, is a worthy contender for the throne. It is already a place where you can trade a lot of NFTs and other tokens related to games, even Axie Infinity after integration with Ronin. Moreover, YoHero is a contender game launched on the BSC that is getting a lot of traction. In general, we see a lot of utility in NFTs, even those not given utility by being useful assets in related games. Indeed, in many instances they function much like assets in the art market, which is notoriously pretentious and non-utilitarian in seeming contradiction to its enduring liquidity. But with cryptogaming being such a nascent category, once more actually good games come out that won't even need to rely on play-to-earn logic, especially those that leverage the inherent trading card model that goes with blockchain tokens like Axie Infinity (but maybe many other types too), there might be massive growth in a whole new category of DApps that could begin and persist on a blockchain like the BSC to drive BNB demand.
While there are many ways to play the potential cryptogaming boom, and the NFT craze that we are already seeing, we want to take the lower risk approaches. So we look at infrastructure within crypto, where we think Binance, together with its native coin Binance Coin, have the best shot at enduring demand. While Binance as a platform has its regulatory issues, as a blockchain infrastructure for relatively decentralised commerce it is the most likely to both eventually comply with general regulation as well as deliver on its purpose and achieve larger scale thanks to its consensus model. We are already seeing signs that even for cryptogaming DApps, Binance might be the platform of choice, again thanks to its scalability but also because it is a node for so much activity in the community by virtue of being associated with an exchange. With growth in DApps on the platform, and with growth of cryptogaming in general further boosting that, greater activity of running contracts on Binance fueled by the network effects of developers and users joining and growing the app base, Binance Coin is probably the most likely to justify its own >$80 billion market cap. With the infrastructure of Binance finding a middle ground between scalability and decentralisation, while already being a node for a lot of development of smart contracts, we would take the position that they could become an important economy, and Binance coin an important currency, if businesses start embracing the benefits of doing business with programmable, tractable and unambiguous smart contracts.
Read the rest here:
Where Is Cryptocurrency Headed In 2022? Our Favorite Is Binance Coin - Seeking Alpha
- QazInnovations: Kazakhstan seeks to bring volume of innovative ... - inform.kz/en - April 23rd, 2023 [April 23rd, 2023]
- World Earth Day: What is green finance, and why do we need it so much? - The Economic Times - April 23rd, 2023 [April 23rd, 2023]
- Netarts Bay cleanup scheduled for Earth Day with SOLVE and ... - Tillamook Headlight-Herald - April 23rd, 2023 [April 23rd, 2023]
- Shaping humanitarian and ethical governance in Pakistan - The Express Tribune - April 23rd, 2023 [April 23rd, 2023]
- Remarks by Secretary of the Treasury Janet L. Yellen on the U.S. ... - Treasury - April 23rd, 2023 [April 23rd, 2023]
- Investing in nature: Building local economies through conservation - McKinsey - April 23rd, 2023 [April 23rd, 2023]
- Lalith's economic vision for Lanka: Export or perish - The Sunday Times Sri Lanka - April 23rd, 2023 [April 23rd, 2023]
- Alliance for an Energy Efficient Economy to help A.P. govt. implement energy-efficiency projects - The Hindu - April 23rd, 2023 [April 23rd, 2023]
- President Biden Announces Key Appointments to Boards and ... - The White House - April 23rd, 2023 [April 23rd, 2023]
- A Restraint Approach to U.S.China Relations: Reversing the Slide ... - Quincy Institute for Responsible Statecraft - April 23rd, 2023 [April 23rd, 2023]
- Carrollton Mayor and City Council Election Preview 2023: Meet your ... - Star Local Media - April 23rd, 2023 [April 23rd, 2023]
- Governor Kelly Signs Bipartisan Bill to Expand Teacher Workforce in ... - Kansas Governor - April 23rd, 2023 [April 23rd, 2023]
- Indigenous Peoples Must Have Full Representation, Participation in ... - United Nations - April 23rd, 2023 [April 23rd, 2023]
- The EPA Region 6 Announces a Total of $23 Million to ... - U.S. EPA.gov - April 23rd, 2023 [April 23rd, 2023]
- Kansas governor strikes funding for anti-abortion pregnancy centers ... - Kansas Reflector - April 23rd, 2023 [April 23rd, 2023]
- Can You Fight for Climate Justice Without Being Antiwar? - Common Dreams - April 23rd, 2023 [April 23rd, 2023]
- Sustainable Tourism: A World leading to the road of Environment consciousness - Nomad Lawyer - NomadLawyer - April 23rd, 2023 [April 23rd, 2023]
- Atlanta's Cop City and the Struggle for Climate Justice - Resilience - April 23rd, 2023 [April 23rd, 2023]
- Jaishankars visit to Uganda, Mozambique went almost unnoticed but it indicated Indias bold gambit in Africa - Firstpost - April 23rd, 2023 [April 23rd, 2023]
- Natural resource - Wikipedia - October 30th, 2022 [October 30th, 2022]
- Non-renewable resource - Wikipedia - October 30th, 2022 [October 30th, 2022]
- Minister Wilkinson Launches Phase 2 of the Regional Energy and Resource Tables - Canada NewsWire - October 13th, 2022 [October 13th, 2022]
- Executive Secretary participates in Russian Energy Week to advocate for decarbonization in the UNECE region ahead of COP27 - UNECE - October 13th, 2022 [October 13th, 2022]
- Renault Group: The Future Is NEUTRAL: The circular economy is stepping into a new era! - Yahoo Finance - October 13th, 2022 [October 13th, 2022]
- Economy Expected to Contract Further in 2023, as the Fed Appears Resolved to Tame Inflation - PR Newswire - October 13th, 2022 [October 13th, 2022]
- Brazils Runoff Election Will Have Enormous Effects on the Global Climate Crisis - Truthout - October 13th, 2022 [October 13th, 2022]
- Health disparities and health inequalities: applying All Our Health - GOV.UK - October 13th, 2022 [October 13th, 2022]
- Opinion: Biopolitics is the invisible hand shaping mental health - The Connecticut Mirror - October 13th, 2022 [October 13th, 2022]
- Avaaz urges Georgieva and Trudeau to lasso-in commitments from IMF to attend December's vital UN Biodiversity Talks in Montreal - GlobeNewswire - October 13th, 2022 [October 13th, 2022]
- Kochi as a global city? Why not, asks the man behind Ahmedabads mega city story | Manorama English - Onmanorama - October 13th, 2022 [October 13th, 2022]
- Hennessy and Thurgood Marshall College Fund Announce partnership with Group Black and The Bishop Gallery to make "America's Most Influential... - October 13th, 2022 [October 13th, 2022]
- Pollution Prevention Week highlights ways to reduce, reuse and recycle waste - Michigan (.gov) - September 22nd, 2022 [September 22nd, 2022]
- England headed for incineration overcapacity, warns UKWIN - Resource Magazine - September 22nd, 2022 [September 22nd, 2022]
- 3 years of the Principles for Responsible Banking: our vision for change United Nations Environment Finance Initiative - UNEP Finance Initiative - September 22nd, 2022 [September 22nd, 2022]
- Isn't It Time To Challenge The Growth Paradigm? OpEd - Eurasia Review - September 22nd, 2022 [September 22nd, 2022]
- Coalition of Nearly 50 Organizations Launches 'Tear the Paper Ceiling' Campaign to Raise Awareness Around the 70+ Million Workers in the U.S. Skilled... - September 22nd, 2022 [September 22nd, 2022]
- Remote work can actually be more productive: More Hub readers respond to the work-from-home phenomenon - The Hub - September 22nd, 2022 [September 22nd, 2022]
- Mendocino Public Health on record-setting Sept. heat: We can't just treat this as a once-in-15-years occurrence - The Mendocino Voice - September 22nd, 2022 [September 22nd, 2022]
- Carbon Ridge Secures $6 Million Investment from Leading Climate Investors and Maritime Industry Leaders - Business Wire - September 22nd, 2022 [September 22nd, 2022]
- Regenerative Travel Is the Next Phase of Responsible Tourism - Outside Online - Outside - September 22nd, 2022 [September 22nd, 2022]
- NNPC: Between rebranding and reforms, By Tijah Bolton-Akpan - Premium Times - September 22nd, 2022 [September 22nd, 2022]
- Embodying the spirit of Malaysia - The Edge Markets MY - September 22nd, 2022 [September 22nd, 2022]
- Nonprofit executive takes on state-appointed economic development role - MiBiz: West Michigan Business News - August 29th, 2022 [August 29th, 2022]
- Noble Mineral Exploration Signs Exploration Agreement with the Constance Lake First Nation - Junior Mining Network - August 29th, 2022 [August 29th, 2022]
- China and the Democratic Republic of the Congo: A Progressively Deepening Bilateral Partnership - The Geopolitics - August 29th, 2022 [August 29th, 2022]
- Oil money is flooding into Guyana. Who will benefit? - Reuters - August 29th, 2022 [August 29th, 2022]
- Remote-work revolution exposes need for better data, tracking tools to evaluate workforce, pay and economy - The Spokesman Review - August 29th, 2022 [August 29th, 2022]
- We need rare earth elements for a greener future, but there's a catch - CBC.ca - August 29th, 2022 [August 29th, 2022]
- BRNHA the steward of the living traditions of WNC: Opinion - Citizen Times - August 29th, 2022 [August 29th, 2022]
- The Fiji Times Back in history: Future of forestry sector - Fiji Times - August 29th, 2022 [August 29th, 2022]
- Hochul announces grand opening of Capital Region BOCES Career and Technical Education Center - Troy Record - August 29th, 2022 [August 29th, 2022]
- Predicting the Future of Greenhouse Gas Emissions - Columbia University - August 15th, 2022 [August 15th, 2022]
- JD.com Ranks 46th on 2022 Fortune Global 500 - Yahoo Finance - August 15th, 2022 [August 15th, 2022]
- Minister Wilkinson Releases New Report Showing the Impacts of Climate Change and Necessity of Climate Adaptation in Ontario - Canada NewsWire - August 15th, 2022 [August 15th, 2022]
- Do Armenians have a future as an independent nation? Part 4 - Armenian Weekly - August 15th, 2022 [August 15th, 2022]
- Getting the diagnostics right 2 - BusinessWorld Online - August 15th, 2022 [August 15th, 2022]
- GrammaTech and T.E.N. Announce Call for Nominations for Product Security Executive of the Year Awards - Business Wire - August 15th, 2022 [August 15th, 2022]
- Energy Vault and Jupiter Power Announce Agreement for Battery Energy Storage Projects in Texas and California Totaling 220 MWh - Business Wire - August 15th, 2022 [August 15th, 2022]
- The North East LEP: Thinking bigger and planning together for the future - Bdaily - August 15th, 2022 [August 15th, 2022]
- It's not enough to buy American. You also need to sell American all around the world. - The Ripon Society - July 27th, 2022 [July 27th, 2022]
- Bid to designate 50k acres in UP as wilderness highlights tension over public lands - MLive.com - July 27th, 2022 [July 27th, 2022]
- A 'Living Wall' At Texas A&M Could Be The Key To Smarter Cities - Texas A&M University Today - July 27th, 2022 [July 27th, 2022]
- Architects and designers must embrace the circular economy - Project Scotland - July 27th, 2022 [July 27th, 2022]
- Strategic Minerals increases Tin and Tantalum production in June and Q2 2022 at its Penouta Mine - Yahoo Finance - July 27th, 2022 [July 27th, 2022]
- Issues of the Environment: Improving recycling rates and quality of recycling materials in Washtenaw County - WEMU - July 27th, 2022 [July 27th, 2022]
- Joe Oliver: The Liberal Cabinet Needs an Intervention - The Epoch Times - July 27th, 2022 [July 27th, 2022]
- SDG&E and Cajon Valley Union School District Flip the Switch on Region's First Vehicle-to-Grid Project Featuring Local Electric School Buses Capable... - July 27th, 2022 [July 27th, 2022]
- Reimagining business: The greatest debt of all time - Newsroom - July 13th, 2022 [July 13th, 2022]
- Moody's affirms A1 rating of Newfoundland and Labrador, changes outlook to stable - Moody's - July 13th, 2022 [July 13th, 2022]
- New Mexico's oil and gas revenues are breaking records and complicating budgets - New Mexico Political Report - July 13th, 2022 [July 13th, 2022]
- FACT SHEET: White House Announces over $40 Billion in American Rescue Plan Investments in Our Workforce With More Coming - The White House - July 13th, 2022 [July 13th, 2022]
- The Class of 2022 Is Ready to Workon Their Terms - SHRM - July 13th, 2022 [July 13th, 2022]
- Faraday Copper Announces Updated Mineral Resource Estimate for the Copper Creek Project in Arizona; Measured and Indicated Mineral Resources Exceed... - July 13th, 2022 [July 13th, 2022]
- Inside the Triangle's latest job opening data: What boards are showing and who's hiring - WRAL TechWire - July 13th, 2022 [July 13th, 2022]
- Reserve Bank keeps blinkers on inflation, raising OCR to 2.5% - Stuff - July 13th, 2022 [July 13th, 2022]
- Abe's drive to bring back Japan | The Interpreter - The Interpreter - July 13th, 2022 [July 13th, 2022]
- UCF Hospitality Researchers Expertise Is Tapped for Global Sustainable Tourism Report - UCF - June 30th, 2022 [June 30th, 2022]
- Feminist Economics and the Fight for Human Rights - OHCHR - June 30th, 2022 [June 30th, 2022]
- Biden Administration announces historic coastal and climate resilience funding - National Oceanic and Atmospheric Administration - June 30th, 2022 [June 30th, 2022]
- Why green ammonia will be the workhorse of EU's future hydrogen economy - EURACTIV - June 30th, 2022 [June 30th, 2022]