V&O goes Crypto (again) – Part 1: Intro & Major Coins

Introduction: Why looking at Crypto at all ?

I had written first about Bitcoin in September 2016, when 1 Bitcoin was around 1000 USD.  I always had an academic interest because the original idea and the execution of a decentralized decision making system has been a great achievement in itself. You’ll find an attempt to describe Bitcoin and Blockchain here from September 2017.

In November 2017 I made the following observation:

In my opinion, the current Cryptocraze is much more like the South Sea bubble than the Tulip mania.

Underlying the current Crypto currency mania in my opinion is a fundamental new way how to raise capital for and create a new type of decentralized organization.

Clearly the then prominent ICOs were mostly complete garbage or outright theft, such as Wysker or the Naga Coin.

However, four years later, Crypto is booming again and the big currencies are more “valuable” than ever before and there is a “Cambrian explosion” of activity all over the Crypto space.

So I decided to have another look at the Crpyto mainly to educate myself on new Crypto currencies but also on “second generation” activities such as Staking, DAOs, DeFi and NFTs.

Maybe it is of interest to some readers, maybe not, but I do think it makes sense to understand a little bit the evolution in this space. Just to be clear: I don’t think that the space is “investable” as such, however part of the infrastructure that is created now might have impacts on other parts of the economy and society.

So let’s kick it off with looking at the main 20+ Crypto currencies according to “market cap” according to coinmarketcap.com.

1. Bitcoin (920 bn USD market cap)

The “original” coin. Proof of work, very liquid, little functionality on top of the “core” currency protocol. Additional functionality is currently build around the original core such as the “Lightning network” but not widely used. In my opinion, Bitcoin shows that one of the big disadvantages of the decentralized decision making is that it is very difficult to implement changes into the original code and therefore development of these crypto currencies is extremely difficult.

Bitcoin in its current form clearly has its uses: First and foremost as a speculation instrument, due to its significant liquidity. in addition i do think that Bitcoin is also a perfect instrument for large scale money laundering, especially in connection with unregistered Crypto exchanges. This creates real value for people needing to launder large amounts of money and (perversely) supports the valuation of Bitcoin.

However the inability to evolve in my opinion will make it unlikely that Bitcoin will be a “winner takes it all” player in an evolving Crypto space. Also the massive electricity consumption is a big issue.

2. Ethereum (480 bn USD market cap)

Created by Vitalik Buterin in 2013. The main difference is that Ethereum is more like a platform and allows a lot of functionality. However at the moment, Ethereum’s blockchain is very congested. Proof of work, but moving to “proof of stake” consensus mechanism. However this doesn’t seem to be easy.

A lot of the “next generation” applications like DAOs and NFTs are based on Ethereum. These application create demand for Ether and explain the relatively good “performance” of Ether. However Ethereum seems to struggle with the load of traffic. It will be interesting, if and how fast Ethereum can evolve.

3. Binance Coin (88 bn USD market cap)

The Binance Coin is the underlying coin of the Binance Exchange and has been created in 2017. The Binance Exchange itself has a Chinese background and seems to be quite dodgy. However they seem to have build something up that’s attractive for clients and the seem to have built their own Blockchain ecosystem. The Binance coin as such seems to have started as an Ethereum based coin but now runs on its own infrastructure.

One interesting feature of Binance Coin is that that Binance has committed to use 20% of its profits to repurchase and “burn” part of their tokens. This resembles to a certain extent a share buyback and is a very interesting mechanism for these tokens to distribute value to its holders. The price of the coin is still up 20x since the beginning of 2021.

4. Tether (76 bn USD market cap).

Tether is a “stable coin”, which describes a Crypto coin that tries to achieve a stable value, in this case 1 USD per Tether by backing it with “hard assets”. The construction is somehow similar to a US money market fund without the transparency, the amount of Tethers is not fixed. Behind Thether is a controversial Dutch man who also controls crypto exchange Bitfinex . Tether runs on the Ethereum protocol. The big advantage of Tether for crypto investors is that they can trade from one Crypto into Ether at very low cost. Exchanging into “fiat” is always more costly ans slower. It is alos great for Exchanges because the don’t need to provide “real” liquidity if traders remain within Crypto.

On the other hand, this clearly makes Tether vulnerable for potential “bank runs” if things would really turn ugly. Personally, I would not want to hold Tether in any circumstances.

5. Solana (53 bn USD market cap)

Solana is another newcomer in the Crypto space. it was created in 2017, based on “proof of stake” verification and claims to be a lot more scalable than for instance Ethereum. As Ethereum, it is designed as an operating system for other apps. Similar to Binance, they also seem to “burn” coins on a regular basis. Solana clearly looks like a technologically advanced platform, however it needs to be seen if they can attract enough activity to justify the already massive valuatio, following its~100x increase in 2021.

6. USD Coin (42 bn USD market cap)

USD Coin is another stable coin, that was released in 2018 by Coinbase and a Fintech called Circle. Overall, it looks slightly less dodgy than Tether.  This consortium seems to build a lot of functionality around USD Coin although honestly I understand little of it, One of the main attractions seem to be the possibility to “stake” USD coin and earn “interest” on it. However this will be part of a more in depth analysis of staking at such.

7. Cardano (42 bn USD market cap)

Cardano is a “proof of stake” blockchain with its token named ADA. Cardano was cofounded by one of the Ethereum Co-founders named Charles Hoskinson. Cardano also seems to allow apps and other functionality on its blockchain.

Cardano claims to be open source and more decentralized compared to other blockchains. One main difference to Ethereum seems to be that they have split the system into a payment and a function layer. As in other “proof of stake” chains, token holders can earn interest by “staking” their coins.

Overall, this clearly looks like a next generation Ethereum chain, but again the question is if they can attract enough users to value the current valuation.

8. Ripple (XRP, 39 bn USD market cap)

Ripple/XRP is a rather “old” crypto currency that seems to have been around in theory already since 2004. Ripple was always planned as a large scale payments network that should rival SWIFT.

Ripple had managed to bring on board quite a number of big banks such as Santander or Bank of America.

There have been significant lawsuits and litigation around Ripple and I a m not sure if anyone actually uses Ripple in the banking world. Nevertheless it has a market cap of 39 bn USD, as at least speculators find it interesting.

9. Terra LUNA (28 bn USD market cap)

Terra LUNA is a relatively recent newcomer to the Top 10 Crypto coins, increasing by 150x (that’s right, not 150%) in 2021 alone. Terra LUNA offers stable coins in different currencies and the TerraLUNA token somehow works as as a means to stabilize the stable coins. It was created in 2018 and launched only in 2019 and seems to have its roots in South Korea.

It seems to be based on a “proof of stake” algorithm and the tokens can be staked to earn interest. In South East Asia, they seem to have established a few partnerships with corporates. Terra LUNA is one of the few coins that has gained in the time before writing this post.

10. Avalanche (25 bn USD market cap)

Avalanche claims to be an Ethereum rival that seems to be organized into 3 different sub-chains that seem to enable faster processing and more transaction per second. The project seems to have started at Cornell university, the white paper wa issued in 2018 and the first tokens were only issued in 2020.

Avalanche is also a proof of stake chain and allows staking and earning interest. They also try to intergrate with other chains like Ethereum, most likely to attract activity from these big chains.

Avalanche claims to combine the best from Bitcoin and Ethereum plus extra speed and proof of work by keeping total decentralization. This sounds a little bit too good to be true, but at the moment, Avalanche is clearly a rising star.

11. Polkadot (24 bn USD market cap)

I have to admit that Polkadot is my favorite name among the “Big” coins. Polkadot’s aim seems to be to connect all the chains together which sounds like a pretty heroic task. It is founded by another Ethereum co-founder named Gavin Wood. Technically Polkadot is a “sharded multichain network, meaning it can process many transactions on several chains in parallel (“parachains”). This parallel processing power improves scalability.”

Back when I looked at Bitcoin & Co in 2017, “sharding” was mentioned also but it seemed to be really hard to get it to work. They also call themselves the “blockchain of blockchains”.

It is also a quite new project, with the first blocks created in 2020 and runs on a proof of stake verification system. However Polkadot seems to have attracted already a significant amount of projects which explains maybe its significant market cap. Just before finishing this post, Dt. Telekom announced that they have invested into Polkadot. However I am not sure if this is good or not.

12. Dogecoin (22 bn USD market cap )

Dogecoin is an early “Fork” of Litecoin in 2013 which itself was an early competitor of Bitcoin. Meant as a joke, Dogecoin has no functionality, nevertheless it has become “THE” meme coin with a meteoric rise from nowhere to almost 60 bn market cap at its top in May. Why it became so popular is not so clear. It seems to have started on Reddit and then somehow Elon Musk tweeted about it which of course than adds a lot of value 😉

Overall it still seems to be still a joke but a quite expensive one.

13. Shiba Inu (16 bn market cap)

If Dogecoin is a joke, Shiba Inu is a Joke’s joke. Named after the dog race that is pictured as mascot of Doge coin, it was created by an anonymous person in August 2020 and is clearly the most successful of “dog related” shit errr meme coins. Again, Elon Musk did help here as he posted pics of a Shiba Inu dog he had adopted in June or so. Shiba Inu managed to reach almost 40 bn in market cap at the end of October, before losing more than half of it in a few weeks. One of the attractions seems to be that at a price of a fraction of a fraction of a cent, even a modest amount of money allows people to buy millions of coins. This one will clearly go to near zero at some point in the future, however when and what happens in between is anyone’s guess.

14. Polygon  (15 bn USD market cap)

Polygon is a “multi chain” blockchain similar to Polkadot and Avalanche. It seems to be backed by Binance and Coinbase. MATIC, its coin howver seems to simply run on Ethereum.

The technical description is really complex but if I understand it correctly, it allows to create blockchains on top of ethereum. As a proof of stake chain, MATIC tokens can be staked and they earn interest. The system was created in 2017 by former Ethereum developers.

15. Binance USD (14 bn USD market cap)

Binance is the stable coin of the Binance exchange.  Again, as mentioned already with regard to the Binance Coins: Binance looks very shady, among others the US authorities investigate fro money laundering etc. On the other hand, Binance seems to offer significant leverage to investors. They used to offer 125x (!!!) leverage but now scaled it down to a conservative 20x leverage max.  Binance fromthe outside to me ooks like a “bucket shop on steroids” although it might be missing something.

16. Crypto.com Coin (13 bn USD market cap)

Crypto.com is a Singapore based Crypto Exchange that recently got into the spotlight with a 700 mn USD sponsoring deal. Crypto.com is also offering Visa Cards with huge cash  backs, up to 8%. The drawback is that one needs to buy Crypto.com coins and “stake” them for 6 months. In order to get the 8% cash back for instance, one needs to buy Crypto.com coins in a value  350K EUR and lock them up for 6 months. From a technical standpoint, the tokens seem to be based on Ethereum, so nothing groundbreaking here. The company was founded in 2016 as Monaco.com.

This pretty much smells like a really big Ponzi scheme, although the main “lure” here seems to be the Credit card. it is interesting that someone like Visa is actually collaborating with them.

17. Wrapped Bitcoin (12 bn USD market cap)

Wrapped Bitcoin is actually a 1:1 Bitcoin derivative hosted on Ethereum. Someone had the idea of Buying Bitcoins, depositing hem and issuing Bitcoins token on the Ethereum Blockchain. It seems that a Wrapped Bitcoin owner can unwrap the Bitcoin and get the “real thing” instead.

The purpose of this coin seems to be to establish some kind of interoperability between Bitcoin and Ethereum and there seems to be quite a large numbers of “wrapped” tokens.

18. Litecoin (10 bn USD market cap)

Litecoin is one of the “old school” tokens and was created in 2011 as an update of the Bitcoin protocol, being somehow faster and having less transaction fees. However,as Bitcoin, Litecoin requires proof of work verification. Other than that it doesn’t have any additional functionality. As the market cap indicates, Bitcoin enthusiasts preferred to stick with the old, slower and more expensive protocol which proofs the point that improving existing decentralized Blockchains is really hard. Litecoin had a boom in 2018 as well as a few months ago.

19. DAI (9 bn USD market cap)

DAI is an Ethereum based Stable coin that is manage by a decentralized autonomous organization (DAO) called Maker DAO. Other as with the bigger stable coins, DAI uses other crypto currencies as collateral and is only “soft pegged” to the US Dollar. The main function of DAi seems to be to allow Lending and earning interest income. Around DAI, a lot of “DEFI” application have been created. To be honest, I do not really understand how all this works and sometimes there seem to be problems with the collateral. To add to complexity, MakerDao itself has issued coins called “maker” whcih are valued at around 2,5 bn USD.

20. Uniswap (9 bn USD market cap)

Uniswap is not a traditional crypto currency but rather a “governance token” for the underlying Uniswap exchange. As far as I understand it, Uniswap allows user to swap other utility tokens instead of buying and selling them against ETH: Here is an article that explains in more detail how this is supposed to work. If I understand this correctly, they allow investors to trade without the need for centralized exchanges. Ift that works, that would be quite an achievement as exchanges for now were at the heart of the Crypto system. There is a similar project based on the Binance blockchain called “Pankake Swap”.

21. IOTA (3 bn USD market cap)

Iota currently is only ~ nr 48 in market cap of crypto currencies. Back in 2017, when I wrote about it, IOTA was “the hot shit”, promising to solve all kind of problems like speed and scalability. This resulted in a top 3 position with 10 bn uSD market cap. I googled a little bit but couldn’t really find any real world use case for IOTA, despite the fact that Bosch in 2018 entered into a cooperation with IOTA.

So IOTA is a good reminder that highflying Crypto projects sometimes don’t really work out.


Compared to 4 years ago (here is a 2017 snapshot of market caps), only Bitcoin and Ethereum could defend their relative positions, with Ethereum relatively outperforming Bitcoin by a wide margin. Cardano and Ripple have done Ok, the rest has been overtaken by the newcomers, which are either meme coins (Doge, Shibu), stable coins or “next generation” projects.

I guess it is fair to say that the landscape still seems to shift constantly and it is really hard to say if and what coin will make it going forward. So what I wrote 4 years ago still seems to apply:

However even IOTA is clearly not the end of development. I think it is reasonable to assume that there will be even better Crypto currency platforms in the future and it seems that the development is accelerating these days. I personally don’t think that this is a “the first one takes it all” kind of technology. The current price of Bitcoin seems to indicate this but in my opinion is not justified by actual use cases apart from money laundering and speculation. And Bitcoin unfortunately doesn’t scale very well.

Overall I have to say that I am lacking a lot of knowledge to understand even the basics of the more advanced concepts. I hope I can educate myself a little bit more during this series.

To be continued when time allows ….


  • Hi MMI,

    with regard to your envisaged focus on crypto, have you thought about covering Wexboy’s KR1 Plc? Would be very interested in your thoughts on it (Disclaimer: I earn no commission for pushing KR 1. I am long KR 1).


  • somehow, the original comment didn’t appear, probably because of using a different nick than in the past, so I try posting it a second time:

    Great post, thank you!

    I have some thoughts on Crypto.com and its Ponzi characteristics:

    First, there are four different segments/businesses to Crypto.com:

    – the credit card business that was the original Monaco credit card
    – the credit margin business, which is one of the main business cases you come across in DeFi
    – the exchange and trading fee business
    – the newly launched cronos smart contract platform

    Let’s look at the fundamentals of those segments:

    Credit cards:
    This is not really a credit card, but a regular debit card with extremely attractive perks:
    – Cashback between 1% and 8% (my assumption is that the most common cards are the 2 and 3% tiers, so let’s assume 2.5% on average)
    – Netflix, Spotify, Prime rebates, Lounge key, no fees for payments with forex or withdrawals from atms, etc
    It is clear that this can never be a sustainable business with these metrics.
    Even if they earn 0.X% on the transactions that still leaves them with a loss of probably 2 to 3% on the card transaction volume.
    Almost all of the perks however are paid in their own currency CRO that they created at zero cost out of thin air.
    They created 100 Billion Cro tokens and already burned 76 Billion, so there is a maximum number of 24 Billion Cro. Crypto.com still owns the majority
    of the remaining funds.
    The more users they acquire for their cards, the more goodies they have to pay in Cro. I estimate they currently have maybe one or two million active cards
    generating maybe an average of 400$ CB/year (800 Cro at current price), so for if 1.5 million active cards is correct, then they have to shove out 1.2 billion
    of their CRO per year for the goodies. We can already see that they only have about 5-10 years runway at current conditions with 0% growth assumed.
    So if this was the only segment and the price of Cros would go down (they’d need to pay out more cro/card transaction) and it would quickly collapse.
    Therefore it’s crucial, the price of Cro is supported.
    The initial support mechanism of course is new card users purchasing a “stake” of Cro (for the 3% tier 4.000$ need to be staked, for the 5% tier 40.000$
    for the 2% tier 400$). So if a new user stakes 5.000$ on average (also pulled up by users who stake for the 400.000$ 8% card) then that supports the Cro
    price for his goodies for about 5 years on average. This works well while there is high growth, but then users can unstake after 6 months and if
    there were no “other game in town” as soon as growth declines, selling pressure would increase, price would fall and the “ponzi” collapse.
    What would happen in this case? Crypto.com would still be fine, they could either issue a new token (which they already did about 1.5 years ago, replacing
    MCO with CRO for more functionality and more reserves for Crypto.com). But in the end they owe their customers 0 cash and even state that they can adjust
    or cancel all of the goodies. So other than real life ponzis, they’d never get problems because they owe anybody cash.

    But now to the second segment, because this is crucial for supporting the CRO price more:
    The Credit margin business:
    Basically a really easy business:
    – they pay their users 6 to 12 % interest on their CRO and Stablecoins (those are the main ones), and then they use the funds to lend them to borrowers
    on DeFi platforms and to margin traders on their exchange or other places (yes, the implicit interest there is much higher than 12%, and until now there
    is still huge shortage of supply of credit). They basically earn a high credit margin (my guess is at least 5%) on a very high and also ususally collateralized
    volume. The Yields for the Crypto.com users are also not guaranteed and could be adjusted to lower yields if Crypto.com doesn’t get their margin in the market
    anymore. This is a huge business and there are billions of funds employed this way and I estimate their profit is at least in the mit 9 figures, this profit
    they can convert to cash.

    Printing even more money should be their exchange business, however:
    We just know Coinbase makes about 3.5 Billion $ profit this year, Binance should achieve a similar profit.
    In the trading volume Crypto.com has already overtaken Coinbase (https://www.coingecko.com/en/exchanges) and their fees are on a similar
    level to coinbase and much higher than binance. They are also much stronger positioned in the DeFi game than coinbase and their marketing is more agressive.
    So I expect to Crypto.com also can make about 3-5 Billion of profits from this segment in the future.

    Compared to segment two and three, we can now see that the credit card segment (ponzi economics it might have) is just a marketing tool for their other two
    main segments where they make the money. Currently they are probably printing so much cash that they don’t know where to go with it, why they are making
    sponsoring deals, hiring actors like Matt Damon, Super Bowl ads or just burning 75% of the Cro coins like they did this year (was like a buyback).

    Segment 4 (the smart contract platform) is fairly new, but provides the oppurtunity to raise DeFi profits and maybe generate some other positve stuff for
    Crypto.com that we don’t see yet. Wouldn’t value it too highly because we’re now at a point where creating a new smart contract platform can basically done
    copy/past (like binance smart chain just copied Ethereum) or as a service (Crypto.com got theirs from Cosmos).

    Now at the end, if you wanna look what a Ponzi looks like in Crypto, take a look at OlympusDAO, paying a yield of 5,200%, 2.4Billion$ Value locked (https://app.olympusdao.finance/#/stake)

  • I came for the article, but I’m only staying because of Code is Lols comments 🙂 finally someone who gets it! HNY mmi!

  • For me Bitcoins is an fascinating experiment as religions.

  • great summary mmi. thank you.

  • The tech has potential, but the biggest use cases are still laundering money or evading country currency controls (in my opinion).

  • „Bitcoin unfortunately doesn’t scale very well.“
    Does it need to? My impression is that Bitcoin is becoming more and more the equivalent of gold. You dont use it for anything, you just keep it. Also, I dont think decentralization is the reason why Bitcoin evolves relatively slowly. Rather, it is a trait that defines it against other coins. Fan boys may not realize this, may say that Bitcoin can do everything Ethereum and other coins do, but the fact is it cannot, and neither is it trying. Not saying it cannot become a means of exchange, it can, but even that would not make it an Ethereum.
    I think it is going to be very hard for any coin to take either Bitcoin or Ethereum. For all the market has changed in the last few years, their dominance has been a constant.

  • Iota’s protocol is so broken that it needs a hardcoded central server to be the final authority, hilarious that it’s still going.

    Cardano similarly hilarious: their take smart contracts seems unfixably broken yet it keeps going.

    Saying doge has no functionality is a bit harsh, it’s a copy paste of bitcoin, so almost exact same functionality and limitations. A car with a funny bumper sticker does not stop being a car.

    Uniswap and friends sort of cute in principle but decentralisation is hard so cost 100x of tradfi/cex, 100x as slow, endemic front running, lol.

    USD coin is a shadow bank, forgot to ask for banking license, getting away with it because in bed with Californian VC aristocracy, perhaps most toxic thing if it gets too big.

    Luna is algo stablecoin backed by crypto, works as long as crypto goes up, fails if it goes down too much, and then accelerates the downfall. Lol.

    Tether same as Luna, but run using spreadsheets instead of smart contracts.

    Staking is beautifully simple: you send 100 to some contraption that sends you back 10 in instalments while stocks last.

    • Thanks for the insight. For some strange reason, IOTA just went up +30% or so.

      Re staking: I guess you refer to off-chain staking, right ?

      • On-chain staking is the same, it is just that the smart contract redistributes late players inflows to early players. There’s a lot of variations on the theme, and you may need to unfold several layers (e.g. various token levels) but most of the time, possibly always, it boils down to some redistributive scheme. It is possible that some honest smart contract authors actually do not see the system level and miss the reflexivity while building it one cog at a time.

        It is easy to understand from first principles: where else would the money come from? There’s no “customer” in crypto as attempts at doing on-chain crypto non-reflexive services are usually unusable or at least not competitive with normal, because decentralization is hard (and good luck getting traction with an actual product with no number-go-up attached in that space).

        They have stories like staking is reward for “providing liquidity” which is hilarious. Given there is hardly any use for all those coins, it is, within crypto, flooded with liquidity. Nothing else you can do but trade or hodl the thing. Liquidity providing in that context is selling ice to the eskimos, indeed you’re more likely to get done by adverse selection (if not outright fraud or bugs) as a liquidity provider.

  • I am sorry. Cardano it’s me.

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