There is always a “third currency” in cryptocurrency. This is the spinning coin that ranks third in market capitalization after Bitcoin (BTC) and Ether (ETH). The third coin is usually described as competition for the incumbent of the two positions. It is favored by new investors and it occupies a middle position in the cryptocurrency political spectrum.
It has been XRP, binance currency (BNB) and most recently Cardano (ADA). There are fewer riskier positions to occupy than third place in cryptocurrencies. The only way down.
Paul J. Dylan Innes Assistant Professor at the University of Dublin Business School.
Just as a small majority of Americans have a favorite football team, as cryptocurrency is becoming increasingly familiar to ordinary people, they are starting to pick and choose their favorite coins.
In the fantasies of Cryptocurrency investors, who are often newcomers to the space, Cryptocurrency solves all existing corporate problems. Often these investors are not familiar with the historical roots of the third currency and imagine XRP, binance coin or Cardano being new, revolutionary and fresh products off the boat, like theirs.
Its audience is blockchain suits and not bitcoin, the discord aunt, or the average Joe messing with their Robinhood app. For example, the attraction of XRP (before the SEC suit) was its association with Ripple and its alleged use case: to get rid of the slow and costly banking infrastructure by replacing it with RippleNet and XRP as the base currency.
For the new investor, Ripple was a legitimate company, with offices all over the world, not a group of “Mysterious super programmers.This same investor was not interested in vague concerns like decentralization and was completely satisfied with the high-trust centralized XRP network which, after all, resulted in faster transaction times and lower fees, which should be a good thing. Of course, most third-party cryptocurrency investors probably have never seen this firsthand since their XRP was only on the Binance exchange.
Speaking of BNB it follows the same logic. There is a company associated with the currency and not just any company, but there is a company that is familiar to the new investor, Binance. Of course, there is also a purported use case. Users can pay a fee on Binance with BNB. Tying BNB’s long-term fortunes to a company, like XRP, that is subject to massive regulatory scrutiny, has been another hard lesson for new investors.
Third coins often benefit from corporate advertising, but they always run the risk of corporate advertising.
Then there is the Binance Smart Chain (BSC). It is difficult to capture the absolute chaos of the Binance Smart Chain (BSC) in words. It’s somewhat a copy-and-paste of Ethereum, but it’s as if someone created Ethereum and then stopped holding it the next day. It’s a lawless land full of unexpected bugs and YouTube influencer scams.
Lately investors seem to have recognized the risks of the company’s currencies and took refuge in the warm comfort of the ADA. While XRP and BNB are central and median, ADA is decentralized, but rather centric. Cardano differentiates itself from Ethereum – and is explicitly positioned as an Ethereum killer – in that the code undergoes a rigorous peer review process, as it does in academia. It seeks to legitimize through academic association.
A new investor in ADA can defend the lack of basic functionality — until recently Cardano did not have smart contracts — by pointing to the slow and steady peer review process. The DAO hack (2016) or parity error (2017) probably never would have happened had Ethereum followed this procedure, assuming any contemporary ADA investor knows what any of these legacy events are.
Today, ADA, BNB and XRP are sitting behind the rope (USDT) – a stablecoin with a huge volume and not a third coin in my view – waiting for their turn in third place. Behind them awaits Solana (SOL), a third coin on hold if there is one. It is an Ethereum killer, moderately decentralized or mostly centralized depending on your view, has low fees and fast transactions and is aimed squarely at an investor who just wants to buy non-fungible tokens (NFTs) without paying obscene gas to do so.
Don’t bother if it works offline. We’ll just restart it. The third coin mentality!
The tragedy of the third coin is that the gap in market capitalization between it and Ethereum, regardless of Bitcoin, is so large that it is likely to take a seismic collapse of incumbent companies for the challenges to succeed, rather than catching up with competitors because of the block. adoption. ETH is worth about $350 billion at the time of writing. The next third coin, ADA, is around $66 billion.
The disturbing conclusion, and I apologize to everyone in advance, seems to make me, and others like me, an extreme couple: those who believe in bitcoin and ether are too entrenched to be toppled.
Read more: You can be extreme in Bitcoin and like Ethereum too