Netflix’s smash hit series Squid Game has prompted fans to create everything from reenactment videos to custom merchandise. The strangest creation by far, though, has to be SQUID, a crypto-asset inspired by the series.
In less than a week, from 26 October to 1 November, SQUID’s price surged by over 230 000% to $2861, as memecoin enthusiasts showed their willingness to play a risky game in return for a big payday. Unfortunately, particularly in the meme coin space, what goes straight up tends to go straight down and – spoiler alert – SQUID’s price plunged by 100% to less than half a cent on Monday 1 November. Links to its website and social media assets are now dead, trading in SQUID is no longer possible and it is widely considered to be a scam.
Over the course of October, we saw two other meme coins – Dogecoin and Shiba Inu – grow to become 9th and 10th largest crypto-assets by market capitalisation. Clearly then, not all meme coins are as short-lived as SQUID. So if you can’t simply use time since launch as a reliable measure of what separates a meme coin from a potentially disruptive piece of blockchain tech, then what should you be looking for in your next crypto investment?
“One approach is to focus on the fundamental value that the technology behind a crypto-asset offers,” says Sean Sanders, CEO at Cape Town, South Africa-based cryptocurrency investment platform Revix.
“What problems is it attempting to solve? How is it trying to change the world and who is driving it? If you can clearly establish these three criteria by visiting the project’s website, you’ll at the very least have established the legitimacy of the project, a critical first step in an investment evaluation.”
Breaking it down, step by step, says Sanders, investors need to ask:
- What is the project trying to achieve? Does it aim to serve as the currency of the future, like Bitcoin, or does it serve as the basis of new decentralised technologies, such as Ethereum? If the purpose of the project is difficult to find or unclear, that should be a clear red flag.
- How does it plan to achieve its objectives? It’s easy to set lofty goals, but without a solid plan outlining how to achieve them, they are worthless. Any project worth investing in will have published project roadmaps, timelines and plans of action to inform stakeholders and investors, like you.
- Who is driving the crypto-asset? The credibility of the team behind the project is often one of the easiest indicators of its legitimacy. Have they worked on any other successful blockchain or decentralised finance projects in the past? What kind of experience do they have in the space? Another important question is who is supporting the project? Can you buy or sell its native assets on mainstream, well-established exchanges and crypto platforms like Revix, Crypto.com, Binance and others? If you have to jump through multiple hoops just to buy the crypto-asset, and if you can’t sell it, perhaps it’s still too early-stage for all but the most risk-tolerant of investors.
“There are any number of good examples of crypto-assets that tick all of these boxes,” Sanders continues. “The smart contract space is an exciting sector to invest in, because the technologies defining it are trying to revolutionise the way we bank, transact, create and play. Ethereum remains the front runner in the space, but that position is being hotly contested by Solana, which has had a stellar month in terms of price action.”
Solana makes it possible to develop apps that allow person-to-person borrowing, lending and trading without any intermediary, such as a bank. It was founded by Anatoly Yakovenko, a visionary developer known for leading the development of operating systems at Qualcomm. The whitepaper that he published in 2017 proposed several blockchain-based innovations that would eventually become Solana.
“Just these points show that Solana easily stands up to the legitimacy test proposed above,” Sanders adds.
“Solana set a new all-time price high this week, passing rival Cardano to become the 4th largest crypto-asset by market capitalisation. With its very first global conference set to kick off in Lisbon next week, many analysts believe its upward price trajectory is set to continue.”
For investors looking to diversify beyond just Bitcoin and Ethereum, Solana is a great example of the type of blockchain technology to keep an eye on, but it’s by no means the only one.
2021 has been a year of record growth for multiple blockchain projects and there are more options and earning opportunities available to the savvy investors than ever before. Don’t play games with your crypto investments.
Stick with the players that are already winning the game and their success could also be yours.