Cryptobroker tokens and those based on ‘proof of work’ have higher returns
As cryptocurrencies mature, investors are showing increasing interest in discerning which segments of this vast market with over 11,000 tokens perform best. The latest Goldman Sachs report sheds some light on what kind of ‘cryptos’ have the highest yield and which ones have performed the worst since the end of 2019.
“Monitoring the segments of the cryptocurrency market can help determine which characteristics of the network are rewarding investors, as well as the perspective of the practical applications of the technologies,” they comment from Goldman Sachs. And some of these segments stand out, such as crypto brokers tokens or remittances.
According to analysts Zach Pandl, Goldman’s Co-Head of Currency Strategy, and Isabella Rosenberg, tokens issued by platforms of cryptocurrency trading and digital assets based on the ‘proof of stake’ algorithm (proof of stake) are the best performers in the last two and a half years. In contrast, privacy-based tokens have underperformed.
Thus, according to the classification of the experts of the US investment bank, the cryptos issued by cryptocurrency trading platforms, such as binance coin, which with a market capitalization of more than 65,000 million dollars, disputes the ‘stablecoin’ tether the third position of the market, they are the most profitable. In fact, the crypto exchange Binance’s token has witnessed the third-largest increase in market capitalization in the past eight months, with an increase of 992%.
On the other hand, assets similar to the currency are represented by bitcoin and are those that are considered as a means of payment or as speculative assets. Other segments that it uses to classify tokens are those of ‘other applications’, among which chainlink stands out, or the privacy-based like monero.
The remittance tokens like ripple outperformed the cryptocurrency market in November 2020, while decentralized finance-related assets such as uniswap they gained momentum in January and early February.
The latter, in particular, compared to the main cryptocurrencies, has a significantly lower price. However, the 10th largest digital currency in the world is the second in growth in the last 12 months, just below dogecoin. Statistics collected by ‘BlockArabia.com’ show that the capitalization of this token increased by 1,028% since July 2020, going from 1,400 million dollars in January to 17,500 million.
Meanwhile, the tokens associated with proof-of-stake networks, such as polkadot or neo have outperformed proof-of-work tokens, such as bitcoin since late 2019, according to the report. Among them, the cardano stands out, whose value in January was 5.6 billion dollars. This figure has risen an impressive 728% since then, reaching $ 56 billion. Polkadot has grown 149% in the last 12 months, according to ‘BlockArabia.com’.
Still under the proof-of-work algorithm but preparing a revolution towards proof-of-stake, ethereum has seen a massive 310% increase in so far this year. In fact, in a previous report, Goldman Sachs experts stated that the potential of Vitalik Buterin’s creation is far superior to any other digital currency, even above bitcoin. The US bank noted that ‘crypto’ “has what it takes to unseat bitcoin as the dominant store of value.”
The entity highlighted that the ether use cases currently have the highest growth projections, being the most popular development platform for smart contracts. Also, it is preparing for this update of its algorithm, which makes it even more promising.
The jump to Ethereum 2.0 will happen between the end of this year or the beginning of next and follows the ‘London’ update in August. After the change, the blockchain will be less polluting, which contrasts with bitcoin, which will maintain the proof-of-work protocol, whose mining is much more polluting and remains in the eye of the hurricane due to the carbon footprint it leaves. However, it will also roll out a number of enhancements in November, under the codename ‘Taproot’.