What are zombie tokens? How to use the currency circle "coin selection tool" to select valuable cryptocurrencies?

Recently, "Forbes" listed 20 "zombie tokens" with a market value of more than US$1 billion, including XRP, ADA, BCH, ETC, LTC, ICP... and other well-known currencies.

This article will take you through what “zombie tokens” are, the characteristics of zombie tokens, and ways to avoid worthless cryptocurrencies. And how to use the currency circle’s “coin selection tool” to select valuable cryptocurrencies.

1. What are zombie tokens? The definition of zombie coins

Zombie tokens (English zombie tokens), Forbes defines "zombie tokens" as crypto assets that have almost no use other than speculative cryptocurrency transactions.

Our definition of zombie coins is as follows:

• ① Lack of enough users/supporters;
• ② Lack of sufficient funds to support the project The team achieves the vision described in the white paper;
• ③Lack of token holder liquidity;
• ④It may be difficult to raise more funds in the future due to reasons ① and ②;
• ⑤The actual network usage is very small and lacks practical applications.

In summary, "zombie tokens" are mainly used for speculation and speculation, but lack actual use, and their future development prospects are worrying.

2. Forbes’ list of 20 “zombie tokens”

Forbes Research released a report called “20 Zombie Blocks Worth Billions of Dollars” The list of "chains" has caused market controversy.

The report stated that “these cryptocurrencies are considered to have respectable valuations but have little practical value beyond speculative trading.”

It is worth noting that the cryptocurrencies in focus Currencies and projects include XRP, ADA, BCH, LTC, ICP, ETC, XLM, STX, KAS, THETA, FTM, XMR, AR, ALGO, FLOW, EGLD, BSV, MINA, XTZ, EOS, etc.

These "immortal" tokens can continue to be traded, but bring almost no benefits to users. Many people survive on speculation and past capital rather than achieving their purpose.

Image source: Cryrtonite

Forbes: Top cryptocurrencies rely mainly on speculative trading

Various cryptos heavily criticized by Forbes Among the assets, XRP - the cryptocurrency of the Ripple ecosystem. XRP was originally designed to compete with the SWIFT international banking system, but has actually failed to achieve its ambitious aspirations.

Despite its market capitalization of approximately $36 billion, Forbes considers XRP to be “essentially useless” as it serves no purpose other than market speculation.

Forbes analysts added: “Not only is SWIFT still going strong, but there are now better ways to make international payments via blockchain, especially stablecoins like Tether (USDT), which are pegged to the U.S. dollar. , the circulation volume reaches 100 billion US dollars.

Although hard forks on the market such as Litecoin (LTC), Bitcoin Cash (BCH), Bitcoin SV (BSV) and Ethereum Classic (ETC) are mainly used. For speculative investments rather than practical applications, their market value still exceeds $1 billion.

The birth of these cryptocurrencies often stems from disagreements within the developer community and is due to its historical importance or speculative nature.

Forbes: Challenges Facing the “Ethereum Killer”

Forbes’ report further takes a look at Tezos (XTZ), Algorand (ALGO) and Cardano (ADA). The so-called "Ethereum killer" is critical.

Despite significant technological advancements and high valuations, these tokens have yet to see widespread adoption or user activity.

Speculative interest in Cardano (ADA) reportedly stems from the popularity of its founder, Charles Hoskinson, rather than real-world utility.

"Forbes" emphasized that there is a lack of sound governance structures and financial accountability mechanisms within these blockchain entities. These entities operate without regulatory oversight and have no obligations to shareholders. This makes it difficult to assess their financial health, as evidenced by ETC’s continued trading activity despite being the victim of a major security breach.

3. How to choose valuable cryptocurrencies?

It is difficult for most cryptocurrency investors to judge whether the cryptocurrency you want to invest in is valuable, such as checking the token white paper, the liquidity of the token, and whether there are enough funds to support the project team to complete the white paper The vision described in...etc.

Then we can use some [currency circle tools] to select investment currencies. For example, institutional positions (grayscale trust funds), currencies listed on compliant exchanges, market capitalization rankings of cryptocurrencies, etc.

1. Institutional holding currencies

The advantage of institutional holdings is that they will review before buying, which is equivalent to the institution having helped us screen the investable currencies. Currently, traditional financial institutions have launched Bitcoin ETFs and Ethereum ETFs, so BTC and ETH are our preferred investment currencies.

Take the holding currencies of Grayscale Fund as an example. They are all currencies that have been audited by Grayscale. These projects have a low chance of running away and committing fraud. If you are new to the currency circle, you can first consider selecting the coins you want to buy from the currencies held by Grayscale.

It can be seen from the number and value of currency holdings that Grayscale Trust’s key holdings are Bitcoin and Ethereum, and the proportion of holdings in other currencies is relatively low!

2. Currencies listed on compliant exchanges

Regulated and compliant cryptocurrency exchanges have strict reviews on the currency listing process. The probability of air coins, junk coins, and MLM coins is very low.

Take Coinbase as an example. It has a special internal committee responsible for reviewing currency listing matters. The committee considers the compliance of the Token project, the founding team, and determines whether it is a security or a commodity based on the internal review structure.

Compliant exchanges such as Japan, Hong Kong, and Singapore must first pass the review of regulatory authorities before listing currencies. The currencies of these exchanges can be used as a reference for our currency selection.

3. Cryptocurrency market capitalization rankings

You can query all cryptocurrencies through the cryptocurrency market capitalization ranking of the "Cryptocurrency Price Tracking Website-CoinMarketCap".

Includes the current price, market value, trading volume (24 hours), circulating supply, as well as a brief introduction to the currency, website, white paper, trading market and related news.

CoinMarketCap was acquired by Binance in 2020 and continues to operate independently from the parent company.

Generally, the currency with a larger market value has a larger trading volume and a higher market popularity. It is recommended to start with the top-ranked currencies and use the tools 1 and 2 above to filter.

Although the “zombie tokens” listed by Forbes have yet to be verified by time. However, it is foreseeable that in the future, the cryptocurrency market will gradually phase out currencies with backward technology and few application scenarios. After government laws and regulations are more standardized and comprehensive, only those that can survive will be the market darlings.

4. How to configure digital assets?

Asset allocation largely depends on our subjective perception. According to the author’s investment philosophy, the proportion of Bitcoin (BTC) in asset allocation is higher than 70%, and 10% can be allocated to Ethereum (ETH). , 10% can be allocated to the top 20 currencies, and the remaining 10% can be allocated to some hot small currencies.

Overall, the holding ratio of BTC and ETH should reach more than 80%. BTC is the belief in the currency circle, and ETH is the most widely used underlying public chain in the currency circle. The credibility and asset value of both are much higher than other currencies.

1. Classification of value coins (personal opinion)

##Level 1ETH (Ethereum)Below 10%Second LevelSOL (Sole currency), LINK, TRX, DOT and other underlying public linkages can only be contracted. Platform currency BNBless than 10%Level 3MANA, LPT, FIL, AVAX, DOGE, BAT and other small currenciesBelow 10%

Cryptocurrency asset value classification
asset value evaluation	Corresponding cryptocurrency	Recommended holding ratio
Priority level	BTC (Bitcoin)	More than 70%

2. Cryptocurrency market capitalization ranking

The following is the 2024 virtual currency market capitalization ranking, use description and tradable cryptocurrency exchanges.

Virtual currency market value ranking (2024.4.15) Application usage description Listed on exchanges1. BTC (Bitcoin)Digital gold, value storageBinance , OKX##2, ETH (Ethereum)3. USDT (Tether)4 , BNB (Binance Coin) 5, SOL (SOL coin)6, USDC (USDCoin)##7, XRP (Ripple) Banks, corporate transfer networksBinance, OKX8, DOGE (Dogecoin)Network reward coins, Bitcoin clone coins Binance, OKX9, ADA (ADA coin)Layered digital cash and smart contracts Binance, OKX10, AVAX (Tezos token)Smart contract, challenger to EthereumBinance, OKX

Cryptocurrency asset value classification
Smart contracts and electronic cash	Binance, OKX
Currency conversion base currency (1USDT=1 USD)	Binance, OKX
Binance exchange platform currency, token to compensate Binance transaction fees	Binance
High TPS, high scalability public chain	Binance, OKX
Regulated USD stablecoin (1USDC=1 USD)	Binance, OKX

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