There are 8,000+ cryptocurrencies globally, and each has different monetary policies, technical designs, and value propositions.
We create educational content that highlights these differences in a digestible manner. People are free to invest their capital as they see fit, but we are determined to provide foundational analysis for those that want to learn more about the monetary and technical aspects of a specific project.
Our research identified the key differentiator amongst layer-one-blockchain cryptocurrencies: monetary policy achievements versus technical achievements.
We believe that Bitcoin is the only cryptocurrency that is trying to be sound money. In our estimation, it is the only cryptocurrency with a decentralized monetary policy that has sound-money principles.
All of the other projects optimize their blockchains for a specific use case. Generally speaking, they trade in decentralization and security on their layer one blockchain for transaction throughput and scalability. They can do this because they’re not offering a solution to a monetary problem; they’re offering a solution to a technical problem. We view altcoin projects as companies with an executive suite, an advisory board, and a marketing team.
That’s not to say that altcoin projects aren’t creating new and exciting technologies, but it does beg the question of why the project needs to have its own “decentralized” blockchain. Many of these projects would be better off in a centralized database or built on top of a truly decentralized blockchain as a layer two solution. However, if that were the case, it wouldn’t need its own new currency, which presents the founders and potential investors of the project with an interesting dilemma.
No blockchain means no currency, which means no pre-mine, which means no massive equity stake, which means investors look for other projects with their own blockchain.
This realization is why we primarily produce Bitcoin-related content.
Our research and experts make the delineation between Bitcoin and altcoins explicitly clear. Each is trying to solve different problems – and that’s okay. But we believe it’s important for investors to be aware of these fundamental differences before investing in a specific project.
Cryptocurrency Rating Methodology
SimpleMoneyLyfe evaluates cryptocurrencies on the following criteria:
- Decentralization: There is a broad spectrum of decentralization, and each cryptocurrency falls between completely decentralized and completely centralized. We believe that maximizing decentralization must be a priority for any currency vying to be sound money. This removes the opportunity for a select group of insiders to change the monetary policy or alter the history of the blockchain’s ledger.
- Consensus Protocols: The varying degrees of decentralization rely on the consensus protocol of the specific blockchain. These protocols enable the network to agree on the integrity of transactions and ensure that participants spend only the coins that belong to them. Generally speaking, there are two consensus protocols: proof-of-work and proof-of-stake. Proof-of-work requires a network participant to show work by expending real-world resources to audit the blockchain. Proof-of-Stake requires a network participant to own a large amount of the native coin to audit the blockchain. There are trade-offs to each consensus protocol that matter to varying degrees depending on the problem that the cryptocurrency is trying to solve.
- Sound-Money Principles: The currency needs to have sound-money principles if it is vying to be a layer one blockchain. Amongst a handful of other characteristics, it must effectively satisfy the monetary requirements of scarcity and censorship resistance. A fixed supply and a high-stock-to-flow ratio are important factors to consider because they preserve the value of the existing coins in circulation. Additionally, a transparent and predictable supply schedule contributes to the project’s integrity because the currency’s inflation rate is widely known and provable by the network participants. A protocol that adjusts the difficulty of minting new coins, depending on the amount of effort expended to produce them, removes the monetary good from the cycle of debasement that has ravaged most forms of money throughout history. Finally, a currency must be sufficiently decentralized for it to be resistant to censorship.
Sourcing Cryptocurrency Data & Information
Unprecedented amounts of data are available on certain cryptocurrencies because of their public blockchains. We leverage several data platforms to examine the behaviors that are happening on-chain, such as:
- Blockchain.com
- Glassnode
- Coin Metrics
Additionally, we rely on several well-cited publications, government databases, and individual contributors to ensure our content is packed with relevant information that adds value to the educational experience of our audience. We spend hours filtering, analyzing, and interpreting diverse data sets to help us clearly articulate the cryptocurrency’s risks and value proposition.
Updating Our Cryptocurrency Analysis
Crypto moves fast, and so must our content. Our team of crypto analysts diligently strives to update older content to best reflect the current state of the markets. Content is updated periodically to reflect the regulatory landscape and technological developments.
Crypto Research Team
Our crypto research team consists of passionate experts that have gone deep down the rabbit hole on various projects. We have an all-star team of research professionals, financial analysts, and professional writers committed to producing accurate and relevant content. Their contributions to the space have been cited in publications such as Business Insider, InvestorPlace, Entrepreneur.com, CoinGecko, and Bitcointalk.org. For more details on our research process, please reference our editorial guidelines.