According to the creator of Litecoin, Charles Lee, most altcoins have no innovation, instead having weak developers, dishonest marketing and/or bad incentives.
In a series of tweets aimed at sharing his thoughts about cryptocurrencies and how he evaluates whether or not to invest money into any of them, Lee says:
“In order to stick out from the crowd of altcoins, a lot of coins do a lot of shady things like make promises that are just BS.” He further adds:
“A lot of coins are solutions looking for a problem or just don’t bring enough innovation.”
With almost 700 alternative currencies in existence today, according to CoinMarketCap.com, only a few are popularly used. There is a view that most of them were built to fail in the first place.
Lisk CEO Max Kordek had stated in a previous post that the biggest mistake many creators have is to solve everything at once and trying to implement dozens of different features forgetting that even projects with a great vision have problems - a failure rate for regular startups is about 90 percent and probably bigger in the Blockchain industry.
He says it takes time to build the foundation for a good product, then the design of a great UX for hundreds of thousands of users to be expected.
These are some of the reasons for which the altcoin market is considered dangerous and highly competitive, yet lucrative in a way. Adding several new features and tools makes a coin successful with room for huge profits but with a similar amount of risk.
With the year still young and looking somewhat promising, Lee notes some of the features he looks out for in his evaluation.
They include innovation, competent developers, honest marketing and fair incentives. He adds that coins like Ethereum, Monero, Augur, Zcash and Decred bring a lot of innovation and are trying a lot of cool things to push innovation.
Strong team a must
“Without a strong team, there’s very little chance that a coin will succeed long term. So when I see teams spend resources on marketing over tech, I know that they have their priorities in the wrong place,” Lee, who says some of the strong teams he has looked at include Ethereum, Monero and Decred, tweets.
He says he stays away from premines, instamines or ICOs as they are rewarding the developers too much and also notes that many white papers are filled with technical terms that make no sense just to confuse the reader.
Without mentioning Litecoin, he ranks Bitcoin, Monero and Decred as his highest coins citing that Decred spent a year doing coding to improve its consensus and governance system, and Monero which didn’t have a GUI wallet. Ethereum is close, he adds, but the decision to hardfork and go back on the “uncensorable transaction” promise really hurts.
If you have something good, he says, work hard and you will eventually succeed. If you don’t, you try to lure people in with fancy marketing.