The future of anonymous coins is uncertain? Where will Grin and Beam go...

Two cryptocurrencies that are currently very popular may not be suitable for investment.

Grin is very popular, and there is no upper limit on the total issuance, which contains an inflation crisis. Grin's ambition is not to oppose Bitcoin and seize the throne of digital gold, but to be a digital legal currency. The fate of inflation is inevitable, and the best strategy to meet Grin is just one word - sell.

Beam coin price cut in half, computing power fleeing, scandals of the founding team frequently appearing, the future of anonymous coins is uncertain, where should it go?

Text丨Buliang

01

Grin’s depreciation

Grin is beginning to reach the peak of its life.

On the first day of the mainnet launch, 9 exchanges took the initiative to list Grin, and the price of the currency showed a sharp trend.

According to Coingecko data, at around 9:00 on January 17, the average price of Grin across the entire network was US$26.27, and the 24-hour highest price was US$261.65.

“Grin is easily the most advanced and fascinating cryptocurrency after Bitcoin.”

Cobra, the owner of Bitcoin's official forum Bitcoin.org, praised Grin on Twitter.

The big man in the domestic cryptocurrency circle, Martian Xu Zijing, also posted a Weibo post to support Grin. "Grin may be the most hardcore digital currency in recent years, the one closest to Bitcoin fundamentalism; small blocks, pure anonymity, anti-censorship, cypherpunks, anarchism are once again making waves."

However, Buffett once said, "I am greedy when others are fearful, and I am fearful when others are greedy." When everyone is trying to sell you Grin's investment value and encryption ideals, you need to be vigilant.

From the perspective of return on investment, Grin may not be a good long-term investment target.

There is no upper limit on the total amount of Grin issued, and the supply remains linear, and the mining speed will not change.

This is a monetary model with persistent inflation.

In the early days, the inflation rate is high, and every minute of mining output dilutes the value of Grin, but as time goes by, the inflation rate will gradually decrease and will be infinitely close to but not equal to zero.

This design has been questioned because when supply is unlimited and demand is limited, the value of Grin will be infinitely diluted. Why would Grin adopt such an inflationary monetary policy?

In fact, this just reflects Grin’s ambition—Grin wants to be a digital legal currency.

This makes it less of a direct competitor to “digital gold” Bitcoin and more of a monetary attempt.

The total amount of Bitcoin is constant, and its output is halved every four years. This is a continuously deflationary monetary model, which leads to two consequences: 1. Early miners are destined to benefit more than later miners; 2. Bitcoin has become a store of value, that is, digital gold, rather than a currency.

Bitcoin is called digital gold because it has a high stock-to-flow ratio.

The stock-to-flow ratio is the amount held in inventory divided by the amount produced each year. The higher the stock-to-flow ratio, the lower the inflation rate of the asset. It is expected that by 2025, Bitcoin's stock-to-flow ratio will exceed that of gold.

As Bitcoin has already achieved broad consensus, if Grin were to appear again with the same monetary policy and directly challenge Bitcoin, it would be difficult for it to win.

In the early days of Grin, the stock-to-flow ratio was low and the inflation rate was extremely high. Grin produces 270 million coins per year, and the inflation rate is 400% in the third month and 100% after one year, which will incentivize spending rather than holding.

Once Grin Coin is in circulation in large quantities and generates network effects, it will create a wider distribution of currency; at the same time, it also prevents speculation, and the Grin of early holders will be greatly diluted, so it is more reasonable to spend Grin than to hold it.

If anyone wants to get rich by mining and hoarding Grin, they'd better wake up. In fact, there is a high probability that they will be trapped.

This is also in line with the vision of the Grin team. Developer Michael Cordner once said in an interview:

First, if it is a deflationary monetary policy, early miners will inevitably benefit more than later miners, which is not what we want to see. Second, we think this will make Grin more likely to become a currency rather than a store of value like Bitcoin. If the value of Grin is unlikely to change, people will be more willing to use it rather than hoard it speculatively.

In the later stage, because the output rate remains unchanged, the proportion of tokens generated by mining to the existing supply will gradually decrease, and the inventory circulation ratio will gradually increase. At that time, the storage value of the currency will be reflected. Eventually, Grin may become a low-inflation currency that is more suitable for value exchange, but this will not happen for many years, at least not within ten years.

The ideal situation is that after a large amount of base currency is issued, the loss rate of tokens exceeds the new issuance, maintaining a low and permanent inflation. This can solve the problem of long-term incentives for miners and will not cause any token dilution.

But for individual investors, holding a depreciating currency is not a good business.

Gold has long-term investment value, but currency does not!

Looking at the historical lessons learned from the predecessors of privacy coins, they all saw a sharp rise after listing, and then continued to fall sharply.

Learn to exchange, not store, so the best strategy for Grin is just one word - sell.

02

Beam: The “scammers’” project

Compared with the popular Grin, Beam has not had an easy time these days.

Before it fully matured, the price and computing power of the coin both fell. The market price plummeted from 10 yuan a week ago to 5 yuan, and the over-the-counter price was decreasing by 1 yuan every day. With the launch of the Grin mainnet, miners voted with their mining machines and the computing power fled to Grin. According to the data of Spark Mining Pool, the computing power of the Beam network dropped by 23% on January 16.

“Because of hoarding Beam, I have lost tens of thousands of dollars!”

Talking about the halving of Beam coin price, Li Chao sighed and was very depressed. In the early days of Beam's launch, he bought a large amount of chips worth nearly 80,000 yuan at the price of 10 yuan in the over-the-counter market, planning to sell them all when the price rose to 15 yuan. Unexpectedly, the reality directly added a negative sign in front of the expected return, and now he has lost 50%.

Beam has also been unpopular in public opinion.

Because of the 20% "mining tax" and the investment from 16 funds, Beam has been questioned about centralization from the beginning. Now more and more opponents are digging up the black material of the Beam team and firing two bullets of public opinion, which makes the situation worse for Beam.

The first bullet was aimed at Beam COO Amir Aaronson.

Prior to joining Beam, Amir Aaronson was a serial entrepreneur. In 2015, he co-founded the Israeli company Fitch, raised $500,000, and was committed to creating innovative fishing equipment. In 2017, he became the Chief Operating Officer of Playtness, building a fitness membership ecosystem through smart contracts.

In July 2018, Playtness conducted an ICO to raise Ethereum, but just a few months later, the webpage could not be opened, the Telegram group disappeared and disbanded, Facebook and Twitter stopped updating at the same time, and Amir Aaronson started his next business - Beam.

The second bullet was fired directly at Beam's "disappeared consultant" Yonatan Ben Shimon.

In the early introduction of Beam team, Yonatan Ben Shimon was listed among them, but now when I open the official website to check, Yonatan Ben Shimon is missing. The disappearance consultant is actually a tainted "sinner".

Yonatan Ben Shimon is the co-founder and CEO of the blockchain project Matchpool.

Matchpool raised $5.7 million through ICO in 48 hours, but the day after the ICO ended, another co-founder announced that Yonatan Ben Shimon would leave the project, and it was discovered that Shimon took $1.7 million from the company's wallet. The team later tried to prove that this was their internal optimization strategy and the problem of the wallet itself, but it was never convincing.

Falling coin prices, a sharp drop in computing power, tarnished founder’s credit, doubts about centralization… Beam’s privacy coin’s road to counterattack has been bumpy.

How can Beam fight back?

"The only hope now is to pray for Beam to be listed on large exchanges such as Huobi and Binance." Li Chao still has expectations for Beam, and hopes that the Beam team and the fund behind him can show their talents and allow Beam to be listed on some large exchanges to stimulate demand.

After all, all those who are trapped can do is wait and pray except cut their losses.