What is POW?
POW (Proof of Work) coins are a consensus mechanism for cryptocurrencies, primarily verifying transactions and generating new blocks through computational power. The basic principle of the POW mechanism is:
Computational Difficulty: Miners need to solve complex mathematical problems, and only after successful completion can they package transaction records into blocks.
Competitive Mechanism: Miners compete based on computational speed, with the first miner to solve the problem receiving block rewards and transaction fees.
Security: Due to the need for substantial computational resources, attacking the network (such as double spending) becomes extremely difficult.
Rarity
Bitcoin is the most famous POW coin, with other examples including Ethereum (before transitioning to Proof of Stake) and Litecoin. The advantages of the POW mechanism are its security and decentralization, but the disadvantages are high energy consumption and relatively low efficiency.
As cryptocurrency investors, we recommend allocating a portion of your holdings to these top 50 market cap POW tokens with a stable total supply. According to data from CoinMarketCap, the top 50 POW tokens include BTC, DOGE, BCH, LTC, ETC, XMR, etc. Among them, DOGE and ETC have an inflation rate, which means their total supply is unlimited. XMR, due to being delisted from several exchanges, has lower liquidity compared to other cryptocurrencies, so we will not discuss it here. Therefore, from the perspective of rarity, we suggest focusing only on the remaining few tokens.
Age and Consensus
In the cryptocurrency space, each round of bull and bear markets gives rise to and eliminates a large number of cryptocurrencies. Only a few have survived three or four rounds of bull and bear cycles. Selecting investable altcoins based on age is also very important. Among the aforementioned three cryptocurrencies, the oldest is BTC, which has existed for over 16 years, followed by LTC (13 years) and BCH (7 years). We believe that only old coins that have experienced 2-3 years of bull and bear cycles are worth investing in, as it is not just about age but also the power of consensus.
Institutional Choice
Among all institutions investing in cryptocurrencies, the most famous are MicroStrategy and GreyScale. MicroStrategy has always focused on BTC, while GreyScale, based on our analysis of its positions over the past 30 days, is significantly reducing its BTC holdings, while its LTC and BCH holdings are slowly increasing. Meanwhile, one of the most famous exchanges in the cryptocurrency space, Coinbase, recently released the coin50 index, which also includes LTC and BCH.
Summary
In summary, for long-term investors, from the perspective of rarity, age, consensus, institutional choice, and liquidity, we believe that a portion of the position can be invested in these two altcoins, BCH and LTC.
