Protocol Wars

The protocol wars

Blockchain promises to revolutionize the protocols that enterprise and governments are built onto. The ability to build existing and new applications on a decentralized ledger will affect everything in the world that functions based off data. In the future one of the competing protocols will succeed with most of enterprise will be built on top of this new “Super Computer”. We will see 3-5 of the protocols end up coexisting.

Ethereum (ETH)
The Ethereum protocol was the first to accomplish this idea of a generalized blockchain for DAPPS or decentralized applications. This new idea sparked a sort of revolution and new ecosystem for development. Anything from Data storage and transactions, to the legal system and voting can be made decentralized making it more secure, transparent, accurate and peer to peer to name a few benefits. Ethereum was the first project to make this idea come to fruition and thus, has the largest developer ecosystem was far. At this time, over 80% of all tokens in the crypto space are built on top of Ethereum’s network. I have chosen to hold a large amount of Ether, Ethereum’s native currency. Rather was looking at Ether as a currency, the developers describe it was a crypto fuel. This is because every transaction or transition of data on the network, is fueled by little pieces of Ether. This creates a real use case for the crypto commodity known as “Ether”. Being first however, does not make you the best. Ethereum, like almost every blockchain right now, has serious scalability and governance issues that was stopping enterprise and governments from going all in. There are newer second and third generation protocols that aim to solve these problems.

Disclaimer: It’s important to note all/most protocols competing with ETH are running on testnets, not mainnets.

Cardano (ADA) Cardano is a second generation protocol promising much higher TPS (transactions per second) and scalability. ADA is promising 1500 TPS on mainnet with TPS around 100+ on testnet. I have chosen to hold ADA as a hedge against ETH.

Zilliqa (ZIL) Zilliqa is a third generation protocol with some very promising expectations. The testnet was able to handle 2000 TPS with the intention of achieving well over 10,000 TPS. Zilliqa aims to do this by implementing shading right away to increase scalability. The developer team claims as it scales to the size of Ethereum’s network, 30,000 nodes, ZIL should be able to handle a 1000x more TPS than ETH. I hold a decent amount of ZIL as a hedge against ETH.

As an investor in the blockchain space, I have chosen to build my portfolio primarily around the protocols that will end up being the platform for governments and enterprise to be built on top of. This will be both the existing as well as new industry the world has never seen. Apart from trying to invest into the protocols I believe have a chance to win, I also have invested many of the side chains that hope to solve scalability, security, governance etc. for the Ethereum network. The ETH network has its weakness/issues but the size/quality of the ecosystem aiming to fix it, has me confident ETH is very likely to succeed and become the platform to which most of the world chooses to build Dapps on.

I am not a financial advisor, I am just simply sharing my opinion. Take all advice from others with
a grain of salt, especially when there’s money involved.