When evaluating totally different blockchains, billionaire Mark Cuban appears to be like at a number of particular traits earlier than investing.
“Most individuals take a look at velocity and value in comparison with BTC [bitcoin] or ETH [ethereum],” Cuban tells CNBC Make It. “Whereas these issues could be necessary, I take a look at blockchains as networks with growth platforms through sensible contracts.”
Cuban is referring to the capabilities of every blockchain past velocity and value of cryptocurrency transactions. Every blockchain, which is a decentralized digital ledger that paperwork cryptocurrency transactions and different info, is exclusive.
For instance, the ethereum blockchain can execute smart contracts, which energy decentralized functions like DeFi, or decentralized finance, and NFTs, or nonfungible tokens. The ethereum blockchain options its cryptocurrency ether, however can even work as a platform for other digital cash.
These features of ethereum are appealing to Cuban, he previously said. As a consequence of its sensible contracts, he likens this blockchain to the internet, since totally different platforms, from issues like DeFi to social media websites, could be constructed on it.
Different consultants agree. “Ethereum [is] on the lookout for methods to change into a completely working infrastructure platform,” Kathy Lien of BK Asset Administration recently told CNBC. “Ethereum itself can carry out quite a few financial duties, so it goes past” bitcoin, which is named a peer-to-peer electronic cash system.
That is why, in response to Cuban, “the platforms which have essentially the most energetic builders and create functions with important utility for his or her customers could have a community impact.” In flip, the blockchain might “generate important charges,” which might fund the community, making it investible.
To mint, or blockchain confirm, a token — like an NFT, for instance — and transact on the blockchain, a person is usually charged a price by the blockchain’s miners. These charges could be especially costly throughout excessive demand or congested durations.
In Cuban’s opinion, “relying on how charges are distributed, [it can] create an actual income stream that will increase the values of the tokens they mint,” he says.
For instance, ethereum collects gas fees. That “makes it an earnings producing asset whose worth ought to rise as its community expands,” Lien says.
Although some individuals might imagine that blockchains are solely used for cryptocurrency transactions, the platforms might probably be used for rather more than that, as ethereum is. That is why Cuban appears to be like on the attainable use instances for every blockchain earlier than investing, fairly than simply the velocity and value to make use of them.
Cuban has invested in many blockchain corporations this yr, all of that are centered round sensible contract capabilities. His portfolio contains NFT platforms, DeFi corporations and ethereum scaling options.
Cuban has additionally been investing in cryptocurrencies like ethereum, bitcoin and others.