When evaluating totally different blockchains, billionaire Mark Cuban appears to be like at a couple of particular traits earlier than investing.
“Most individuals take a look at velocity and price in comparison with BTC [bitcoin] or ETH [ethereum],” Cuban tells CNBC Make It. “Whereas these issues will be essential, 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 price of cryptocurrency transactions. Every blockchain, which is a decentralized digital ledger that paperwork cryptocurrency transactions and different data, is exclusive.
For instance, the ethereum blockchain can execute smart contracts, which energy decentralized purposes 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 facets of ethereum are appealing to Cuban, he previously said. Resulting from its sensible contracts, he likens this blockchain to the internet, since totally different platforms, from issues like DeFi to social media websites, will be constructed on it.
Different specialists agree. “Ethereum [is] in search of methods to turn out to be a completely working infrastructure platform,” Kathy Lien of BK Asset Administration recently told CNBC. “Ethereum itself can carry out plenty of financial duties, so it goes past” bitcoin, which is called a peer-to-peer electronic cash system.
That is why, based on Cuban, “the platforms which have probably the most energetic builders and create purposes with vital utility for his or her customers can have a community impact.” In flip, the blockchain might “generate vital 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 consumer is usually charged a charge by the blockchain’s miners. These charges will 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 folks might imagine that blockchains are solely used for cryptocurrency transactions, the platforms might probably be used for far more than that, as ethereum is. That is why Cuban appears to be like on the potential use instances for every blockchain earlier than investing, fairly than simply the velocity and price to make use of them.
Cuban has invested in many blockchain firms this yr, all of that are centered round sensible contract capabilities. His portfolio consists of NFT platforms, DeFi firms and ethereum scaling options.
Cuban has additionally been investing in cryptocurrencies like ethereum, bitcoin and others.