Kaspa is a cryptocurrency that gets hyped up for its technology, and I see no evidence that it has any exciting technology. It also gets hyped up for being a fair-launch, proof-of-work coin, which people say is better than proof of stake, but I don't see that either. So I'm going to destroy Kaspa, because in my opinion Kaspa is a crypto investment that is more likely to go to zero from where it's at today than it is likely to beat Bitcoin. Almost no altcoin even beats Bitcoin over the long term, and Kaspa to me looks drastically overvalued today based on what I'm about to walk through. If you're holding Kaspa (KAS), you might want to hear all of this so you can decide whether you want to keep holding it, because to me there are some obvious, critical problems.
This is my opinion and my own experience as an investor, not financial advice. I record these reviews live, so some of the people who love Kaspa are telling me why they're hyped about it while I'm coming in like Miley Cyrus on a wrecking ball ten years ago.
Kaspa is valued right next to the Internet Computer
First off, look at the fully diluted market cap on this crypto. Before we even discuss anything else, Kaspa is valued right around where the Internet Computer is today. It sits right next to ICP on market cap, so I'm going to compare the two a lot. All of my money is in the Internet Computer, based on the technology I'm actually using, and I'll bet you that 99% of the time that bet holds up. At the same market cap, I believe Kaspa is overvalued by at least 100 times right now, based on hype, speculation, and people not understanding the technology, both what Kaspa is and what else is already out there.
So what is Kaspa? Kaspa is a proof-of-work cryptocurrency that implements the GHOSTDAG protocol. Unlike traditional blockchains like Bitcoin, GHOSTDAG does not orphan blocks but rather allows them to coexist. So we're seriously comparing this to Bitcoin right now. It's 2024. Bitcoin didn't just launch, and here is another coin hailing itself as better than Bitcoin. Last time I checked, there were a lot of other altcoins with the exact same pitch. Seriously, we're still making "better than Bitcoin" blockchains? Bitcoin is dominant and number one. It already is the best at what it does. Look at all these other blockchains and layer ones that think they're better than Bitcoin. Is Kaspa a Bitcoin layer 2? No. Is it an Ethereum layer 2? No. Can you even do smart contracts on it? No. They say that's coming, but look at the price too.
Kaspa over the last year: I did not like Kaspa at two cents, and now it's up to 17 cents. Do I find that infuriating? Yes, because people are going to lose money on Kaspa, and I don't want my neighbors to be broke because some group of people deceiving them ripped them off on a cryptocurrency that, to me, has no real value proposition.
Kaspa is basically a copy of Kadena
In the simplest terms, they basically copied Kadena. Kadena was all hyped up before as a "better than Bitcoin," next-generation proof-of-work blockchain. Kadena is a proof blockchain that combines proof-of-work consensus from Bitcoin with a directed acyclic graph. Does that sound familiar? Yes. Kaspa is basically, in the simplest terms, a copy of Kadena. I know there are small differences, but the average person wouldn't pay any attention to those small technological differences.
Now look at what happened with Kadena. Kadena went from like 30 cents, all hype and speculation, up to around $22 at the peak of market euphoria. And then it died right back to where the price was before. It's now back down around 15 cents. It has gone nowhere in four years. Kaspa is basically like a copy of Kadena. Somebody took the same basic technology, made some slight modifications to it, and this is a drastic simplification, but everybody else will complicate things for you. Genius is being able to simplify. This is basically just like Kadena, and I think it's going to have the same trajectory: it has one bull market in it, one market of hype and speculation, and it's dead after that. Just like Kadena, that is what I expect happens with Kaspa.
If you want my honest take on other overvalued coins, this is the same pattern I broke down when I argued HYPE is the most dangerous altcoin in the top 20.
The on-chain data shows a ghost chain
You want some proof of this? Let's go look at the Kaspa blockchain, and I'm going to compare it to the Internet Computer, because when you put it next to ICP and consider the same market cap, you can see it for yourself. The Kaspa dashboard is linked on CoinMarketCap as the official explorer. Can you read that transactions-per-second figure? That's 2.2. I mean, I guess we need decimals because it's so small. 2.2 transactions per second. And everyone is getting hyped up that the tech is so great here that this is going to be a fair version of Bitcoin. Then the transactions per second just dumped to 0.2. This is a ghost chain.
Now look at the active addresses. This is people sending Kaspa from one wallet to another. These can easily be faked by bots, where you set up 10,000 bot accounts, have them send small amounts back and forth between exchanges. They're very easy to fake. Over the last 90 days, the Kaspa transactions have been pretty constant, which to me is a good indication of some solid bot activity at the foundation. But what are people actually doing in these transactions? They're just sending money from one wallet to another.
What can you actually do with Kaspa? Well, you can send money from one wallet to another, for a $4 billion market cap. You know what else can do that? Just go down the list of coins. Solana can do that. Ethereum can do that, though the gas fees are a bit higher. Solana has cheap fees. USDC is on a bunch of chains. XRP, you can send rapid transactions. Dogecoin has pretty low transaction fees. Cardano is slower, but you can send it. AVAX, you can send transactions on that. Tron, Bitcoin Cash, Near Protocol, Polygon, all of these send transactions from one wallet to another. Kaspa does nothing special at all. It is all hype and speculation, and almost nobody is even using it.
Now let me show you the Internet Computer dashboard. This is doing 4,000 transactions a second, which blows Solana away in raw transaction numbers. But if you consider the computation that's driving these transactions, the Internet Computer is doing the equivalent of hundreds of thousands of Ethereum or Kaspa transactions per second. This is serious computer infrastructure that is worldwide and allows you to build an entire website, app, game, or metaverse all directly on chain. And half of the value on the Internet Computer is locked in almost indefinitely. What about Kaspa? On Kaspa, nothing's locked. You can just send all of it and dump it anytime you want to.
The hype is pure fluff with no substance
Now, the people hyping Kaspa, if you look on their X account, where is there some substance where they're talking about the actual technology? "The evolution of a project like Kaspa impacts the world in many ways." How exactly does it do that? You've basically copied other people's technology. You've spun up your own blockchain and you're bringing a whole bunch of money in for the core team. But how is this making anybody else's life better? Is copying off of somebody else's paper in school making a better classroom for everybody else? No, this is ridiculous. "Kaspa is a holistic movement, allowing many to shine." This is pure fluff. It is absolute pure fluff. There is no substance.
If you go to kaspa.org, we can look for some more substance. I'll give them credit: when I was first extremely critical of Kaspa for not listing any of the team members, shortly after that they did make a page with some contributors. Now you've got the founder, Yonatan. And think about this. DAGlabs was founded by one guy who collaborated with his PhD advisor. One guy. This was so simple technologically to invent that it looks like basically two people put this together, based on what I'm reading. One guy and his PhD advisor threw this together. That's how easy it was to make Kaspa.
That's a brutal, ugly truth, isn't it? But most of these blockchains are really easy to make. You just don't know how to do it yourself. Somebody who's a developer could pretty easily take another blockchain, copy it, and start their own blockchain. And this is what I see has happened here. I broke down this exact same problem when I reviewed Humanity, a $6 billion coin with a 404 team page.
Compare that to the team and tech behind ICP
Now compare that to something like the Internet Computer, which has taken thousands of years of person-research from the largest research and development team in blockchain. They have full-time dedicated people, a huge, massive team, and they have built the most advanced blockchain in the world. This took years just to launch, and it has been running successfully for years. It does things like letting you put a gigabyte of data directly on chain. No other blockchain can do that for a fraction of the cost. Even on the layer-one comparison, it costs something like $10,000 to put a gigabyte on Solana, and Kaspa can't even do smart contracts, last I checked.
So I'm holding the Internet Computer, which means I've got my money invested in this massive team of technical staff: engineers, PhDs, computer scientists, superstar cryptographers who are cited and who hold a whole bunch of patents, working to make technology that nobody else can even copy right now. And that's the same market cap as Kaspa. So let's look at Kaspa's core developers and researchers. I'm proud of them for at least putting this up there, but it's five people. Even assuming six or seven people built Kaspa, it's not great technology if it was that easy to make. If it's really game-changing technology, you'd expect a lot more behind it.
Now, I know so many of you are saying, "Well, crypto is not about the technology, it's about the money." In the short term, the charts often are just manipulated by money. But in the long term, it truly is the technology that's going to make it happen. The technology is the driving force behind the money in crypto. So my question is: does the technology at Kaspa merit a $5 billion valuation? You have a core team of researchers and developers of five people, and then you've got five people on the marketing team.
Why "donate to the dev fund" was a red flag for me
Here's where I really trolled Kaspa hard the whole time: donate to the dev fund. Just logically, would I want to invest my money where the developers need to accept donations to a development fund? When I saw this, I thought, there's no way this is a good investment. If the developers are surviving off donations, that's a problem. In theory, I love going to yoga classes that are donation-based, but practically I spend almost all my money at the yoga studio. I pay a thousand bucks for the whole year of yoga so I don't have to worry about anything else, versus donation-based yoga. These five people are accepting donations, but here's what's even worse.
For those of you who are excited about proof-of-work mining, proof-of-work mining means that the only way the development team can even make money is by holding Kaspa and speculating on the price themselves, or by running proof-of-work miners to mine the transactions. This has proven to be a critical flaw with Bitcoin. On the Internet Computer, you have the network nervous system and you have voting rewards. So DFINITY is able to make a huge paycheck just by keeping their ICP locked. They've gotten over 20% in voting rewards because of age bonuses and such. DFINITY has an incredible business system where they can literally just hold the tokens and print, even at current prices, millions of dollars every year. I've calculated the salaries at DFINITY. When you work out how much money this team needs to make, you have tens of millions of dollars in salary a year to support this team. The Internet Computer has one of the absolute best business systems and most transparent governance in all of crypto.
And Kaspa? The only way the developers can make money is to speculate on price or to proof-of-work mine all by themselves. Each of these blocks is mining 103 Kaspa right now, which comes out to like 20 bucks. So the developers basically have to run proof-of-work hardware to mine. But if we've looked at the history of Bitcoin, the more successful a crypto is, the more outside companies come in and buy up mining hardware cheaper than everybody else through big bulk deals.
And it looks like a lot of the Kaspa transactions are purely mining. If you calculate it out, there are 3,600 seconds in an hour and over 86,000 seconds in a day. Depending on whether they're counting the mining or not, and it looks like they've filtered those out, the vast majority of Kaspa transactions are mining transactions. There's hardly anything besides mining. And if Kaspa actually did well and you got outside investment into the mining, then the developers are looking at not having any funding at all. The only way they can continue developing is to sell their Kaspa, and eventually the developers will run out of Kaspa. Then who's paying the development team to innovate the technology? If the technology is not constantly innovating and adapting like the Internet Computer is, this is never going to succeed.
Why I think Kaspa is more likely to go to zero
So this, to me, looks like the absolute epitome of hype and speculation, with nothing exciting that I see at all in the technology. You can't host a website on chain. You can't put an NFT on chain. Some people are saying, "Well, this is going to be the next Bitcoin." That is ridiculous. Why would this be the next Bitcoin when you have massive ecosystems like Solana already? And I think Solana is going to zero too. But you compare Solana and Kaspa, and Solana has way more users and has proof of stake to lock up the tokens. With Kaspa, the only way you make a profit is by holding the tokens and hoping the price goes up.
So far that has gone well, but as we've seen over the long term, that doesn't work out well. What happens over the long term is you'll have this climb up in one bull run, and then it's dead. And there's no guarantee Kaspa is even going to have a bull run like Kadena did, especially since Kaspa has already done a 10X. How much higher is it going to go? It's already up to $5 billion. There's nothing that I see that excites me at all about Kaspa, literally nothing. It's an example of something relatively easy to create, which is most of crypto, that's hyped up, where you see a lot of conversation that has no talk about the actual technology but a lot of fluffy, emotional, narrative-based stories. "Fair launch." Who cares if it's fair launch? Did you get any of it at launch?
It doesn't matter if it's fair launch. Kaspa is hyped up that it's fair launch, so what, did you get it? I didn't. Did all the people on the inside who set up proof-of-work mining since the beginning? You didn't know about it. So I don't think that's very fair, is it? And it doesn't matter if it was fair-launched or if the initial team kept all of it, because who was mining this at the beginning? The initial team would have been almost the only people mining it. So the fair-launch narrative is even false.
I think I've ripped Kaspa pretty significantly. Yes, it's on exchanges, but exchanges just want to make money. They want to list as many coins as they can to make as much money as possible for themselves. Just being listed on exchanges has gotten Kaspa traded, but people are buying Kaspa with no understanding of the bigger picture. This is the same skepticism I bring to the whole sector, and it's why I think Fractal Bitcoin is a scaling solution nobody needs.
I'm tracking this call publicly
So I'll put this on my spreadsheet, and we'll see how I do over time. I've just started this spreadsheet. I bet I'm going to absolutely go nuts on it. Occasionally I might say a coin is going to zero that does well, but the vast majority of the time I'll be correct. So I'll add Kaspa on here along with the ones I just reviewed today, and we'll see over time how right or how wrong I am. My bet is that the Internet Computer absolutely rips compared to Kaspa, based on fundamentals like technology, team, and potential use cases. I keep all of these honest reviews going in my Money playlist if you want to follow how each of these calls plays out.
Yes, Kaspa is absolutely a ghost chain to me. Almost the only thing happening on Kaspa is proof-of-work mining, and that mining is generating almost all of the transactions that are happening on Kaspa. How much value is there really in that?
For comparison, guess where my website is hosted: the Internet Computer Protocol. This site is actually hosted on the Internet Computer Protocol, and it generates a transaction when you go to my website. There's nothing else in crypto that can do that like this does. Open Chat, where I talk with people, is also hosted on the Internet Computer Protocol. That kind of on-chain hosting is something Kaspa has no realistic possibility of ever being able to do. If you want to go deeper on any of this with me directly, you can join the Jerry Banfield Family and bring me your own coin questions.