I have to say that, even as someone who is staying out of the crypto markets, I’m intrigued. It is the first time I’m writing about the cryptocurrency Amp (CCC: AMP-USD). It has piqued my interest because Amp’s core objective is to solve a problem. Amp seeks to solve the insecurity that lenders have about ensuring that transactions made with cryptocurrencies will be paid in a timely fashion in the currency of their choice.
But offering users a solution to a real-world problem hasn’t stopped the token from being caught up in the current cryptocurrency sell-off. In the last month, Amp has been down about 21%. And since the token briefly traded above 12 cents earlier in 2021, a price of just 3.8 cents is significant.
The drop in Amp’s price looks like a case of guilt by association as investors may be looking to move into risk-off assets. However, as crypto investors revisit beaten-down cryptos, Amp looks like it will get off the mat.
Amp Has a Defined Use Case
When I first wrote about Ripple (CCC: XRP-USD), I remarked that the underlying technology excited me more than the token. Ripple was created to let cryptocurrency solve the barrier to cross-currency transactions.
According to Coindesk, “Amp allows users to provide AMP tokens as collateral for transactions on the Bitcoin, Ethereum, and other cryptocurrency networks. If transactions take too long to process or are unsuccessful, AMP tokens are liquidated to cover the costs so that the receiving party still gets paid.”
In marketing speak, that’s providing a value beyond price. And that’s something I can get behind.
The Ultimate Backup Plan
Essentially, Amp is helping to overcome a fundamental limitation of blockchain networks like Bitcoin (CCC: BTC-USD) and Ethereum (CCC: ETH-USD). Because they are global, distributed systems, validating transactions can take more time than users would like. Because the networks have limited space, users may need to pay an extra fee (known as a gas fee) to prioritize their transactions.
But Amp serves as collateral, allowing users to avoid paying these fees. And because Amp is considered a secure payment method, users can assume the transaction goes through instantly.
I’m not going to pretend that I understand Amp’s technical ins and outs. But I’ll take the creators’ word for it. Logically, anything that takes away the uncertainty surrounding cryptocurrency transactions is good for cryptocurrency in general. That’s what Amp provides.
Amp has something that other cryptos, particularly some altcoins, lack. That something is a utility that, for now, isn’t easy to duplicate. And as InvestorPlace contributor Mark Hake points out, if Flexa, the company that created Amp, begins to deliver solutions for the smart contracts needed for decentralized finance (DeFi), decentralized apps (dApps), and non-fungible tokens (NFTs), it would make a case for Amp more bullish.
Amp Is a Bridge and Perhaps Much More
Amp seems to be focused on the debit side of the transaction ledger. However, cryptocurrency could be a real possibility if it starts to facilitate a cryptocurrency credit market.
That’s another intriguing consideration. And it does seem like Amp is a bridge to something else. But until that something else exists, this is one token that’s likely to move higher.
If cryptocurrency is like a second language for you, I’d encourage you to study the token’s whitepaper. Short of that, remember not to invest any more than you can afford to lose. And for that reason, you need to do your due diligence in whatever form that takes.
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