Harmony one is one of the most trending crypto these days. Investors like you have many questions regarding this like Is harmony a good investment? Will Harmony replace Ethereum? and more like that.
No, Harmony one is not a good investment. It is pretty centralised and does not have any major advantage over other cryptos which it will not sustain in the long run.
It’s my opinion on Harmony one, I want you to make your opinion because, in the end, you will have to bear the risk. Currently, it has a high probability that you know almost nothing about Harmony one. So first of all have a look at its fundamentals and technicals before making any opinion about it.
Fundamental Analysis of Harmony one
Harmony is a layer-2 cryptocurrency built on the Ethereum blockchain network that claims to provide almost every feature of Ethereum with very little transaction fees and time. Layer-2 cryptocurrency is made on an existing blockchain network, if you are new to it then definitely check out our fundamental analysis of Kadena where I explain layer-1 and layer 2 blockchains with an example.
Now the question is, “ Is harmony offering major features of Ethereum with less transaction time?”. The answer is a partial yes because it offers almost all except decentralisation. If you do not know, Ethereum provides the facility of smart contract to its users by adopting proof of work which enables it to remain completely decentralised.
On the other hand, Harmony adopted Proof of stake with the sharding technique which helps it to provide the facility of smart contracts with fewer transaction fees and time but it makes it centralised because only the top 1600 stakeholders of Harmony can verify a transaction in its blockchain.
These stakeholders are refreshed every day but most of the time majority of verifiers remain the same as they do not sell their stake. In most cases, the government of your country would have more officials than Harmony verifiers, so if you think your government is decentralised then you can categorise Harmony as a decentralised cryptocurrency.
[Sharding- It means dividing a block into multiple pieces and verifying all blocks individually to save time and energy.
Proof of Stake– It’s a mechanism in which a person needs to stake from crypto tokens to verify a transaction in a blockchain.
Smart contracts- It is a blockchain program that automatically executes when certain conditions are met.
If you are not familiar with these terms then do check out my article on Kadena where I explained these terms in detail, as fundamentals of Harmony are quite similar to that of Kadena.]
Although Harmony claims that it solved the problem of Centralisation by introducing effective proof of stake in sharding. In effective proof of stake, every shard is to be verified by 250 nodes( nodes simple means verifiers) and those nodes are to be selected at random out of a total of 1600 nodes. But still, in my opinion, a cryptocurrency needs to be more decentralised, as a person needs to hack only 801 computers
Apart from that, one token is also used in the governance of the platform. Harmony also offers inter blockchain exchange in its network with the help of bridges. Honestly speaking currently, I don’t know how a crypto bridge works but I will tell you about it in future. But remember that other platforms also exist that allow you to do inter blockchain exchange.
Technical Analysis of Harmony One
Has a look at the market performance of Harmony One:
|Average volume(24h)||$270 Million|
|Market cap||$2 Billion|
|Returns in the year 2021||5420%|
|New supply||441 million/per year|
|Average burn rate||0.000021 tokens per transaction|
Some of you might get shocked to see 5420% or 54.2x returns in the year 2021, whereas some of you may feel worried to see it because the market cap of Harmony was about $3 Billion on 31st December which means Harmony’s market cap on 1st Jan 2021 was just $5.5 million ($3 Billion/542). So anyone could manipulate Harmony by just investing $2.8 million in Jan 2021 because it is based on Proof of Stake.
I think comparing Harmony one with other cryptos with almost the same features will help to understand its market performance.
Harmony vs Kadena
Harmony gave a return of 34.2x from 1 Jan 2021 to 3rd March 2021 whereas Kadena provided a return of almost 49x during this time frame. Sometimes Harmony’s return is better than Kadena’s and vice versa but overall both cryptos gave a very good return from Jan 2021.
Harmony vs Cardano (Returns comparison)
Cardano is a fast cryptocurrency but its transaction fees are relatively very high as compared to Kadena and Harmony that’s why it gave a return of -20% to its investors from 3 March 2021 to 3 March 2022.
Is Harmony one fast?
Currently Harmony one can do up to 5,000-10,000 transactions per second and claims that it can go up to 10 million transactions per second, whereas the current speed of bitcoin is about 7-10 transactions per second and that of Ethereum is 25-30 transactions per second. So we can say Harmony is quite faster than Ethereum.
On the other hand, currently, Kadena can do up to 5,00,000 transactions per second which makes it super faster than Harmony.
Should you invest in Harmony One?
Currently, there are two major cons of Harmony, the first one is centralisation and the second one is the new supply of 441 million tokens per second. Now it is very difficult to make it more decentralised because it requires more than 50% vote to do so and the top 1600 will not vote in favour because they are getting benefited because of centralisation.
On the other hand, an average burn of 0.000021 per transaction and supply of 441 million per year makes it an Inflationary token because 21 trillion transactions need to be done to burn 441 million tokens which are very difficult to achieve means its price is most likely going to fall in future. It is possible to reduce its supply because the top 1600 stakeholders may vote in favour because they want the price of one token to rise in future.
But currently, its supply is 441 million per year that’s why I will not suggest investing in it. In case its supply is reduced to about 10-20 million tokens per year then you can consider investing it like a share of a company by betting on the inter-blockchain exchange facility provided by the platform instead of investing in features provided by its token.
That’s the fundamental and technical analysis of Harmony one. I already shared my opinion regarding it with you and now it’s your turn to make an investment decision from your hard-earned money.
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Frequently Asked Questions
Is Harmony One a layer 1 crypto?
No, Harmony is not a layer 1 crypto.
Is Harmony One a layer 2 crypto?
Yes, Harmony One is a layer 2 crypto.
Can Harmony One reach $1?
No, as per my analysis Harmony one will not touch $1 till 2024.
Is Harmony one centralised?
Yes, Harmony one is pretty centralised because only top 1600 stakeholders can verify a transaction.
Which cryptocurrency is the biggest competitor of Harmony One?
Kadena is the biggest competitor of Harmony One.