The Amp (AMP -2.67%) cryptocurrency only launched in September 2020, but its tokens have appreciated by more than 430% since then. These tokens are unique in the cryptocurrency world in that they feature programmable agreements (aka, smart contracts) that lock and release Amp as collateral for consumer transactions made with cryptocurrencies such as Ethereum (ETH -2.65%).
It's a revolutionary idea. Cryptocurrency transactions can take minutes, hours, or days to settle during peak network activity. And no vendor wants to sell a cup of coffee and wait that long for certainty that the customer's payment has gone through.
Let's look at why Amp is one of the top cryptocurrencies to buy now.
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A promising crypto...
Amp was created by Flexa, which operates a payment solutions app of the same name. And Amp is now the cryptocurrency collateral of choice when it comes to the Flexa app. With $1.445 billion worth of spending capacity available for Flexa merchants and users, Amp has gained far more traction. Put simply, that means at any given time, a total of up $1.445 billion worth of transactions can be processed on the network, and the parties involved don't have to worry that they won't go through. The Amp tokens, as collateral, are guarantees against fraud, default, etc.
More than 41,336 retail locations across the U.S. and Canada use Flexa to facilitate digital payments. On the user end, anyone with a recognized digital wallet such as MetaMask or TrustWallet can use it to spend their digital currencies, as the wallet developers partnered with Flexa in bringing out the payment solution.
... But it's not without risks
First of all, the problem that Amp solves isn't a big one per se. All that's needed to send money on any blockchain peer-to-peer network is the knowledge of the recipient's wallet address and the possession of a digital wallet. Obviously, it can take days for transactions to settle when the network's overloaded, but all of them do eventually go through. If they didn't, there would be no way cryptocurrencies would trade at anything near their current market caps.
What Amp really does is allow vendors the comfort of knowing that they don't have to wait for a cryptocurrency transaction to finalize before moving on to their next customer. But in a sense, solutions to that aren't new. One can already view pending transactions on Bitcoin Explorer and Etherscan long before they settle.
Secondly, the reward earned for depositing one's Amp into the collateral pool isn't that magnificent. The interest rate stands at a mere 2% a year, which is pretty low in cryptocurrency realms. But again, investors aren't really dealing with the risk of transaction default either, so no risk, no reward. As said before, in the absence of force majeure (such as an alien invasion taking down the global power supply), transactions made from wallet A to wallet B will always go through as long as the correct addresses are entered.
Luckily, Amp isn't at a dead end, and the token resembles a work in progress. For starters, the token itself isn't tied to Flexa per se. One possible way to expand its utility is to let it collateralize trades on decentralized exchanges. Investors who have a high-risk, high-reward mindset might consider opening a small position as a bet on its ability to advance.
