GRT, or “the Graph” is a relatively new kid on the block when it comes to cryptocurrency. And like some other cryptos, it’s not merely a digital currency—there’s a little more to it than that.
Read on to learn what “the Graph” is, GRTs role, how to buy it, and whether it’s a good investment.
What Is GRT?
The Graph Network, also known as “the Graph” allows users to build APIs, known as subgraphs, to allow applications to talk to each other, and it also makes querying networks fast and secure. While it may require a further deep-dive to really understand the ins and outs of APIs and querying, we’ll save that for another time.
In technical terms, the Graph is a decentralized query protocol built for use with blockchains. More specifically, it works with Ethereum and the InterPlanetary File System (IPFS) to make it easy for users to build and publish APIs, or application program interfaces. Applications built on the Graph do not need a centralized server.
Users also use the Graph to query specific networks (again, like Ethereum or IPFS) to collect data without a third party.
GRT is an ethereum token that runs on the Graph Network. GRT is central to the Graph’s economy. Users swap it to keep things running.
Recommended: What is a Token? Crypto Tokens vs Crypto Coins
History of the Graph (GRT) Crypto
The Graph Network and its token, GRT, are a very new type of cryptocurrency. As of spring 2021, GRT has been on the crypto markets for less than a year.
The team behind the Graph Network includes a slew of industry veterans, and the founding team consists of Yaniv Tal, Brandon Ramirez, and Jannis Pohlmann. They started working on the Graph back in 2017, finally seeing the project come to fruition a few years later.
In October 2020, The Graph Foundation sold roughly $12 million worth of GRT during its initial public sale, comprising 400 million tokens. The Graph protocol launched in December 2020, giving GRT utility.
Some traders or investors have not yet heard about GRT because it’s still very new to the market, but it has gained ground with larger investors. Ten holders control more than half of GRT’s supply.
How Does GRT Work?
In effect, the Graph Network works as an intermediary between blockchains and decentralized applications—it helps the two communicate in a secure and efficient way using a query language called GraphQL. The Network comprises users who need queries to be processed, and who are willing to pay for it. As such, there are indexers, curators, and delegators who make it all happen on the back end.
Some of these users act as GRT stakers, supporting the others, who run nodes and process those queries. To run nodes, however, users must hold a certain stake of GRT token—which is where the token comes into the mix.
GRT allocates resources within the Graph Network, and acts as an incentive for users within the network to keep the Network up and running. That can mean processing queries, improving APIs, etc.
Effectively, the Graph Network is similar to networks like Ethereum in which users use the network for their own purposes, and use GRT tokens to facilitate transactions on the network. GRT also has value outside of the Graph’s ecosystem, although not much utility. It’s the utility on the network that gives it value, and why crypto traders and investors may want to add it to their wallets.
Users can create open APIs, known as subgraphs, to index and store data pulled from the Ethereum blockchain, like Google indexes data from the Internet. Developers query via GraphQL to build on blockchain with these subgraphs.
Having been in existence on the market for only a handful of months, as of spring 2021, GRT’s price history is short, but fairly volatile.
GRT hit crypto exchanges back in December 2020, as you’ll recall, and its value soon shot up to around $0.70. When many other cryptos started to see values start to skyrocket in February 2021, GRT’s followed suit—although not quite to the lofty heights as some of its crypto cousins.
GRT prices hit their all-time peak (so far) in mid-February 2021, reaching more than $2.70 per token. Since then, prices have slowly declined, and as of July 2021, are hovering around $0.66 per token. So, in a matter of months, GRT’s value has nearly quadrupled, and then fallen by more than 75%.
Recommended: Crypto Bear Markets: What Are They?
Investing in GRT: Benefits and Disadvantages
For investors and traders, GRT won’t have much utility outside of the Graph Network’s ecosystem. Like many other cryptocurrencies, it’s going to be very difficult, if not impossible, to find a business willing to accept GRT in exchange for goods or services. But you can always trade your GRT for US dollars if need be, via an exchange.
Benefits of GRT
For investors or traders, GRT is yet another cryptocurrency that can help diversify a crypto portfolio. GRT’s value is currently down, but there is potential for it to go up in the future, depending on adoption of the Graph Network in the future. But that may require investors to HODL for some time.
Drawbacks of GRT
GRT is a cryptocurrency, which means it comes with a slew of risks. Cryptos are incredibly volatile (as is easy to see with GRT’s price history), and risk-averse investors may have trouble handling daily or weekly price fluctuations. Additionally, there is always the potential that the government could institute or change crypto regulations and rules, which could throw the crypto market into flux.
How to Trade GRT Cryptocurrency
Seasoned crypto traders: You know the drill when it comes to buying GRT or other cryptocurrencies. For newbies, it’s time to go over some investing in crypto basics:
Step 1: Choose an exchange and fund your account
If you want to trade cryptos like GRT, you’ll need to do so on an exchange—it’s pretty much the same thing as choosing a broker to buy stocks. Pick one, fund your account, and get yourself a crypto wallet (if one isn’t offered by the exchange) to store your holdings.
Step 2: Make the trade
Log in to your crypto exchange, and look up GRT—of course, you’ll want to make sure your chosen exchange offers GRT on its platform, first. Assuming it does, the process should be as simple as looking up GRT, deciding how much you want to buy, and executing the trade.
Step 3: Transfer your holdings
With your trade executed and GRT listed among your account holdings, you may want to transfer your tokens to your crypto wallet. Do some research into different types of wallets, and see which is right for you depending on how long you plan to hold onto your GRT.
GRT is a relatively new ethereum token that powers the Graph, a decentralized protocol that indexes and queries blockchains. Users can build subgraphs, known as APIs, that can collect data without a third-party.
Understanding the intricacies of GRT and APIs, can be complicated for non-expert crypto investors. That said, if crypto investing is something that catches your fancy, you can wade in using the SoFi Invest® brokerage app. With SoFi invest, you can build your own investment portfolio, including cryptocurrencies as well as stocks, and exchange-traded funds.
Photo credit: iStock/Eva-Katalin
The information provided is not meant to provide investment or financial advice. Investment decisions should be based on an individual’s specific financial needs, goals and risk profile. SoFi can’t guarantee future financial performance. Advisory services offered through SoFi Wealth, LLC. SoFi Securities, LLC, member FINRA / SIPC . SoFi Invest refers to the three investment and trading platforms operated by Social Finance, Inc. and its affiliates (described below). Individual customer accounts may be subject to the terms applicable to one or more of the platforms below.
1) Automated Investing—The Automated Investing platform is owned by SoFi Wealth LLC, an SEC Registered Investment Advisor (“Sofi Wealth“). Brokerage services are provided to SoFi Wealth LLC by SoFi Securities LLC, an affiliated SEC registered broker dealer and member FINRA/SIPC, (“Sofi Securities).
2) Active Investing—The Active Investing platform is owned by SoFi Securities LLC. Clearing and custody of all securities are provided by APEX Clearing Corporation.
3) Cryptocurrency is offered by SoFi Digital Assets, LLC, a FinCEN registered Money Service Business.
For additional disclosures related to the SoFi Invest platforms described above, including state licensure of Sofi Digital Assets, LLC, please visit www.sofi.com/legal. Neither the Investment Advisor Representatives of SoFi Wealth, nor the Registered Representatives of SoFi Securities are compensated for the sale of any product or service sold through any SoFi Invest platform. Information related to lending products contained herein should not be construed as an offer or pre-qualification for any loan product offered by SoFi Lending Corp and/or its affiliates.
Crypto: Bitcoin and other cryptocurrencies aren’t endorsed or guaranteed by any government, are volatile, and involve a high degree of risk. Consumer protection and securities laws don’t regulate cryptocurrencies to the same degree as traditional brokerage and investment products. Research and knowledge are essential prerequisites before engaging with any cryptocurrency. US regulators, including FINRA , the SEC , and the CFPB , have issued public advisories concerning digital asset risk. Cryptocurrency purchases should not be made with funds drawn from financial products including student loans, personal loans, mortgage refinancing, savings, retirement funds or traditional investments.