A growing number of public firms are stockpiling cryptocurrency, but beware those riffing on the Bitcoin treasury trend by tapping alternatives that have yet to gain sufficient adoption, warned one analyst.

As more companies put their own twist on Strategy’s playbook—abandoning traditional metrics to grow the amount of crypto they own per share, they must remember that other tokens have different purposes, Greg Cipolaro, global head of research at Bitcoin financial services firm NYDIG, wrote in a recent note.

“Unlike Bitcoin, which investors understand best as ‘digital gold,’ many of these alternative treasury cryptocurrencies function as consumptive commodities,” Cipolaro wrote. “These protocols may or may not achieve meaningful adoption, leaving open questions about the long-term value and utility of the treasury holdings.”

Bitcoin’s reputation as a store of value has taken years to earn with Wall Street embracing it gradually. Compare that with the second largest cryptocurrency by market cap, and advocates will say traditional finance is still warming up to Ethereum’s “digital oil.”

Beyond Bitcoin, he argued that a firm engaged in strategic acquisitions of a digital asset assumes the risk of its associated network failing to fulfill its aims at scale. 

Within the context of crypto, some digital assets are consumptive in the sense that they are “burned,” or removed from circulation, after being used. That could apply to basic transactions, or the computational power needed to execute code in smart contracts, for example.

Over the past few months, more companies have brought alternative cryptocurrencies onto their balance sheets. SharpLink Gaming, an online gambling marketer, is building an Ethereum treasury; Trident Digital, a Singapore-based tech firm, is building an XRP treasury; DeFi Development Corp., a Florida-based tech firm, is building a Solana treasury, for example.

On Monday, SRM Entertainment, a producer of theme park merchandise, said that it would start stockpiling Tron. Although these cryptocurrencies are among the largest by market cap, some companies are gravitating toward digital assets with comparatively narrow potential uses.

Last week, Nasdaq-listed biopharmaceutical firm Synpatogenix said that it would begin accumulating TAO tokens, which power Bittensor, a network focused on artificial intelligence.

Interactive Strength, a fitness equipment maker, also said that it would begin strategically acquiring Fetch.ai (FET) tokens. The token is primarily used for payments within a decentralized machine learning platform, while underpinning the “Artificial Superintelligence Alliance.”

Cipolaro noted that crypto treasury strategies don’t just depend on the underlying digital asset, but also the structure of operating companies buying cryptocurrencies themselves. Among microcap companies seizing on the trend, some announcements are “thin on details,” he added, making it difficult for investors to understand what they’re purchasing.

Edited by James Rubin