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Are Cryptocurrencies Doomed?

20180120_Bitcoin-doom

This past week has seen a dramatic turn-around right across the board in the crypto-currency space. Literally billions of dollars have been slashed off the market value of many of the currencies and the once darlings of the media have quickly become pariahs.

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I watched a financial commentator on the local news speaking almost with glee on the dramatic fall from grace of Bitcoin and how cryptocurrencies were completely crazy. He then flashed up a few charts that reinforced his point that cryptocurrency investors were obviously bonkers.

I was chatting with my brother the other day and like the news commentator he also missed the single defining point about cryptocurrencies…..and that is, not all of them are created equal. Unlike fiat money which is essentially the same no matter whether its dollars, pounds, euros or whatever, cryptocurrencies can often have a business model that is attempting to solve a real-world problem.

The fact that a currency has also been created in this solution process is more often than not a side issue from the main game. For example, Ripple (XRP) is trying to solve the problem of the hugely expensive international bank transfers. This then provides Ripple with a utility that goes far beyond being merely a currency.

The fundamental difference between fiat money and cryptocurrencies is how the block chain is being used. The uses of the blockchain technology are extraordinary and limited only by your imagination.

A cryptocurrency is actually more akin to a new gTLD domain extension and the value relates to how many businesses are building real functioning websites. Like the new gTLDs the challenge for a new cryptocurrency is to get buy-in for the problem they are solving.....the more buy-in, the higher the market cap floor price.

When you look at the wild ride of the past week, my advice is to push past that and take a deeper look to determine whether a cryptocurrency is successfully solving their real-world problem. Then take a little longer view as cryptocurrencies in one form or another are here to stay.

Have a great weekend!

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Comments

vanclute on 21 January 2018

Not to mention that everyone seems to be conveniently ignoring the fact that the market overall had regained more than half the "losses" within 2 days.

In another 5 or 10 years, theres's going to be as many (if not more) people recounting their stories of how they could've invested in crypto back when it was under a $1 Trillion market cap, as there are people who now can regale you with their stories about how they could've been in on the ground floor of Apple, eBay, Amazon, etc. etc. (and I'm one of those people who has those stories! I'll be damned if I'm going to miss lightning striking a second time!)

It's my theory that most people would rather have a story of near-success and ultimate failure, than a story of actual success. Actual success does not garner sympathy, but near-success followed by failure, gets both the admiration of the near-success, AND the sympathy of the failure.

Human beings and their silly psychology... LOL

Not to mention that everyone seems to be conveniently ignoring the fact that the market overall had regained more than half the "losses" within 2 days. In another 5 or 10 years, theres's going to be as many (if not more) people recounting their stories of how they could've invested in crypto back when it was under a $1 Trillion market cap, as there are people who now can regale you with their stories about how they could've been in on the ground floor of Apple, eBay, Amazon, etc. etc. (and I'm one of those people who has those stories! I'll be damned if I'm going to miss lightning striking a second time!) It's my theory that most people would rather have a story of near-success and ultimate failure, than a story of actual success. Actual success does not garner sympathy, but near-success followed by failure, gets both the admiration of the near-success, AND the sympathy of the failure. Human beings and their silly psychology... LOL
kosap1 on 21 January 2018

Worked out well for me. Bought more when they started to bottom out!

Worked out well for me. Bought more when they started to bottom out!
Guest - mgilmour on 22 January 2018
mgilmour


mgilmour

mgilmour
Guest - Mike Sallese on 22 January 2018

The blockchain and cryptocurrencies are here to stay- agreed that there needs to be real problems being solved as the tech giants from 20 years ago did! But, we must remember that we are still very very early in the game!

Two standouts besides Bitcoin itself are Ripple (as you pointed out can solve real world pain points) and Ethereum (what smart contracts are being built upon). Sure is interesting to watch!

Cheers,

Mike
FinTechNames

The blockchain and cryptocurrencies are here to stay- agreed that there needs to be real problems being solved as the tech giants from 20 years ago did! But, we must remember that we are still very very early in the game! Two standouts besides Bitcoin itself are Ripple (as you pointed out can solve real world pain points) and Ethereum (what smart contracts are being built upon). Sure is interesting to watch! Cheers, Mike FinTechNames
Guest - Jeff Schneider on 22 January 2018
Cryptos are already Toast

The organized Crime syndicates Poster Boy ( Bitcoin ) is an Int'l Hoax perpetrated by Techno Babble Advocates, who missed out on the real deal = ( .COM Equimoditty Platform Assets ) They have to find a hero asset that suites their Techno Mentalities. Cryptos = ( That Dog Don't Hunt ) = (Blockchain same fate as Crypyos).
We have a Truthful News Flash for the Vaunted Blockchain Advocates. Blockchain is NOT Secure from Hacking nor is it the answer for Tech Cos.. Lots of wasted dollars chasing this Digital Pipeline Dream. Stay away from Tech. Cos. they are connected to Digital pipeline where Organized Digital thieves Play. JAS
Gratefully, Jeff Schneider (Contact Group) (Metal Tiger) (Former Rockefeller IBEC Marketing Intelligence Analyst/Strategist) (Licensed CBOE Commodity Hedge Strategist) (Domain Master ) http://www.UseBiz.com

The organized Crime syndicates Poster Boy ( Bitcoin ) is an Int'l Hoax perpetrated by Techno Babble Advocates, who missed out on the real deal = ( .COM Equimoditty Platform Assets ) They have to find a hero asset that suites their Techno Mentalities. Cryptos = ( That Dog Don't Hunt ) = (Blockchain same fate as Crypyos). We have a Truthful News Flash for the Vaunted Blockchain Advocates. Blockchain is NOT Secure from Hacking nor is it the answer for Tech Cos.. Lots of wasted dollars chasing this Digital Pipeline Dream. Stay away from Tech. Cos. they are connected to Digital pipeline where Organized Digital thieves Play. JAS Gratefully, Jeff Schneider (Contact Group) (Metal Tiger) (Former Rockefeller IBEC Marketing Intelligence Analyst/Strategist) (Licensed CBOE Commodity Hedge Strategist) (Domain Master ) http://www.UseBiz.com
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