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Why Bitcoin Naysayers are Wrong

20171227_bitcointop

I’ve been reading a lot about the various cryptocurrencies and trying to dig through the misinformation to get to the bedrock of what’s going on. The first thing I’d like to say is cryptocurrencies are a complete game changer for the world financial system…..ignoring them may well be detrimental to your business.

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For those of you wondering….at its simplest level the blockchain operates in a similar fashion to the DNS that most domain investors are familiar with. There are additional levels of cryptography added (sort of like DNSSEC) to ensure transactions are legitimate but what it all boils down to is a ledger of transactions held by a distributed computer network.

Of recent days, the cryptocurrency naysayers have been jumping up and down saying, “I told you we are in a bubble!”. Why is this? Bitcoin (the dominant currency) dropped by around 30% and this got them all excited about how Bitcoin is in the process of collapsing.

Bitcoin

This year Bitcoin has been undoubtedly in a bull run but let’s put the decline in perspective. At the beginning of the year you could buy one coin for $AU1265 (Australian dollars – source btcmarkets.net) and the lowest point of the recent drop was $18870.

This means if you bought a single coin on the 1st January 2017 and sold it at the lowest point of the recent correction you would make 15 times your money. I’ll take that any day!

What this also suggests is that Bitcoin would have a LONG way to decline before earlier investors would start losing money on their investment. I’m not saying that Bitcoin can’t completely collapse but the momentum is definitely still in the other direction.

To understand this more fully, the volume of trades reported by btcmarkets has jumped over 10 times since the beginning of the year. The interest in Bitcoin as an investable asset class is still growing which will put an upward pressure on value as the demand continues to increase.

So where will Bitcoin max out at? If I knew that then I’d be a very rich person…..what I do believe is that it has a way to go.

There is one thing for certain. If you do decide to invest in Bitcoin, then expect a wild ride as prices do fluctuate all over the place. I highly recommend you get cleared by your cardiologist first before investing with serious money. I actually find investing in Bitcoin more akin to going to a casino…..never bet with money you’re not prepared to lose.

This then brings me to two other cryptocurrencies that I’m really interested in, Ethereum and Ripple. Out of the thousands available, why do I like these two? Both of them are underpinned by very unique business models rather than simply just another cryptocurrency.

Ether is trying to solve the challenge of automated digital contracts while Ripple has been working on international payments. Both these market segments are massive and provide real value to real business rather then just betting on a number going up or down.

Demand for both these currencies is exploding and this is being reflected in the price. Both currencies are also backed by major players in the VC and traditional financial institutions.....all big ticks for my investment dollars.

For me, I’ve invested a small amount in multiple currencies that I plan on holding for the long-term. There has only been one other market that I’ve seen behave in a similar fashion to crypto-currencies and that’s domain investing.

I think domain investors will find it very natural to invest in crypto-currencies but like any investment, take a very close look and as I said before, only invest money you’re prepared to lose.

Will Bitcoin Continue to Rise and Inevitably Fall?
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Comments

Guest - Jeff Schneider on 28 December 2017

Hello Michael,

Please explain what Bitcoin really means ? You nor anyone else can honestly do just that. Also why are you so sure ? , that just because the whores on Wall Street want to take investors to the cleaners, that the sovereign bankers of the World , will let Digital Thieves Steal their Centuries old game plan ? Sorry Michael, (That Dog Don't Hunt ) JAS

Gratefully, Jeff Schneider Former (Rockefeller I.B.E.C. Marketing Intelligence Analyst/Strategist) (Licensed C.B.O.E. Commodity Hedge Strategist.) (UseBiz.com)

Hello Michael, Please explain what Bitcoin really means ? You nor anyone else can honestly do just that. Also why are you so sure ? , that just because the whores on Wall Street want to take investors to the cleaners, that the sovereign bankers of the World , will let Digital Thieves Steal their Centuries old game plan ? Sorry Michael, (That Dog Don't Hunt ) JAS Gratefully, Jeff Schneider Former (Rockefeller I.B.E.C. Marketing Intelligence Analyst/Strategist) (Licensed C.B.O.E. Commodity Hedge Strategist.) (UseBiz.com)
Guest - page howe on 28 December 2017

Micheal, im not sure if its a sign of the top that youve bought in. I have lost millions not buying BITCOIN, so take this for what its worth. I think you can be rational, or buy-in, but not both.

i value your oponion so heres mine,

If you look at bitcoin as a currency, its appreciated 10x in one year, which means if you lived in a land of that currency, it would be similar to every asset not called bitcoin losing 90% of its value over that year....

beginning of year a 200,000 house was worth 200 1k bitcoins
end of year that house is worth 10 bitcoin when BTC got to 20k

so house has dropped 90%, you are probably tempted to buy that house.. you bet.

but you can, becuase for you to be in BTC youve got to think its going to 100k, so then that house will only be worth 2 bitcoin, so you dont sell, and no one sells and it goes up.

so if this was AU$, your AuS appreciated 10x in one year, then assets worldwide would have dropped 90%, so good news is your 1,000 on jan 1 is worth 10,000, but now, AFTER it has gone up, do you cash out and use your currency, or stay in.

i think its not bitcoin people want, its the money(dollars) they can make trading bitcoin they like.

At some point, whatever discrepency in value that existed on jan 1, no mater WHAT it was or HOW much bitcoin was mispriced, at some point bitcoi investors will rather have what heir bitcoin can buy them, instead of bitcoin.

but that could be at 20,000 50,000 100,000 so buy away, but when it does come back to reality - please dont say OMG i cant believe it happened.

so im off to buy, hold nose, drink the punch, and use limits.

Page Howe

Micheal, im not sure if its a sign of the top that youve bought in. I have lost millions not buying BITCOIN, so take this for what its worth. I think you can be rational, or buy-in, but not both. i value your oponion so heres mine, If you look at bitcoin as a currency, its appreciated 10x in one year, which means if you lived in a land of that currency, it would be similar to every asset not called bitcoin losing 90% of its value over that year.... beginning of year a 200,000 house was worth 200 1k bitcoins end of year that house is worth 10 bitcoin when BTC got to 20k so house has dropped 90%, you are probably tempted to buy that house.. you bet. but you can, becuase for you to be in BTC youve got to think its going to 100k, so then that house will only be worth 2 bitcoin, so you dont sell, and no one sells and it goes up. so if this was AU$, your AuS appreciated 10x in one year, then assets worldwide would have dropped 90%, so good news is your 1,000 on jan 1 is worth 10,000, but now, AFTER it has gone up, do you cash out and use your currency, or stay in. i think its not bitcoin people want, its the money(dollars) they can make trading bitcoin they like. At some point, whatever discrepency in value that existed on jan 1, no mater WHAT it was or HOW much bitcoin was mispriced, at some point bitcoi investors will rather have what heir bitcoin can buy them, instead of bitcoin. but that could be at 20,000 50,000 100,000 so buy away, but when it does come back to reality - please dont say OMG i cant believe it happened. so im off to buy, hold nose, drink the punch, and use limits. Page Howe
Guest - page howe on 28 December 2017

plus to be a real currency, you need ot be able to trade and borrow, can you imagine if you took out a loan of 10k at the beginning of the year in Bitcoin...

and oh yeah its not legal tender in the US

and oh yeah you need electricity to trade,

and oh yeah 35-50% is unaccounted for

and oh yeah you have to have a record of every trade to verify f yours is legit

i wont even get into whether it chinas gambit to take down the west, or whether in the endtimes 1 million bitcoin wont buy a loaf of bread, one loaf of bread will buy 1,000,000 bitcoin

wait, Ive got to buy more

anything that keep going up in the face of all this must have more speculative frenzy til 1/1 when taxable invesors sell, so it may hit 20k

page

plus to be a real currency, you need ot be able to trade and borrow, can you imagine if you took out a loan of 10k at the beginning of the year in Bitcoin... and oh yeah its not legal tender in the US and oh yeah you need electricity to trade, and oh yeah 35-50% is unaccounted for and oh yeah you have to have a record of every trade to verify f yours is legit i wont even get into whether it chinas gambit to take down the west, or whether in the endtimes 1 million bitcoin wont buy a loaf of bread, one loaf of bread will buy 1,000,000 bitcoin wait, Ive got to buy more anything that keep going up in the face of all this must have more speculative frenzy til 1/1 when taxable invesors sell, so it may hit 20k page
mgilmour on 29 December 2017

I've just posted an article clarifying my thinking on crytpo-currencies. A few comments though:
1. Transactions that require electricity are fine with many people.
2. Peer-to-peer transactions are here to stay and are a game changer.
3. The Bitcoin price is insane.
4. Regulators will wrestle with crypto-currencies like they wrestle with the anarchy of the Internet.....it's really tough for them. It is was simple then the dark web wouldn't exist.
5. All currencies are ficticious and are only given value because of perception.
6. Like I said, there's only one market that I've seen behave like Bitcoin.....and that's domains.

Love the comments...keep them coming!

I've just posted an article clarifying my thinking on crytpo-currencies. A few comments though: 1. Transactions that require electricity are fine with many people. 2. Peer-to-peer transactions are here to stay and are a game changer. 3. The Bitcoin price is insane. 4. Regulators will wrestle with crypto-currencies like they wrestle with the anarchy of the Internet.....it's really tough for them. It is was simple then the dark web wouldn't exist. 5. All currencies are ficticious and are only given value because of perception. 6. Like I said, there's only one market that I've seen behave like Bitcoin.....and that's domains. Love the comments...keep them coming!
vanclute on 29 December 2017
Bitcoin Shmitcoin...

I'm with you Michael - Bitcoin has no actual business model. Right now it's just got a massive first mover advantage, and the insanely fast rising "value" is of course sexy as all-get-out to speculators. But ultimately I'm not sure I see Bitcoin turning into anything the world will really want to use. And "store of value"?? PUH-LEEEZE. Stores of value are supposed to be stable. Bitcoin is anything but. Could that change? Yep, sure could. But my money isn't on it happening.

Now as you've pointed out, ETH and XRP (Ripple) on the other hand... I think those are the places to be. Maybe Litecoin as well since from my experience it transacts way faster and more cheaply than Bitcoin. Of course that could just be because nobody's using it yet so the network isn't clogged up. Time will tell.

Anyway, like you I have no doubts at all that crypto/blockchain is here to stay. I've made my "bets" and am quite content to ride them out for a good number of years as personally, this reminds me way too much of the early to mid 90s and the internet boom that happened all around me but that I didn't participate in. Coulda Shoulda. Not missing the party this time around, but for me I don't see myself hanging out at the punch bowl with Bitcoin!

I'm with you Michael - Bitcoin has no actual business model. Right now it's just got a massive first mover advantage, and the insanely fast rising "value" is of course sexy as all-get-out to speculators. But ultimately I'm not sure I see Bitcoin turning into anything the world will really want to use. And "store of value"?? PUH-LEEEZE. Stores of value are supposed to be stable. Bitcoin is anything but. Could that change? Yep, sure could. But my money isn't on it happening. Now as you've pointed out, ETH and XRP (Ripple) on the other hand... I think those are the places to be. Maybe Litecoin as well since from my experience it transacts way faster and more cheaply than Bitcoin. Of course that could just be because nobody's using it yet so the network isn't clogged up. Time will tell. Anyway, like you I have no doubts at all that crypto/blockchain is here to stay. I've made my "bets" and am quite content to ride them out for a good number of years as personally, this reminds me way too much of the early to mid 90s and the internet boom that happened all around me but that I didn't participate in. Coulda Shoulda. Not missing the party this time around, but for me I don't see myself hanging out at the punch bowl with Bitcoin!
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