Hello Steemian Crypto holders – Let’s us take a close look on what is currently unfolding in the Crypto currency space.
With nearly a thousand different crypto currencies, Bitcoin is surely no longer the only game in town. It does benefit from the “First to Market” premium, but how long does that last? How does anyone accurately value one coin from another, in this light-speed expansion, of the various creations of different coins?
As a Quant, I even find it difficult to place any type of fair value on any crypto coin and I have valued many different companies over the past 15 years. So what can we rely on when investing or trading in crypto currency? I think I have a good explanation that may help you divide and conquer in your personal approach.
Currently many crypto currencies are experiencing yet another pull back. As we can see this chart of Bitcoin, despite its recent pull back and quick retracement close to its high, we are seeing another ‘pull back'. Is this a general pullback of profit taking or something more?
With every new coin being developed, it brings an opportunity for a new and improved version of what we believe to be the future of currency. Each crypto has its own structure and software that makes it unique, it’s these differences, whether subtle or dramatic, that will determine your personal value and ultimately the popularity of its use as a generally acceptable use of a paper fiat alternative.
For example, the differences such as the level of pure anonymity, which we are learning now that Bitcoin may not be as anonymous as once thought, may be what is most important to you and now you may be researching the benefits or faults of other competitors such as Monero, Zcash or another newly created crypto with similar attributes.
These coins, along with many others, can provide another opportunity at the ground floor; for either lower prices, or the availability to mine at somewhat easier points of the Algo. Hence, what I believe to be our first real major sector rotation from one crypto to another.
Bitcoin is not the only victim to skepticism or sector rotation. Ethereum also has its share of competitors. As with any open source technology, individuals are free to take the basic foundation and improve upon it or tie in a different approach that may add significant value or attention.
So you see, there is no telling which crypto will ultimately reign supreme. Not yet anyway. Unless you’re Clif High… But he also stresses ‘Doing Your Research’ - which cannot be stressed enough. What we do know for sure is that a lot of money is being made from its early mining days up to and through its debut on an exchange.
To me, at this point the clear bottle neck are the exchanges. Can they handle the volume of both the number of coins, as well as its volume and volatility? There is no reason why there has to be any one or two kings of the cryptos. Why must there be a Coke vs Pepsi or Republican Vs Democrat? If there are multiple forms of cryptos that have competing qualities that can be used and traded quickly and efficiently, with a floatable exchange rate, then I believe we can ultimately be freed from the current fiat based system, under centralized control.
The true ultimate value of any underlying crypto currency will be its ability to become stable enough to be used as a real substitute for the money we currently hold in our pocket. We seem to be a bit way off from that point. With the current centralized system, not eagerly ready go quietly into that night, we will all be in store for an uphill battle. Until such time as that shift can occur, you’re better off to be nimble and don’t fall in love with any one particular crypto, despite what you may hear.
Perhaps ultimate stability can truly never really be achieved, to a level of a necessary form of a store of wealth, since as technology improves more ideas will ultimately create more competing forms of crypto currency. Until more citizens embrace the use of crypto currency it will be hard to see which will rise to the top. Currently, we are nowhere near a critical mass needed to determine any particular social contract. Also, as there are many different countries using different currencies today, it’s certain that the extension of our human behavior will desire a diversification of cryto’s as well.
Blockchain technology is providing a myriad of different possible solutions and paths we can embark on. Many industries, such as the ‘Middle Man’ will eventually evaporate into the dustbin of history. This will bring about remarkable savings that can be directed elsewhere in the general economy. It will also bring about dramatic impacts on employment or rather unemployment, which we as a society must deal with.
Although, it is certainly our future, the question remains of how will we deal with these changes as a decentralized society? In the meantime, I wouldn’t put too much stock into any particular crypto currency, but rather encourage or teach others how to get, store and buy things with crypto currency. Nature will provide rest.
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