In my opinion, there are no reliable sources on what's going to happen in the mid to long-term with crypto currencies. The crypto world is home to thousands of people who offer insights about where the market will go, but I have never come across anybody who has any solid foundation for their theorizing. I don't mean to denigrate the opinions out there. There are lots of opinions, which are interesting and insightful. I do just don't think anybody currently understands the long-term behavior of the crypto beast.
The reason for this is simple: this class of assets in brand new, and it's totally unclear what its actual value (cold hard utility as a store of value, a method of account, and a method of exchange). Crypto currencies are not backed by revenue streams or the full faith and credit of any business or government, and this makes it even more difficult to objectively calculate the non-speculative value of these assets.
So, nobody knows how much of the crypto currency market's market cap is linked to actual, durable utility, and how much is pure ephemeral speculation.
Now that I've made this long disclaimer about the limits of knowing the direction of the crypto market, let me give a brief rundown of my opinion on where the market's going:
I do believe that the market for crypto is driven mostly by speculators (as opposed to people who actually use the currencies as currencies - for transacting). I'd bet that about 90% of all crypto currency in existence is used for investment/speculation purposes, rather than being used as currency.
This fact leads me to believe that the crypto market, while it may continue to grow for a short or long period, will inevitably retrench. The enthusiasm surrounding crypto currencies is based entirely on the expectation that they will continue to rise in value. It is hard for me to imagine that this enthusiasm will transition painlessly into a stabilized value. I think when the speculative fad ends--and mark my words, it will end eventually--crypto values will tumble hard.
Some may dismiss this as "FUD." Sorry guys, anybody who doesn't admit that there IS uncertainty associated with the crypto market is misguided.
I do not, however, believe that cryptos will be down for the count. I think there will be a few, or maybe even a lot, that recover. Once the extreme volatility of the present market subsides, I think there will be more and more businesses and institutions that begin using crypto. The speculative madness occurring presently is actually holding cryptos back - companies hate accepting volatile currencies as payment.
In the distant term, I also think cryptos may replace some national fiat currencies. And this is a good thing. It's nice that the contents of your checking/savings accounts won't become worthless if your government collapses.
In short, I think it makes sense to keep some money in crypto (probably the bigger ones - my preference has always been Ripple). I think there's a strong chance that the market will undergo a very bearish period at some point in the next year or two. However, I believe it will recover, prices will stabilize, and this stability will lead to wider adoption.
As always, this is subject to debate, and I don't hold myself out as some kind of guru. Thanks for reading!
I don't think anyone has bought Bitcoin or any other crypto for that matter with the sole purpose of spending it! Everyone is in this game for gains and it really undermines adoption which ironically undermines value.
Thank you for the comment. Hope you enjoy the week!
I believe that we are still in the early stages of cryptocurrency and that we will hit 1 trillion in market cap some time this month.
Is there too much money being thrown around by clueless people these past few months? Of course!
But more money is heading into this market every day and will keep this trend going for a while.
Followed!
I don’t doubt it. Thanks for the comment! Followed!
Thanks for sharing your thoughts on the current crypto currency space and its future.
I agree on the speculation and the hype propagated by the media (social media, newspapers, some tv channels, etc.). Somehow, it's inevitable and it's also natural to attach monetary value to anything new and limited.
However, I don't think that speculators are carrying the movement. The blockchain concept doesn't live thanks to the price of bitcoin or Ethereum, but by its technology and the fact that it can't be killed that easily.
Bitcoin has been around for many years and, while its popularity increased exponentially in 2017, it carried values that are universal and can't be exchanged for money (such as total freedom of trade).
Bitcoin and the alts can be overvalue or undervalue, they will always and forever represent some utopia most of human would like to see in reality. Will it ever replace the statu quo? I'm not sure. Will it alter it? it already started!
Excellent post! It's always good to see critical / skeptical people. I really dislike how most of the community dismisses any legitimate concerns as 'FUD'. It's lazy as it doesn't force you to think critically and propose counter arguments. We could be so much more as a community..
Followed you for above mentioned reasons. If you're looking for non-hype posts, feel free to follow me too. I will be writing about Bitcoin in SoV (Store of Value) context soon!
Thank you sir. I will follow you too. I was actually a little nervous to post. Figured anything not purely optimistic might garner downvotes.
That's true, people might downvote just because they don't agree with you but that would be extremely unintelligent and lead to a bland community lacking in diversity of opinions and perspectives. Let's trust the community to use their votes wisely!
Oh well, in the end it's more important to deliver good content than to get maximum upvotes. Otherwise we might as well post memes 24/7!
I echo the comments below, good to see a critical view on cryptos! You're quite right that it is a new kind of asset that's just mostly been used for speculation. But the emergence of cryptos that are back by a service like Golem, Enigma or Steemit are going to change the game in the long-run in my opinion.
Thank you piv-p. Hope you have a great week!
Great blog!!! I think the Bitcoin Revamp Up is Going to be in the latest season of the year!!! Take care men