Guest Post by Simon Black
Last week the price of Bitcoin was double what it was on April 1 of this year.
Then it crashed by almost 20% in matter of days. Then it surged again. And at the time of this writing, the price of bitcoin is just shy of $8,000.
That’s a pretty volatile ride.
Naturally the “experts” are back to predicting Bitcoin will hit anything up to $10,000 this month, and $100,000 this year.
Obviously no one truly knows where Bitcoin will go. As with all speculations, it could go substantially higher from here. Or lower. Or nowhere.
Long-time readers know that I’m not anti-crypto. A decentralized financial system fully aligns with my ethos of independence and diversification.
I was also an early adopter of Bitcoin and have made a few investments in crypto-related businesses.
But I am anti-stupidity.
And back in 2017 during the worldwide crypto-craze, there was an unbelievable amount of stupidity taking place, including people taking out second mortgages on their homes to buy Bitcoin.
Not to mention there were scams galore… to the point where email spammers sent out tens of BILLIONS of messages encouraging people to buy some ICO token or new cryptocurrency.
Multiple cryptocurrencies and tokens were being created on a daily basis, to the point that there were thousands and thousands of them, often being promoted by celebrities ranging from boxer Floyd Mayweather to Paris Hilton.
It was a classic bubble mentality… people rushing in to the market who didn’t know the first thing about crypto.
Within a few months they all got burned.
Now that Crypto prices are charging higher again, these same people are starting to feel the Fear of Missing Out (FOMO), and wondering whether they should jump in, whether this time is different.
Just remember that, over the long term, the price of just about everything is decided by supply and demand.
So when we look at Bitcoin and other cryptocurrencies, the real question to ask is: will there be more people using Bitcoin in the future? Or fewer people using it?
And I’m talking about actual, real ‘use’. The vast majority of crypto transactions these days are just speculators betting on whether or not the price will increase.
It’s basically just gamblers selling these coins to one another. And that’s not real use.
I’m talking about being able to buy groceries with crypto… and the majority of transactions being for those sorts of purchases.
There are some promising signs that this might finally start to happen.
Stores like Whole Foods and Nordstrom are starting to accept Bitcoin through an app that has partnered with the Winklevoss twins’ crypto company Gemini.
That’s certainly beneficial in terms of actual real cryptocurrency transactions in major mainstream retailers.
Even Facebook is developing a cryptocurrency that can be used with its messaging software Whatsapp.
Given Facebook’s 2+ billion members who could become potential users, this stands to create global reach.
These developments lead me to believe that there is a high chance we will see much more adoption and use of cryptocurrencies in the future, which is why I remain overall bullish.
But just because there appears to be a strong future for crypto doesn’t mean that any specific coin is going to a great investment.
Bitcoin is by far the most popular cryptocurrency, and the one that most people acquire when they’re first getting their feet wet.
But Bitcoin is also the oldest of the major cryptocurrencies, which means that it’s the most technologically inferior.
And it’s always seemed strange to me that the most technologically inferior coin is simultaneously the most valuable.
Just be mindful of that fact before rushing back in to crypto. There are a lot of coins and tokens out there, some of which have superior technology and more specific uses (like privacy, financial clearing, information-sharing, etc.)
And there are also a number of new ones that will hit the market, including proprietary coins developed by tech giants like Facebook, and financial giants like JP Morgan.
So perhaps education is the safer choice for now. Before making any investment, take time to really learn about the developments and the market, as well as how to safely purchase and store your digital assets.
Just like cryptos didn’t disappear when crypto prices crashed to $3,000, they’re also far from having reached their full potential.
This journey still has a long way to go. So any investment in your education will pay dividends long into the future.
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Do you ever hear of anyone telling you to buy (or sell) BEFORE the ‘big moves’?
Last BTC article I was pimpimg…I bought BTC at 5200 and Ltc at 35. I am still buying with ltc at 100 and btc at 8k.
I see value.
In Eth as well…..
So, buy the bump, sell the dip?
This sounds wrong for some reason.
Just received this from a crypto broker in Australia:
“A small correction on the 16th of May saw a massive sell-off of shorts. This indicated that one trader had an open 10,000+ BTC short position which was fuelling the rally prior. This one trader accounted for approximately 37% of the shorts on Bitfinex, which, appears to have been accumulated since April. We’ve analysed his losses to be in the range of $23M USD for betting against Bitcoin. From this major position close, long volume has since moved greater than shorts.”
Jim, waz that you!
I went to Home Depot and bought a shovel. 2 days later i returned it. They gave me an in-store credit. I can use their store credit only at Home Depot. That is facebook crypto currency. You have only one choice to spend it, at fakebook. When people buy that currency they have in store credits. Eventually fakebook and many others will compete with amazon offering free delivery. Fakebook will have online stores, they already do, fakebook company profiles. These companies will advocate fakebook more as its cheaper than brick and mortar. It allows small time to compete with amazon. Fakebook will store billions of dollars in their own currency as “in store credits, ie fakecoin”. It will pump up their assets and people will mistake that for earnings and their stock will go to $1,000. I see an investment opp here buying fakebook stock and waiting on it to quadruple because people are stupid. Fakecoin is a debt, they are holding someones money to spend in their store. Their “store” is getting a profit off their users fakepage. These users buy ads, and provide a percentage of sales to fakebook. So in essence if fakebook has stored $1 billion of fakecoin it can be assumed they will earn some percentage off this and is calculable as earnings. They can probably, like a bank, leverage it and invest it and keep any other earn g off of it too, just like your bank does with your cd, checking and savings acct. but they wont be treated as banks and have no protections of consumers money. If things go bad, tough shit, fakebook wins you lose, no sipc no fdic. Just shit outta luck. Then govt will try being your friend and impose regulations, regs that should have forced them to be a bank in the first place. People will be selling their fakecoin at discounts to one another. It will mimic the stock mkt. just imagine every large cap company does this and money is so diluted the actual stock market will be small in comparison to actual daily in and outflows, and market performance. This is a shit show beginning. Like millions of boomers owning beach houses thinking its worth a million bucks and they believe a millennial will buy it, with no job and no savings. Oversupply and little to no demand. The only way to keep up is low interest rates and money printing to keep money supply high since so much of it will be tied up in large cap companies fakecoins (in store credits) sitting their earning nothing, not employing anyone, no doing anything but waiting on said owner to buy something. This is advocated by the govt to keep the money printing and rates low while hiding a devaluing currency by allowing printed money to be stored and not used.