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I think I've proven over the last few months to have absolutely zero insight into the INVESTING aspect of cryptocurrencies. But after getting absolutely penetrated trading cryptocurrency, I suppose my opinion is as valid as others. So my take:
Cryptocurrencies MAY recover, but I don't think they should recover. I think what South Korea and China have demonstrated is that cryptocurrency is predicated on a lie--the lie that the currency is free from government intervention or regulation. If this already wasn't clear, it is demonstrably true now--cryptocurrency very much can be touched by government regulation/intervention. We've also seen many public reports now of how, paradoxically, the blockchain makes it EASIER for government to track its proverbial prey--it's actually fairly hard to mask crime on the blockchain since every transaction is recorded for all time. It's not exactly a "decentralized" government-free platform when the trading platforms are subject to search warrants.
You're also seeing some weakness in the practicality of cryptocurrency as its practicality is vulnerable to acceptance (or lack thereof) by financial institutions.
I think when you actually look at cryptocurrency with a sober mind, it becomes clear that it is a completely and utterly worthless asset predicated upon lies. And not small lies, but fundamental lies. Will values recover? Maybe. Should values recover? No, they shouldn't and maybe they won't, I don't know. Perhaps enough people now have recognized cryptocurrency for what it is--a lie.
trash
hodl
I mean, I'm sure there are a good number of people who will continue to crush it in crypto investing, but for me if I don't believe in an asset class I just can't invest (or, in my case, continue to invest). Because if I don't believe in the underlying asset then I can't mentally force myself to hold in downturns. Real estate, on the other hand, I have never missed on a deal, partially because I believe in and understand the underlying mechanism that causes prices to rise and fall, so my investing is calculated. Crytpo is just gambling--you're gambling on price movements rather than investing in the asset's underlying principles; intelligent people, at this juncture, understand that crypto's underlying premise is intellectually bankrupt. It's not decentralized and it's not free from the government (if anything, it's MORE vulnerable to the gov't than the USD).
If the premise of cryptocurrency is wrong then what exactly are we investing in?
Setting aside the personal attacks, I'd argue that, paradoxically, the more privacy features built into a currency the more of a target it will become by government regulators as the currency gains wider use. Yes, there are things in the dark web that can escape the regulators, but for a currency to ever gain legitimacy and widespread use it will have to operate in a manner that won't get it shut down by the government. In other words, my position is that cryptocurrencies will become a victim of their own success.
Haven’t posted on crypto in a while;
The state of the crypto market, as dictated by bitcoin, would be just about “at value” would be worth right now. We saw mass hysteria when BTC futures were released, right after seeing Bitcoin Core come out of its most concerted corporate take-over effort in the defeat of SegWit2X. Bitcoin is not going anywhere, anytime soon. It’s the ultimate antidisestablishmentarist asset available for purchase and if you haven’t noticed yet, we’re kind of going through a bit of a populist movement globally. It is a true store of wealth with added technical benefits that no Swiss Bank could replicate when it comes to hiding funds.
As for every other coin in the cryptosphere, they are 99% trash from a technical, utility and use-case point of view. When you’re playing the other 99% of technology, you’re playing surface level hype indicators. “How good is the marketing”, “OMG they have a stacked dev team”, “Holy shit, I haven’t seen this use case addressed by block chain yet”. None of this legs for evaluating the longevity a business; it’s all bullshit.
You’ve got to evaluate the utility model and do you see that model beating out competing products in that same market space. For instance, at what price point would I actually use STORJ or SIA over DropBox, Google Drive or MegaUpload? But we’re not even close to that point yet to where STORJ or SIA can compete for that because their utility tokens are priced to high to make the business model feasible.
From a technical standpoint, does the use-case make sense? Why the fuck do I need a 18th privacy coin? How many Ethereum public blockchain platforms clones can there be? Last I counted it was 5. Theyre just going to dethrone AWS, IBM and Google Cloud without the billions of dollars these companies have spent to develop entire platforms on their infrastructure. Not gonna happen.
All I’m trying to say is that a lot of this isn’t real, and I don’t want you guys going out there and losing your ass in ALT coin trades. Stay conservative unless you really know what you’re doing when it comes to crypto.
Really quickly - It will never happen.
Ripple Labs has a beautiful piece of technology called "interledger". This little piece of technology enables settlement transactions between all other banks which have also purchased the interledger edge router. This enables transactions with greater speed, embedded logic, immutability and finality than traditional processes all while cutting out traditional financial clearing houses.
Here's the thing though: you are not required to use XRP when you use the interledger protocol. You can use fictional checks and balances. You can use fiat currencies. You can put any type of asset on their interledger protocol. But if you're a bank, why would you denominate your global settlement process with with XRP which is held by a private company? Banks would have to first pay for the asset with fees associated and then they are subjected to volatility brought on by public speculation to retail investors?
Banks and specifically, SWIFT, is ripping all the technical innovation from Ripple Labs and building a comparable "interledger". If anyone is going to create a crypto currency that will be adopted by banks for global settlement, it will be contrived through a major banking consortium. Not Ripple Labs.
Could you expand a little bit on how it's a true store of wealth? I understand that it has a finite supply and consequently is a deflationary asset. However it's price is extremely volatile and I'm having trouble imagining a scenario where it wouldn't be.
Even once the remaining supply of Bitcoins decreases along the asymptote to very close to 0 it's still going to be impacted by the POSSIBILITY of government intervention alone. There is government intervention in fiat (via the money supply), but not anywhere near the extent of what they COULD do to crypto currency.
If we look at different currencies as competing products, government's can essentially block/regulate their competition away. It doesn't matter weather or not they actually do this so much so as it will always be a threat. The government's own currency (fiat) is not exposed to this risk in the same way.
Edit: Genuinely curious to hear your thoughts on this as I do think there is a legitimate need to find a true store of wealth.
You articulated similar thoughts/concerns to mine way better than I did.
My position about a true store of wealth sounds like I'm defending the "man," but wealth storage has always been about what people accept as legitimate. Right now, there are a number of very powerful and stable governments that back up their currency at the barrel of a literal gun (or tank, or aircraft carrier). One could argue that land is a true store of wealth, but really, land ownership is only as good as the government that recognizes private property rights and will continue to recognize private property rights.
I would compare Bitcoin to Venezuela. Right now, Bitcoin has more legitimacy in the marketplace than the "strong bolivar" even though Bitcoin is backed by nothing and the bolivar is backed by the Venezuelan military. Well, nobody considers the Venezuelan government to be legitimate and the promise of a BTC trading platform algorithm has more credibility. In other words, in my view, a true store of wealth is only as credible as the authority figure that backs it up.
Addressing your comment and @Yung Hedgefund.
Almost all of the government regulations you see are directed towards protecting investors from blatant crypto scams, ensuring that exchanges are able to maintain a level of liquidity and legitimacy via business licenses and defining what bitcoin is from a legal PoV. The USA does not see BTC as a threat to currency (as evident by CFTC + futures listings + swap market). China is probably one of the most extremes from a regulatory standpoint, and they still allow free trade of BTC within their country. Countries like SK, Japan and Russia have embraced the technology with open arms. I don't want to get into regulatory doomsday scenarios because there's too much to postulate.
From a technical standpoint, it's not possible to block CC transactions. Think of other distributed networks (Torrent, Dark Net) that are still very prevalent despite being unanimously illegal and illicit. Now, try taking down a network that has massive support from the USA, SK, Japan and Russia to maintain nodes. Best of luck.
"What is legitimate" "Bitcoin is backed by nothing" - This is the hardest one to wrap your head around if you're not a technologist by nature. Bitcoin is legitimate because there a 10,000's of nodes world wide with 20,000,000 TH/S of computational power that ensure that the ledger has everyone's balance intact at all times and that transactions are adjudicated. You say it's backed by nothing, but I say it's backed by sound mathematics, cryptography and enough electricity to power Norway.
The reason I choose BTC over Gold is the upside from the economics of mining that push price up, true deflation, geopolitical motives and the potential for completely autonomous financial products and instruments derived from bitcoin's blockchain (see Counterparty and OMNI for art of the possible).