That’s right, the crypto craze is over. No more Youtube videos about self-made millionaires who cashed in their bitcoin before 2018. No more frat boys from the other side of the office telling you how they signed up with Coinbase and what currencies to buy… For now.
Bitcoin, Litecoin, Altcoin and other strong competitors have all been on a downward trend since the beginning of 2018. Most people have lost interest in the game, but that doesn’t mean it won’t come back.
Cryptocurrency Trading
It’s very simple actually. The concept is that if people think it’s worth money, it is. This may sound like an oversimplification of the situation, but you have to consider the life cycle of the product.
Right now, crypto currency is still less that 10 years old. You could call it a new born in terms of currency years. The spike of consumption in 2017 was almost like it’s first cry. Following this was a big social media craze where “crypto” and “blockchain” were among the top trending words on Twitter. At this point, most people were introduced to the idea of a decentralized currency. These days it’s just not being mentioned in the media. Why? Because no one needs it right now! Unemployment is down, jobs are up and the US Dollar is doing great… For now.
People only buy Cryptocurrencies when they’re relevant. In other words, everyone is buying when market values are high. The majority of consumers are very reactive when it comes to Cryptocurrency because they don’t yet believe in the value. Unfortunately, this is how it will continue to be for the next stage of it’s life cycle. You can call this it’s “teething” stage. However, once it starts being used as a primary source of wealth, it will stop being sold once it is devalued.
Decentralization & Blockchain
For the sake of this article I can’t fully explain Blockchain; it might take me several pages. In a nutshell, cryptocurrency is defined by the Blockchain. It is a series of series of blocks (a code made from a combination of letters and number) which are generated by computers. Each time a new block is created, it is added to the chain in succession of all of the previous blocks. The next block is only allowed if it “agrees” with all of the previous blocks in the chain. In other words, it can’t be fabricated. Adding to the blockchain is called “mining” and it can be done by anyone with a powerful enough GPU.
This concept is called Decentralization, which means that the value is not determined by any one source, but rather by all of the computers mining the currency. Since there is no central power with a political agenda to inflate or deflate the currency, it is a scientifically safe investment of currency.
Melanie Swan, a Technology Theorist for Purdue University, writes the following in her new book:
“The potential benefits of blockchain are more than just economic -they extend into political, humanitarian, social, and scientific domains- and the technological capacity of blockchain is already being harnessed by specific groups to address real world problems”.
Believe it or not, Melanie Swan is just one of the advocates who understand the true benefits to society. There are a number of other experts and researchers including Doug Casey -who correctly predicted the market crash in 2008- that believe that Crypto currency will be the leading alternative for failed government currencies. You can watch his interview here.
“You’ve got millions and millions of people that are involved in these cryptos -they’re mostly young people that are computer literate- and no of them have ever thought about the nature of money or economics. These young people, all over the world, see that ‘I can buy Bitcoins or Ether or something and I’m not trapped in this country and I don’t have to rely on the banks’ and it get’s them thinking”.
Granted, Doug Casey believes that people will eventually invest in gold, but he acknowledges the value of a decentralized currency.
Investment
The fact is that there are many assets which can be a reliable investment, but the Federal Reserve is just not one of them. Just as Ron Paul, Peter Schiff and others have been preaching for years, the Federal Government will default on it’s debt. It’s just a matter of when… What does that mean for our money? Nothing now, but don’t trust the US dollar.
Were not here to tell you how to invest your money, that is up to you. What we can offer is this advice: Diversify your investments. Bitcoin can be a good investment if you buy and sell at the right time. It could be a winning investment if your country starts using it as a primary source of trade, but who’s to say if and when it will happen. If you’re going buy bitcoin, perhaps do it in small increments and buy several different types. The last thing you want is sink your whole investment on a loosing pony.
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