Posted October 18, 2017
By Ray Blanco
Why I Changed My Mind on Bitcoin
Friday of last week, I wrote about the enormous impact blockchain technology could have on retail transactions.
Verifications blockchain tech makes possible could end counterfeiting. It could end lost or stolen goods.
Plus, it could allow for immediate transactions and for goods to be shipped minutes after a confirmed purchase, as opposed to hours or days.
Thats just a quick look at consumer-focused applications.
Banks, brokers, money managers. There are blockchain tech implications for all those jobs too.
Instant stock transfers. Fee-free, immediate ledger reconciliation. The mind reels at the possibilities.
To date, were just scratching the surface of how blockchain tech could remove barriers, costs and complications.
Truly, no exaggeration, the long-term promise is a new era of commerce.
Thats blockchain. Blockchain isnt bitcoin, however.
Before we float away on these rosy dreams, we need to look at the bitcoin/cryptocurrency landscape as it exists today.
Bitcoins Worth $94 Billion and Counting
Initial coin offerings (ICOs) are all the rage right now. New tokens hit the airwaves near daily, sucking up investor interest and making their backers into millionaires.
Bitcoin, trading as I write at $5,696, is up $800 in the last week.
Ethereum trades for $334.
In January, you could get one for $9.62.
By total market cap, bitcoins now a $94 billion-plus enterprise.
Ethereums at $31.8 billion.
There are now 12 (12!) separate cryptocurrencies with market caps over $1 billion.
Smart money. Dumb money. Undecided money. Call it whatever you want.
There are now tens of billions of dollars invested in cryptocurrencies. Much of it from people who as recently as a year ago wouldve scoffed at the idea of putting money on the line for a digital currency.
This, rightly so, should give you pause. It should make you think of runaway real estate speculation, Pets.com and tulip bulbs being exchanged for diamonds.
I fully admit as recently as a few months ago I shared that opinion. Ive written to you about it many times.
Heres the thing
Every time bitcoin forks make news or the Chinese government cracks down on cryptocurrency trading or bitcoin prices suddenly dip and then recover
cryptos get a fresh injection of news-cycle energy. The mainstream financial media fall all over themselves to explain what happened and why.
Cryptocurrencies have a hold on the public consciousness right now like few assets in history have ever achieved. And yes, many of those that did achieve such news power were classic bubbles.
Return of the Golden Geeks
Dot-com stocks made headlines daily in the 1990s.
Netscapes Marc Andreessen, for example, was on the cover of Time on Feb. 19, 1996, with the headline The Golden Geeks and the following text:
They invent. They start companies. And the stock market has made them INSTANTAIRES. Who are they? How do they live? And what do they mean for Americas future?
Instantaires was a popular buzzword at the time for folks who became millionaires or billionaires instantly after taking a new website public.
My point is the cryptocurrency bubbles going to pop at some point.
In its aftermath, real long-term players will emerge.
And years from now, well all look back at the fortunes we couldve made in both blockchain tech and the best-of-breed cryptocurrencies like bitcoin.
Netscape isnt an independent company today, for example. But Marc Andreessens still a billionaire.
Blockchain and cryptocurrency tech is here to stay. The changes weve seen so far are just the start.
My positions evolved. Yours should too, if it hasnt already.
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