My take on the whole cryptocurrency investment thing. I'm not an expert at all and don't pretend to be. Would be interested to know what you guys think.
What we have been seeing over the last few years is similar to the dotcom boom of the late '90s, in that it's predominantly people investing in something that they don't understand because it is showing exceptional growth. Ofc the investment then drives the price, which creates an artificial bubble around the whole sector.
However this chicken and egg scenario didn't start out of nothing, it started because there definately IS something there, just ask anyone who invested in FB or Google in the '90s - they invested in something real and got massive returns. However a lot of people who INVESTED in 'dotcom' stocks that they didn't really understand lost a truely massive amount of money, once the dust settled and people realized that those companies weren't realy doing anything other than being traded.
There were also people who made a lot of money TRADING 'nothing' dotcom stocks, but the made sure they weren't left holding the ball when the crash happened. I would expect a similar scenario to play out with the cryptocurrency thing.
Lets face it with a few well timed purchases and sales any one of us could have retired to a very rich lifestyle by now, so it can't be said that these things aren't worth the risk of trading, if you're smart and watchful. Also it seems quite possible that some form of cryptocurrency will end up being the global currency at some point in the future, in that case getting on board the right horse at the right time and sticking to it would set up your family for generations to come. But does the winning 'horse' even exist yet?
CC has just entered a new phase which generated the most recent bubble and the notoriety from that bubble will drive the next one. What has happened is that CC has gone from being "that bitcoin thing" to (enough) people realising that multiple CCs exist and can exist, and people have started creating and trading new CCs. Expect more new ones in the near future. While there is still enough general confusion about what they are there may be money to be made buying brand new ones at very low rates and dumping them very shortly afterwards. Don't get greedy here some (probably most) of them will tank very badly before too long.
Another possible thing to watch for is when some of the big banks/powerbrokers get together and work out how create their own CC that they can manipulate (has this already happened idk?). In this scenario it would eventually come down to a battle between this 'big money' CC and the largest of the 'free' CCs (currently bitcoin?).
Anyway, as far as the current market and existing CCs go, for any real investment (as against short term trading) I would strongly reccommend looking at one thing: which ones are actully being used
. Which ones are actually being exchanged for goods &/or services? Like the dotcom boom there will at some point be a "the emperor has no clothes" moment and past that point anything that can't actually be exchanged for something real (not
just other cryptocurrancy) will become instantly worthless.
There are also 2 other totaly leftfield factors to consider:
1) Quantum computing. It's still in it's infancy but there is genuine progress being made in the field. For example there's an Australian scientist that virtually has an open cheque from the govornment here and is almost ready to test a rig that has 10 quantum bits, each one based on an individual atom. IDK enough about it to forecast anything, but I do know that a major breakthrough in quantum computing would mean that CC mining would be pretty much instantly smashed open by the first quantum rig that is put to the task. Somethig to think about.
2) Sabotage. Again I'm not an expert in the technical side of CC, but one thing I do know is that whenever there is that much money involved, let alone something that could even be imagined
to be a threat to the people who control the world's finances, that no holds are barred
. Anything that can be done has a very real chance of being done, if it benefits the right people. This includes but is not limited to: cyber attacks, the physical bombing of server farms, deliberate monetary and/or legislative interference/sabotage to the system, covert interception and hijacking of transactions and whatever else anyone can dream up. IDK if any individual one of these can or will happen but when there's enough zeros on the end of a transaction things get crazy. How may people in the world would happily organize another 9/11 if they got a trillion dollars for it?