Monday, May 29, 2017

Planning on going into Cryptocurrencies

So, I'm planning to take a small amount of my investible assets and "invest" / gamble into cryptocurrencies. Since it's such a long word, I'm just gonna abbreviate with CC.

Fact 1: The market cap of all CCs is about a whooping $71B now, and it is rapidly growing.
Jan 15: $5.5b
Jan 16: $7.1b
Jan 17: $18.2b
Source: coinmarketcap

Fact 2: BTC used to dominate the market with over 90% market share until 2016, hovering around 80% through 2016, but since 2017 it has dropped to under 50% of market share.


Fact 3: Many companies (Wordpress, Overstock, Microsoft, Expedia, Newegg, Dell, Steam, Zynga, Mint... ) are accepting digital currencies as payment (mainly BTC now, but many more CCs are riding the wave and offer advantages over BTC as a payment method)
Source: 99bitcoins

Conclusion 1 based on Fact 1: Crytocurrencies will continue to grow. I have multiple reasons that could explain this. Weak fiat currencies run by weak governments is one. Weak banking infrastructure and expensive methods of payments and transfer is another. Lastly, capital controls (permission of transactions) and privacy of transactions is pushing people to find alternatives that solve those problems.

Conclusion 2 based on Fact 2: BTC's dominance as THE king of CCs is being challenged by many other CCs, arguably with much better technology, and only lacking the network effect and adoption. Feature to feature, usability to usability, benefits to benefits, BTC is a weak CC with limited uses and many who are knowledgable about CCs acknowledge this fact.

Conclusion 3 based on Fact 3 + 1: CCs being accepted as a form of payment by companies is going to spur the adoption of CCs by more people since it is no longer just some geeky shit, but it is actually usable.

Final Conclusion based on Conclusions 1 + 2 + 3: Crytocurrencies will continue to grow for 2 reasons - users willingness to shift from traditional fiat currencies to an alternative system that address the issues they face AND the accepting network of businesses that are willing to accept these currencies as payment (Note: countries with good currencies and financial infrastructures will have their citizens adopt CCs last because they are not particularly lacking a stable currency or fundamental features of banking). BTC will lose its dominance as the main CC due to its inherent limitations. Less popular digital currencies that can overcome BTC problems and can achieve critical mass will become the new standard for the next (mini-)era of CCs.

Action Plan:
Research the most promising cryptocurrencies, with particular attention paid to (1) Primary usage, (2) issues of BTC that it solves and (3) limitations and severity of those limitations.

Narrow down the list to a few currencies, then buy them!

Please feel free to comment below or email me if you want to discuss cryptocurrencies! 

7 comments:

  1. Replies
    1. Lol no, I don't offer loans in BTC.

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  2. I am more interested in CCs that are backed by physical gold. These can potentially replace fiat currencies in a major crisis. Haha.

    ReplyDelete
    Replies
    1. Hi F4FF. Yeah, that would be very interesting. Something like Tether (UST) which is linked to the USD, but to gold instead. There is the DigixDAO (DGD), but that more of a stake in the company that operates and trades the actual CC back by physical gold (DGX). I have tried looking into DGX, but I've reached deadends so far. To my knowledge, it hasn't been launched properly yet.

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    2. F4FF, you should check out DGX, it's a gold backed CC, just what you were looking for!

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  3. Hi, pardon my ignorance. Are there a list of ccs that you have to share and what is the cc which you are buying or bought?

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    Replies
    1. Hi Cheryl,

      Sorry for the late reply. I don't really want to share my list because it's just a draft and a work in progress, so consume with a pinch of salt.

      I have ever owned BTC, ETH, LTC and DOGE.

      Currently looking into DASH, NEM, XMR, STRAT, WAVES, ZEC and PIVX. I've not done enough research yet, but on the surface these all look very promising. It's still a long list of stuff, but I can tell you that the list of really BAD stuff is much, much longer.

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