7 reasons why the crypto-market is a fraction of what it might become.
This year, we’ve seen an unprecedented growth. In December 2016, at the very same period, the whole crypto-market was about $40billion and involved less than 5million people (engineers, builders, writers & buyers). Today, it’s a +$400billion market that involves +50million people. Despite up and down moment, it is overall going to keep growing. Here are 7 reasons why…
(I) The Blockchain is like freedom of speech. You cannot stop it.
Blockchain is the distributed trust network that the Internet has always needed, and no one can stop it. Why? Because it’s composed by nothing but just pure code and code is literally a language. You cannot stop someone from speaking or writing his thoughts on his laptop. To stop the Blockchain, you would have to stop people from coding, which means banning their freedom of speech. The country that would do that would be one of the most evil regime we’ve ever had.
(II) The still low adoption rate.
Assuming there is almost ~4billion adults connected to the internet vs ~50million accounts created on the various Exchanges to date (Coinbase, Bitfinex, Poloniex, Kraken…). It means that we are right now at less than 2% consumer adoption rate. The biggest exchanges are seeing huge growth, opening thousands of new accounts per day. Network effect is getting stronger and the average dollar amount per user is also growing, as people are slowly but surely withdrawing more fiat to their wallets.
(III) The Scarcity of Bitcoin.
A Bitcoin worth around $18k today. The road to +$100k will be hectic, but we are on the way. It can seems crazy, but 20 years ago, 99.9% of the population would have told you that you were crazy to think that insurance.com could one day have a worth of $35million. Or that PrivateJet.com could have a worth $20Millions. Well, it’s the case today. Why ? Because of the scarcity of these nominal assets. It’s the same for Bitcoin. The limited number (21million) + the growing demand will make the unitary price rise even further.
(IV) People are slowly realizing…
That as Bitcoin value is not tied to other assets (gold, dollars, housing market), its uncorrelated to the people and the infrastructures that sometimes don’t really know what they are doing. You can also think about it this way : $1k of your wealth stored in Bitcoin is $1k of wealth secured against censorship and seizure. It is a solid store of value against autocratic regime and the banking infrastructure that we know is corrosive to how the world should work properly. You cannot have central banks infinitely printing currency when they need, as you cannot have hundreds of trillions of bills like in Zimbabwe…
(V) Tulip Mania, gold rush... What about the real utility ?
20 years ago, The internet bubble was supposed to be even worse than the Tulip mania. Indeed, it burst and the correction happened, but today, like the vast majority of my friends, I’m at least spending 50% of my day online, I can get everything I want by pushing one button and I spend a few thousand dollars per month on the Internet. Why ? Because the internet bubble created products & services that we use today, natively in our lives. In the meantime, I don’t buy, use or wear gold, and I barely know about the color and smell of a tulip. The internet is useful. Blockchain will be useful. Tulip was not.
(VI) A market “Accessibility” that you cannot ignore.
In 2000, the Web bubble was about $1.7 trillion before it burst (In the US and only with from accredited investors money). Today, the entire crypto-market is 4times smaller, and everyone can buy crypto’ worldwide, as long as you have access to the internet. When is see & hear about 15years old kids holding Ethereum in their Coinbase account, I’m realizing than this ‘bubble’ will go a lot, lot bigger. Of course, there are going to be some winners and losers, as at least 90% of the companies/coins composing the crypto landscape right now will die out in the next few years. But the sure thing is that the value and the game changing aspect of Blockchain won’t go away. In the near future, the first products will be ready to start their consumer phase. Soon no one will talk about a bubble anymore. It’s just a matter of time.
(VII) Big players are coming.
Big boys from Connecticut & Wall street are realizing that few great Crypto hedge funds are making incredible returns. Indeed, when you hear that the best in class are doing +400% to +600% growth per year, classic hedge funds feels a bit old-fashion. As a result, Billions of dollars are going to flow from Wall Street into the crypto-market over the next few months. Major financial institutions have been trashing Bitcoin for years and are slowly starting to embrace the trend. I bet they will be soon, if not yet already, investing in it. (Hi Jamie 🙃)
Fasten your seatbelt, the party is just getting started...
This piece is not an investment advice. Be aware that, in addition to being a highly volatile market, the crypto-space is at +90% filled by companies-tokens-coins that might disappear within few years. If you want to invest your time and money in this market, please do your own research.