“Don’t stop believin’…”

Do you think the cryptocurrency price will go up, bro?

Rohan Handa
Aug 23, 2017 · 4 min read

Short answer: I don’t know.

Long answer: Continue reading…

If you have been paying attention then there is a high chance that this is a very common question being asked around you. Not necessarily that the person asking the question wants to know what the cryptocurrency or cryptographic token does, but more so because of the, ‘Hey! So…how can I get rich quick(er)?’ soft undertone. Not saying that anything is wrong with getting rich quick, but come on.

Don’t be a psychic. Or irrational.

This is counterintuitive, but bear with me. If you have ever invested in stocks then you know that there is no such thing as being able to predict the future of the stock, at least mathematically it’s not. If you are Bran, or the Night King, then that is a different story. But simply put, the price of the stock you see is the most complete information you will ever get about that stock at any given point. Unfortunately, I didn’t come up with that exact theory, a bald-head American economist by the name Eugene “Gene” Fama did in his famous Efficient Market Theory. And for the greater good of human, it has a sense of sound basis— but human behavior does not believe in theories, it believes in market crashes, recessions, and depressions — learn through experiment they say. Also because we are as irrational as the markets, so a perfect recipe for disaster. Period.

Crypto Market.

The crypto market acts no different, at least in theory, and hence the madness. So in economics, a fundamental, bedrock concept suggests that the price is determined by supply and demand. The idea looks simple, but is deceptive and deep. These two opposing forces (supply and demand) are always at constant battle with each other to find the right price for the market. However, unlike your traditional markets where goods and services are sold, and you can validate and attest its utility, it’s not yet efficiently possible to do so for cryptocurrencies and cryptographic tokens.

But darkness is nothing but absence of light (a bit corny, I know!), and human evolution is based on one common principle that provides value to anything and everything, all hail — The Belief System.

Unpacking The Belief System.

A belief system is merely a set of principles which keeps you hooked onto something or someone. As crude as this definition will be.

So, cryptographic tokens have the properties of money, in some ways better than any previous forms of money. Now what is money, is a question am not going to answer here. And humans commonly imbue tokens with monetary value through belief. By connecting these two, we create a feedback cycle. More belief leads to more utility leads to more belief and then you feel dizzy with why so much utility is being created based on just belief. Well, go figure!

But that is not all! This vicious cycle gives rise to what is known as commodity money system, or monetary commodity (FYI am not making this s$%* up, it’s already made this way). A monetary commodity is anything imbued with monetary value. Humans throughout history have assigned random value to random objects. But it is not as random as it may look. According to Xapo CEO, Wences Casares, “anthropologists go as far as saying that if you describe an environment in which a tribe lives, they can predict what’s going to emerge as money.” The prime desirable qualities can be expressed as scarcity, fungibility, divisibility, transferability, durability, and well anything your mind can fathom. Hence, the belief.

Now, back to the question.

Do you think the crypto price will go up, bro?

When this phenomena began, there was just one primary token — BTC or bitcoin. Satoshi Nakamoto picked a handful of consumers (or his disciples) for this technology, and opened the door for the technological nirvana of a sorts known as the blockchain. Now once these handful of users validated potential of this technology, what happened next is what is known as the network effect. The word spread from the disciples, to the geeks and nerds, to the GPU manufacturers, and eventually to the masses. At the same time, circa 2014, Ethereum (native cryptocurrency ETH) was the new kid on the block of which not many had heard of, but that is a good thing — more competition. So now with the ecosystem slowly expanding, the network effect shot for the moon and beyond. With more humans interacting within the ecosystem everyday, it establishes its utility. Keep in mind that so far there’s only a very strong belief that this technology will disrupt every single industry it touches. As for the price of the cryptocurrency itself, since it forms an intrinsic part of the blockchain technology, and hence the overall ecosystem — no price is high enough. If you and I believe in what we believe, then there’s no reason why the price point can’t remain as high as it is.

Ask not the question, but question what to expect.

The entire premise of the cryptographic tokens and the underlying technology is to disrupt the way things have been. This again though, is my belief system speaking. Since internet is rapidly becoming the environment of our economic activity, and cryptocurrencies and tokens are native to the environment, there’s no surprise there’s so much interest for it to become the ‘currency’ of choice for trading purposes. I believe that this technology has the promise and potential to uproot some of the longstanding processes that have been created in the past, which again were based on the belief that awarded them to be the best possible option with the most complete set of resources available at the time— just like our Efficient Market Theory.

May the belief be with you!

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