What are cryptocurrencies used for
Jul 24, 2017 · 2 min read
- Speculation: YES. Cryptocurrencies are very volatile and you can make a small fortune if you know a bit of crowd psychology. People panic buy when the price goes up and panic sell when there is a small crash. Buy high and sell low is not a good strategy. For them. But for you, if being a contrarian comes naturally and you have the stomach to go against the masses, it can be a source of solid profit. The winning strategy? Sell the news and buy the dip!
- (Legal) Fundamental value: NO (not yet). In theory, cryptocurrencies should be like any other currency. You should be able to buy stuff with them, just like you can buy stuff with dollars, euros or yens. The problem? You can’t. Because none of the mainstream shops accepts them. Because the average person doesn’t understand cryptos. It will take time to achieve mainstream. Until then, the dollar is not going anywhere.
- (Illegal) Fundamental value: YES (very much so!). You might have heard of the Silk Road. It used to be a dark market. A dark market, as the name implies, is where people go to buy things they can’t buy otherwise. Drugs. Prostitutes. Assassins. For obvious reasons, dark markets operate outside of the law. And since cryptos are unregulated, they are the number 1 payment method. Pro tip. If you ever find yourself in this situation: use monero!
- Hedge against recessions: PROBABLY (still unproven). What happens when the stock market crashes? The gold price gold goes up. Why? People rush to preserve their wealth. And precious metals have always been a safe haven. Can cryptocurrencies be the next safe haven? Maybe. We’ve seen small episodes that could point in this direction. When Brexit happened, the price of Bitcoin jumped. It might have been a coincidence, and we can’t know for sure. You’d have to wait for the next major recession to hit for that (Don’t worry, it’ll come soon enough). However, it doesn’t hurt to buy some cheap insurance.
- Smart contracts, world computer, blockchain revolution: NO, NO and NO. There are many charlatans in the crypto space trying to dupe the unsuspecting masses. They talk about smart contracts. And the world computer. And the blockchain revolution. These are scams, so please don’t fall for them. The only real, proven use-case for cryptos are illegal dark markets. And like I’ve said, cryptos will probably do well in the next recession. And maybe, in 5 or 10 years, you’ll be able to buy candies with Bitcoins at the corner store. Maybe. But anything more than that is hard to imagine. All these promises about how the blockchain will change the world etc. are just that. Empty promises designed by crooks to take your money.
