initial thoughts on crypto assets
This writing begins my initial thoughts on the so-called Bitcoin crypto currency space. It is also my first public writing, period. Be nice!
Again, these are my personal opinions, supported only by observations and good’ol life experience. No financial advice here! No citations or references to other publications or scientific journals or review, just my own personal opinions and projections of the future.
We begin with the premise that blockchain technology works. Aside from the energy and environmental impacts of BTC-Blockchain (BTC = Bitcoin) technology, there is no doubt that the system operates as both a store of wealth (i.e. a series of numbers which represent legal consideration paid, in the form of fiat currency), and a medium of exchange. I also put aside the legal issue surrounding BTC as a bona fide “currency”; I have my own personal opinions on the matter, but not going to share them here. Moving on,…
WTH is going on?! Blockchain technology & global impact
As a consequence to BTC-Blockchain’s introduction to mainstream media, WORLDWIDE capital has moved into (i.e. funded) thousands of alternative crypto currencies, some of which replicate, improve, expand, and differentiate, from the fundamentals of BTC. Certain crypto currencies are projects, whereas others have quickly moved into real world use-cases.
Some of the highlighted technical factors in crypto technologies are as follows:
· Centralized vs. Decentralized;
· Mined crypto vs. Centrally controlled crypto;
· Blockchain dedicated to crypto vs. Robust Blockchain, of which crypto currency is merely one form of use-case;
Also, certain blockchain technologies purport to be “committed” or “missioned” to applications within a specific industry, whereas others purport to be flexible and theoretically applicable to any industry (e.g. Ethereum blockchain). Highlighted industries which have been slated for blockchain implementation or “disruption” are as follows:
· Banking and lending;
· Mobile, cellular;
· Health and food services, plus supply chain;
· Global non-profit services;
· Brick and mortar retail and consumer products;
· Online retail and consumer products;
· Online gaming;
· Traditional gambling and gaming industry;
This exploding crypto asset class comes with a long list of spawning technological diversity, as well as a long list of actual and theoretical industrial applications for blockchain. Suffice to say at this juncture, the permeation of blockchain and its purported use-cases vary and are as diverse as the coins themselves, numbering into the thousands on January 1, 2018.
Several blockchain and crypto currency assets host websites from which the market can obtain insight into the various strategic objectives of each crypto asset or coin, highlighted as follows:
· Faster and cheaper global transfer of monetary value;
· Enhanced data gained through large industrial supply chains (e.g. olive oil, global tracking);
· Enhanced banking and lending to wit, new forms of collateral and/or expanding capital to the to the “underbanked”;
· “Micro-payments” (i.e. Micro “pay as-you-go” implementations for subscriptions);
· Enhanced online security and anonymity;
· Store of wealth (i.e. “Gold 2.0”);
· Wealth exchanges out of country
Investing in crypto — observations
There are many very short, short, intermediate, long, and very long term models which may be employed by investors looking for massive gains in the crypto space.
Certain cryptos, in the last two years, have already become mainstream and are valued in hundreds of billions of dollars, whereas others (which may or may NOT ever become profitable) are just getting started but are already valued in the hundreds of millions of dollars! Suffice to say, at this point, there is an IMMENSE amount of opportunity for GLOBAL GROWTH, and thus an IMMENSE amount of capital being poured into the crypto space.
Many will declare that the amount of speculation in this space has created a bubble. This is true IMO. Again, IMMESE capital worldwide is flowing in DAILY, and flowing out DAILY, to the tune of tens of Billions of dollars.
However, IMO the bubble will NOT pop to any significant degree in 2018. Yes, there will be “lulls”, say around (20%), (30%), maybe even (50%) but each of those “lulls” will be immediately followed by very sharp recoveries. Why? Because, there is simply too much worldwide demand, and worldwide Fear of Missing Out (FOMO) in the crypto asset space. As 2018 moves forward, more investors, industry, state actors, large institutions, banks, and “Average Joe’s” alike will become enthralled to learn more about what crypto (i.e. blockchain and/or smart contracts) can do for them. I project the crypto space can easily grow another 50% in 2018.
And, NO, there will NOT be a complete fallout to the tune of around (60%) — (90%). What makes me so sure??? Well, aside from the global pent up demand signals mentioned above, it just so happens that the crypto space is opening its doors at a GREAT time in the history of the financial markets. Put simply, there is simply TOO MUCH capital that needs somewhere to go. What do I mean by that?
I mean, that in 2016 through 2017, as a result of central bank QE policies (i.e. free money for the sole purpose of bailing out banks and “stimulating” the larger economy), as well as overvaluation in nearly every sector in stocks, bonds, ETFs, etc., excess capital is essentially begging for a new place to go! Why does capital need a new place to go? Here are a couple of reasons: 1. To “cool off” legacy markets such as stocks, bonds, ETFs; and 2. Investors and institutions need to diversify their portfolios. There is another main additional reason, which puts the Federal Reserve and QE “front and center”, but that topic for another post.
Put simply, some of the hundreds of billions of dollars in worldwide capital will inevitably find a new home in crypto.
To sum up, “investing observations”, consider your own appetite for risk. Obviously, make sure you can pay your bills first! If you have kids, you should probably NOT put their college savings in crypto. Talk to your financial adviser about crypto, they should be able to advise you. Or, get one who can!
Only “sleep walking” folks will NOT somehow have their hands in the crypto cookie jar in 2018. No offense if you’re sleepwalking, and no offense if you love cookies! I do! ; )
Crypto assets’ effect on existing industries
Each industry will be “watching” it’s respective crypto coin and analyzing what “gains”, inefficiencies, problem solving, cost-savings, or innovations, crypto (i.e. blockchain and/or smart contracts, or nodes) may bring to market. Existing large actors (e.g. IBM, Microsoft, Apple, Amazon, Walmart, Nestle, Target, etc.) within various industries are watching the crypto space very closely, as any competitor who purchases or signs with an existing crypto coin may prove to be extremely “disruptive” or detrimental to business.
In other words, in 1999–2001, would you like to have been the business with no computer and no internet access? No!
Existing industry players will rapidly move closer to adoption or implementation of crypto,…Consider for a moment that a Microsoft Store which does NOT take Lightcoin or Dash for purchases, and on the other end of the mall is an Apple Store which DOES take Lightcoin or Dash for purchases. (Note, that taken together at present, the existing market value for LTC and DASH = 20.5Billion dollars!) You have a couple of thousands of dollars in Lightcoin that you purchased at a massive “Discount”, which store are you going to go to make your purchase?!
Thus, there is, and will continue to be, fierce competition between existing large players within each industry who will make large steps towards crypto adoption.
With respect to RETAIL (i.e. consumer perspectives), these large steps will vary by appearance and by size, but may include the following:
1. Allow certain cryptos to be used for real-world and/or online purchases. Provide consumer incentives and discounts when crypto currencies are used. Provide consumers an immediate “crypto-swap” mechanism which allows consumers to swap to a crypto of the merchant’s choice for purchases;
2. Develop from the ground up a new brand-based crypto currency. (e.g. Home Depot crypto gives incentives and discounts to consumers transacting in it);
3. Move subscription models to crypto currency “micro-payments”.
Each large step will vary and impact the market in various ways.
With respect to INDUSTRY, large steps may include the following:
1. Immediate purchases of large amounts of crypto, so as to ensure a presence AND ownership interest in the space over COMPETITORS;
2. Immediate (and possibly exclusive) partnerships with crypto assets and companies, so as to ensure that COMPETITORS do not get a competitive advantage;
3. Ongoing piloting of crypto-blockchain proposals. For example, supply chain, micro-payments, banking and lending, etc. Industry is likely to create lessons learned and best practices with ongoing improvements, with an eye towards leveraging block-chain technology to increase market share, MAXIMIZE profitability, and beat COMPETITION.
4. Publicity and “leaning forward”. Acquisition or partnership with crypto to appear “cool”, and onboard with “millennial” and “shared economy” norms of thinking.
Where am I personally?
I’ve had several friends recommend cryptos. Many thanks to those friends (old and new), you know who you are!
I’m not going to disclose full details of my portfolio, but I’ve purchased and have an ownership interest in: Bitcoin; Bitcoin Cash; Ripple; Lightcoin; Stellar Lumens; Dash; Electroneum; Cardano; and SALT.
I’ve done hours and hours of research on each of these coins, and each coin delivers its own UNIQUE value for my PERSONAL portfolio. I’m looking at several other coins very closely, and I’ll disclose those once I’ve done the research. Investing is a VERY personal act and I’ve found that there is seldom a “one size fits all” approach.
Good Luck, and thanks for reading! More posts to come!
(This first post is dedicated to my Uncle David, who has been a very influential mentor of mine since I was a boy. From the age of 9 he taught me, “Always Invest in Yourself.” Uncle David is going on his SECOND YEAR of fighting against pancreatic cancer. We expect a FULL 101% recovery! Shoot him a little prayer will ya!?)