Cryptocurrency Is A Bubble, Revisited

However, the point I was making was that massive companies will come out of these emergent technologies, companies like Amazon,  which came out of the dotcom crash. The children of the cryptocurrency bubble will be colossal.

Where this bubble goes is impossible to guess, how high incalculable, but the take away is: Tulip mania crashed horribly taking a large part of Dutch economic dominance with it. Yet today tulips are still big business in Amsterdam. Bubbles are a phase not the whole lifecycle of something new. A bubble is just the beginning of something big.

There will be crashes. There will be scandals. There will be ruin for many, there will be those left behind moaning it isn’t fair. There will be giant fortunes made. A new industry will rise and a new generation of billionaires will spring from nowhere and strut about. This will be a remake of an old movie.

What makes a bubble, does not disappear with it. Not tulips, not railways, not cars, not Wall Street itself, not electronics, not computers, not the internet. Nor will blockchain technologies or their offspring cryptocurrencies vanish.

After my article, Bitcoin, Etherium, etc. crashed and now they have bounced back.

I believe there is a huge lack of global M2 (money and near money) and this will drive this private sector money supply success and it fills a vacuum left by government. The U.S. has trillions less M2 than it has government debt; that imbalance is causing cryptocurrency to fizz up into the void left by too little ‘official money.’ It has happened many times in history. When there is too little money, economics finds a way to make it in the private sector.

From an investment point you have to play this game. As an investor you have to jump on in, skill up and learn. But how?

Let’s start at the beginning. Make this call. Are cryptocurrencies going up or down in the medium to long term?

I say up.

As such I can be serious about investing. I am building a broad portfolio of coins, over time. I have about 20 different ones. Any of them could go to the moon or to nothing. It is such crystalline speculation it makes me smile. I am gambling this is a hugely positive sum game. If it is I will do well.

If the call is down, then you need to play these markets with a fist full of dollars and trade it like a computer game with putting in so little money you don’t care if you lose it. Let’s say $100. And you can.

Because cryptocurrencies have so many decimal points some of the coins out there are effectively toy tokens. Yet they still have markets and can still be ‘mined’ for ‘free coin’ with your computer and played with in the same way as a $3,500 Bitcoin.

Every investor should at least do this, because they need to understand this world as it will soon be a tide that will sweep all markets.

Blockchain technology is a fantastic new technology, it can be thought of as part database, part cloud service, part political platform, but is at the heart a way to keep records in a new way that has and adds significant and unique value.

Blockchain enables cryptocurrency and the value of Bitcoin and the universe of Altcoins cascades from it.

For the investor, understanding cryptocurrencies unlocks the coming blockchain boom that will and must hit the stock market soon. There is no blockchain dotcom-style stock market frenzy yet, but it will come and understanding it will be very valuable.

Right now that frenzy is in ICOs (initial coin offerings), mainly unregulated cryptocurrency flotations, and this thrilling madness will at some point spill into the old highly regulated world of equities. Anyone who ‘gets it’ when this happens will be set to make fine returns.

Now a disclaimer. I am knee deep in cryptocurrency, if I mention it here I use it or I own it. I own lots of different ones, which amounts to quite a chunk of change in total, I’m mining it like a nerd in a mania. ADVFN, the financial web site I run, is adding more cryptocurrency content by the day.

TDLR: This is the big one for the next few years.

Bron: Forbes