The rise and rise of cryptocurrencies was an investment opportunity lost for me. I had been observing Bitcoin (BTC) for a few years, seeing it moved above $1K for the first time in 2013 and its big price drop subsequently. I was thinking that I may try to get it if it goes below $200 but I never got around to doing it. A few months back, I did open an account with Coinbase but I was put off with the complicated way of trying to fund the account and lost interest in it. That was in June and it was a big opportunity cost for me as it was just before the meteoric price rise.
A few months back, I did open an account with Coinbase but I was put off with the complicated way of trying to fund the account and lost interest in it. That was in June and it was a big opportunity cost for me as it was just before the meteoric price rise.
Why are cryptocurrencies so in focus now and what does the future hold?
As long as there is a demand for it, money in various forms has been created and used in human history for a long time as a means of exchange for goods. Long ago, we used precious metals as coins for trade but tricksters melted them and added base metals to increase the number of coins they had. Then there was a concerted effort to have a central control for money and so governments got into the act and started to issue notes backed by gold. The Fed then decided to de-peg the USD from gold in the 1970s and currencies were floated. Pricing was now purely based on demand and supply. Ther term Fiat money was born. The Fed can easily print as much money as they want to fund the growing deficit, as long and there is demand for it. The development of the EuroDollar market helped create demand then.
Along came the Global Financial Crisis (GFC) in 2008 and all hell broke loose. The Fed was not the only central bank that continues to print money like there is no tomorrow. The rest of the big governments jumped on the printing machine bandwagon to try to save their economies.
With the evolution of Blockchain technology, cryptocurrencies were born. The mysterious Satoshi Sakamoto brilliantly created Bitcoin. It was a fully transparent system, under no central control but yet highly efficient in executing transactions with minimal costs. It addresses the loss of faith many people have in the existing currencies issued by the wealthiest countries in the world. Central banks are now seen as being as reckless as the evil bankers who almost killed the financial markets back in 2008.
The current craze in cryptocurrencies means that anyone can simply create one out of thin air. As long as there is demand, there will always be a value for them. Just like any computer game, one can exchange real money for virtual tokens to use to purchase items to enhance your gaming experience. The virtual tokens are effectively “new” pseudo cryptocurrencies.
Where do we go from here? I strongly believe that Blockchain technology is the next big, big thing that will revolutionize all industries, just like what Uber/AirBnB had done over the last few years. Cryptocurrencies will be the by-product of this revolution and they will become more mainstream as a result. As for the many that are in existence, the top few will battle it out for survival as more uses are discovered. With the arrival of cashless transaction and eWallets, paper money will be a thing of the past.
I finally decided 2 weeks ago that enough of talk now, I need action. After reading about Ripple (XRP – $0.195) and the push by global banks to support it, I opened a Kraken account and funded it with USD to buy some. Last night, I had also bought my first Etherum (ETH – $289) ahead of the likelihood of a split of this currency in Oct. It is always wise to get your feet wet first to get a first-hand account. This is the best way to learn. I still have more to understand about cryptocurrencies and many more questions to answer.
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