Story so far
So in Part 1, 2 & 3 we have taken a look at what cryptocurrencies are the characteristics that they have in common with traditional currencies. We have looked at what makes them different from conventional currencies that we use every day. Then we went on to look at bitcoin and other major cryptocurrencies and what makes each one unique. We explore how to invest in cryptocurrency and the associated costs. Finally we took a look at what you should do once you had acquired them.
The fourth and final part
In our last installment of this series we are going to give our opinion. We want to let you know what we think about choosing to invest in cryptocurrency. We want to give you a summary of what we’ve said so far and clarify our outlook for the cryptocurrency market. We’re not mystics and are as good at predicting the outcome of future events as anyone else, which is pretty poor. What we do have is a commonsense outlook to investment that puts things into perspective and works over the long term. We believe that this also applies to cryptocurrencies as well.
Don’t believe the hype!
There are many sceptics about the future of cryptocurrencies. Many are comparing the meteoric rise in the value of these tokens to the tech bubble in the late 90’s. Others are making an even more damning comparison and likening them to Tulip mania in the 17th century. Critics say, like the bulbs which reached some very heady prices cryptocurrencies have no intrinsic value. They feel that current valuations are just the herd mentality which is going to come crashing down very soon. People who invest in cryptocurrency will have their fill of them, feel the pain and we can move onto the next investment fad. This isn’t quite correct and it appears that Charles McKay’s portrayal was far from accurate. Though we do understand the sentiment.
Buy, Buy, Buy!
Then we have the other side of the argument. FIAT currencies are finished, governments and central banks can’t be trusted, cryptocurrencies are the future. This is just the beginning and we have a long way to go before we reach the top of the market. We’re just scratching the surface and there is a lot more to come. You are crazy not to invest in cryptocurrency.
No Man’s Land
We’re somewhere in the middle of this. The fact that you have high profile people questioning the legitimacy of cryptocurrencies is frankly ridiculous. It should also make anyone question the long-term futures of the organisations that they represent. To say that like tulip bulbs they have no value is also extremely short sighted. What gives the US Dollar, Pound or Euro their values. Their central banks give them their value along with the broader market, though beyond this there is no real intrinsic value. People say that it is very difficult to spend cryptocurrencies which puts their value into question. Try popping down to your local supermarket with a piece of gold to buy your groceries and see how far you get. Having said this we never question the fact that gold is valuable, simple because we perceive it to be.
As with gold cryptocurrencies can be exchanged for real world currencies which can be spent. Though bitcoin is probably much easier to spend than gold directly and becomes more so with every passing day. As with gold cryptocurrencies and block chain have other uses beyond that of a means of exchange as we can see with Ethereum. This adds to the value of precious metals, Cryptocurrencies and Block chain something that cannot be said for conventional currencies.
A word to the wise
We are probably witnessing a bubble in the cryptocurrency market at this moment. People are flooding into it with a belief that they are creating change and we agree, they can create change. Others are heading in with their eyes closed thinking that they can make some fast money. A modern-day gold rush, unstoppable momentum a tsunami of enthusiasm. That is until things start to go the other way and the bubble burst.
This may be a bubble and when it pops no one knows. It is a bubble that is built on enthusiasm and that is the best kind of bubble. It means that the reasons for it happening in the first place are real, we are just too excitable. This is a good thing as it means once the bubble does burst cryptocurrencies will have real long-term growth potential. The ride may well be a little less scary as the froth disappears.
Should you invest in cryptocurrency?
We have no idea when this current phase will end and nor does anyone else. Cryptocurrencies are real and this is just the beginning of something that can be truly revolutionary. Even if governments move to ban them they will still get stronger and we believe will ultimately win.
You should be in them for the long term because we believe that is where the true growth lies. Though right now given the current growth proceed with caution.