Bitcoin. Etherium. Ripple.
Recently the price of all cryptocurrencies has exploded in price, and every media site is working the type. This is the new way to get rich – quick!
As of writing this, I just screenshotted this from Coinmarketcap:
By reading this, it says that the total market cap of all cryptocurrencies are 137.137.994.554 USD. That’s 137 BILLION DOLLARS.
Now, please – don’t get fooled by this.
This is going to explode.
This is going to be the equivalent of the IT bubble – and potentially worse:
This is going to say “BOOM” and loose a shit-ton of value.
Lord-of-the-rings-like currencies are not worth 100 million USD – yet
Glancing at the list of cryptocurrencies, we meet:
Qtum (856 million$ marketcap)
Statis (672 million$ marketcap)
Tether (321 million$ marketcap)
Augur (240 million$ marketcap)
And many, many, many others.
Not only do they sound like an orc from Lord of the rings, all their team photos are also made up of a geeky group:
They all look like this. Probably absolutely amazing developers – and some of these will do breakthroughs in the future we can’t even imagine.
Just like the IT bubble where people threw A LOT of money into shit that didn’t make any sense, ignoring all sense of profitability and common sense, the same is happening here.
These “ICO’s” (a new cryptocurrency team offers some of their coins in return for payments) are going to crash. Bitcoin are going to crash. Etherium are going to crash.
The reason is they absolutely don’t deliver value of 130 billion USD – yet. Not even remotely close.
Yes, Bitcoin COULD become the new medium for storage of wealth. Dash COULD replace the whole remittance industry. Etherium COULD replace our modern day patent system (and a billion other things).
But as of today, there are very little real value. There are no “killer apps”. They are few real use cases. There are absolutely nothing but speculation and big ideas that is maintaining a 130 billion USD market cap…
Don’t get fooled by the explosion in price – this is going to crash. Hard.
But let’s not forget what happened after the IT bubble
While IT companies in the nineties sucked (hard), we all know what happened since.
Lets take a brief look of the ten most valuable companies in the world today:
Take second quarter of ’17. Apple, Alphabet (Google), Microsoft, Amazon, Facebook and Alibaba – all are IT companies (you could argue Apple is a hardware company, but I do believe it’s fair to put them into the IT company basket).
These IT companies (add Apple and Microsoft as an exception since they were dominating back then with real products) were not even invented or were just big ideas. They sucked. They had a great team of smart people working on the idea. And during the last 5-10 years, quite a lot of years after the bubble, they’re started to deliver real value and profitability.
I am not so sure we will see cryptocurrencies- or cryptocompanies dominating the list in the same way. While the blockchain is an amazing invention, I do not believe it’s on the same level as the Internet. However, I could be wrong and lets say a cryptocurrency replaces our day-to-day currency, it’s a different story (and then it makes no sense to compare it with market caps of companies anyway).
HOWEVER. I think it’s fair to say that cryptocurrencies has a VERY bright future. I personally believe A LOT in cryptocurrencies. They can make the world a more efficient and better place.
But I also believe we need to respect Gartners Hype Cycle:
Blockchain is on the “top of the hype”, and Gartner has put a 5-10 years timeline of mainstream adoption.
I do believe this to be true.
We will see a huge drop in these non-sense ICO’s, huge market caps and explosions in price.
But when we get to the other side – I can’t even imagine where we will end up.
So should you buy cryptocurrencies right now?
If you plan to hold it for 5-10 years, sure.
If you suddenly end up with 20% of your initial investment and feel bad, probably not.