How do we Make Sense of All the New Cryptocurrency?
Seriously, who cares?
You’re not describing a new technology. Even if you were, it’s highly likely you wouldn’t know how it works.
You’re not a wise predictor, you’re not a sage, and you’re certainly not a guru. Neither is the thousand pounds of material on the space that is published every single hour.
If you’re holding bitcoin today, it’s because you can risk to lose it. If you’re a healthy, sane-minded individual, at least.
Otherwise, you’re an idiot. Amidst all the talk about the cryptocurrency, I’m certain that I’m uncertain about its future. That’s not a bad thing: That’s a reality. I’m one of those people holding bitcoin. I stand to lose what I’m holding.
Why is it that the sages and gurus only pop up after bitcoin spiked from three-digit valuation to five?
It’s because the movement was unanticipated and it carved the way for pseudo-science to exploit the marketplace. Since then, there is a new digital currency popping up every single day.
If something is predictable, everybody would do it, or would have done it, meaning the price of the object that people are purchasing is saturated at the correct level. The only time an asset spikes in valuation as crazy as bitcoin is because it’s misvalued — or, the perception that it is misvalued.
At this point in time, bitcoin is misvalued. That’s exactly why, as a currency, it moves around at wild paces randomly across stretches of time. However, that doesn’t necessarily mean it’s too high or it’s too low. I couldn’t tell you if one bitcoin is meant to be worth a million dollars or nothing. And I’m not going to justify a price point as if I hold the keys to correct analysis, unlike others.
The point is simple: bitcoin moves up — or down — because you don’t expect it to move. Rapid movement is a calculation in correcting unanticipation.
For over a decade now, people have been calling bitcoin worthless. Yet, as a currency, each bitcoin has remained fairly strong. Today, as I write this, people are willing to pay almost $10,000 for a bitcoin. There was a point in time I bought it at just $100.
When people say cryptocurrency, they don’t think litecoin.
Or any cryptocurrency at all, actually.
They think bitcoin.
It’s a household name. Virtually every single person has at least heard of it.
Outside of any kind of fundamental analysis, resistance/support levels, or anything else people like to look at to support their baseless claims, we have a digital coin that acts as a storage of value that is becoming limited in supply.
This is the natural, factual existence of bitcoin. This is the only basis point we have right now. And, at any point, people can lose access to their wallets; this man accidentally threw away a hard drive that had 7,500 bitcoin stored on it in South Wales. That’s the equivalent of around $100 million right now. It’s gone.
People are involved in the cryptocurrency space today because there is a massive pool of money to be made by selling new coins or by writing lousy editorial pieces to push a narrative that isn’t connected or coherent.
It was insanity for people to believe that a digital coin could have gone from being virtually valueless to $20,000 in less than a decade. In my mind, it’s crazy that people will still fork over $10,000 for each.
The one thing that bitcoin signals to me is that people are willing to keep the price steady and continue paying for it. This alone tells me that it’s likely to stay going into the future. If somebody told you that a digital wallet could spike in value from $.01 to $20,000, they’d be laughed at.
But that has happened. Bitcoin has increased in price by 200,000,000%. If you said that price increase was infinite, you wouldn’t be wrong.
And while the cryptocurrency world keeps touting about the technology behind the blockchain in the new coins being developed, a strong part of me says that nobody cares. This is primarily driven by the fact that bitcoin has maintained a strong presence in the arena of digital coins while the others have come and gone, like some sort of virtual pump-and-dump.
Because bitcoin didn’t become what it is solely because of technology or clever marketing. It’s here because everybody knows about it. It was the first and it was new and it was ahead of its time. Sometimes an asset grows to omnipotent power because of its worldwide recognition. It’s in the culture, it’s in the news, and it’s in conversations spanning languages and continents.
Sometimes, the value is in the belief of its value — when that belief becomes strong, and that value is actualized in the form of purchasing the asset, the asset saturates at a new high point.
Otherwise, what explains our infatuation with shiny yellow metal or precious rocks?