Cryptocurrencies are in a Bubble

Wait! Don't you dare leave a comment before reading the article (or watching the video). Please don't downvote or upvote, until you understand what I'm saying. When I say that cryptocurrencies are in a bubble, I'm not talking about the price of Bitcoin, Ethereum, Steem, Ripple, or any other crypto. I can make individual articles on each of those, and analyze their potential, and whether or not their valuation matches their innovation, reputation, etc.
(Feel free to watch, or read on)

That's not what I'm referring to when I say that cryptocurrencies are in a bubble. I'm talking about the entire cryptocurrency market. It's become too crowded. Coinmarketcap.com currently has 871 different coins listed, and I'm sure that number will top 900 in the near future. Of course, some of the coins are years old, and have fallen by the wayside. Other coins may have not been started with the highest of aspirations, such as the famous Dogecoin, or the lesser known RonPaulCoin. However, at the top of the list, we see some legitimate currencies, competing for the top spots that are currently held by Bitcoin and Ethereum. In fact, it would seem that most of the top 50 coins all can make a case for why they are the best. They will say that they are faster, more decentralized, more secure, offer some new feature not found with other coins, etc. The list goes on and on. Each new coin to hit the market always says that it's somehow different, somehow better, and that the investor should buy now.

At least they're being honest in what they think of their coin

The important thing to understand, is that they usually aren't wrong. They usually do have something new to offer, something new to bring to the table. They are intended for some use that hasn't been pioneered yet. They find some investors that believe in this new use or this new feature, and suddenly they have a market cap in the hundreds of millions of dollars. Unfortunately, I do not believe the world is ready for most of these coins. With the exception of a few coins, most of these coins are only garnering attention from a few crypto fans, and some speculative investors. Most of these coins are years away from widespread adoption in whatever capacity they claim to be able to fill, whether it is an actual currency, it has to do with smart contracts, or, in the case of a coin like Gnosis, has utility in predicting future markets. I'm not saying they aren't interesting, useful, or innovative. I'm saying that they very well may be years ahead of their time.

Everyone loves to compare Bitcoin and Ethereum prices to the DotCom bubble around 2000 and 2001. However, I'm going to make a different comparison. A company that characterizes the high stock valuations of the era, was Enron. Enron needed to keep their stock inflated in order to stay in business. To accomplish this, they continually brought new ideas to the boardroom and to the investor, in order to keep people interested and optimistic (sound like anyone? * cough * Tesla * cough *). Many of these ideas were not necessarily bad ideas, but they were ahead of their time. One such idea, was to partner with movie giant Blockbuster, and bring on-demand streaming movies, straight to the customer's house. Sound familiar? Today, Netflix, Amazon, YouTube, Sling, Hulu, and more, all offer this service. However, in 2000, they were ahead of their time. The market was likely not large enough, because of the limitations of the internet network in 2000.

Who else remembers that Simpons episode?

I think the same is true for many of these coins. Their real-world use is still far, far in the future. Don't get me wrong, I think cryptocurrencies have a ton of potential, and they have real-world uses right now, in 2017. Furthermore, I think innovation is great. But who are we kidding, can we really justify trying to adopt 50 different cryptocurrencies at once, while Bitcoin and Ethereum are still struggling to go mainstream? No, I don't think we can. The market is in a bubble, and inevitably, it will correct itself. I think the vast majority will fall to the wayside, leaving a handful of currencies at the top. Then, in the future, perhaps we can approach this more rationally. ICOs can be scrutinized for their actual current potential, not their potential according to their creators. Only the most useful, innovative coins will survive.

With that being said, I have no reason to believe that this bubble is at the top, as of June 2017. I believe we will continue to see coin after coin being brought to the market, and investors will continue to pile into these ICOs, looking for another ride to the top like they may have experienced, or miss out on, with Bitcoin or Ethereum. However, as innovative as cryptocurrencies are, they are still a market, and are bound by the rules of supply and demand. This market will correct itself, but I think it will be much leaner, and more attractive afterwards.

Image Sources: https://docs.google.com/document/d/1EWN_6JSsUMumlTQrn8XIikGvQydqTGhdq9Q650iYD8o/edit?usp=sharing