Speculation, a double edged Sword for Crypto?

Cash is King

All new business needs capital; to grow to hire people to buy stock, make products to sell.
The problem faced by many companies is the same. Traditional sources of capital generally are

• Bank Loans
• Wealthy Investors

I have a great idea

• If you want to start a innovative company one option is to go down these two routes
  

The Reaction

The Alternative

• Find an investor but end up giving away control of your vision

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Where else can you get money?

ICO

The Blockchain has provided a new way of getting finance. The fledgling Initial Coin Offering phenomenon, where companies create a new currency and give away some in exchange for investment.
What they are doing is effectively creating a Digital Asset of shares in the company. If the company does well then the Digital Asset becomes valuable and can be sold, if the company fails it becomes worthless and the investors lose everything or something in between may happen.

But there is a problem.....

Speculation gives liquidity to the global financial system. It accounts for around 90% of the daily FX trading volume in traditional fiat currencies. Some people make money buying low and selling high and this helps oil the cogs of the system. But Cryptocurrencies are no where near as liquid or stable as traditional fiat currencies and this is the problem for companies going down the ICO route.

Greed is good

The volatility of the Digital Asset is often driven not by fundamentals of the underlying business but by pump and dumps, whales manipulating the market.

Conclusion

Speculation provides significant volatility which can destroy companies before they get off the ground.

• Zcash's fundamentals for example are sound but because of hysterical speculation initially the share price went up to 2 million dollars and is now down at 35 dollars.

Has speculation destroyed this coin forever before it even got started?

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Thank you for reading this. I write on Steemit about Blockchain, Cryptocurrency, Travel and lots of random topics.

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