Lessons from History - Crypto is not really a bubble
Long before cryptocurrencies existed, many of us witnessed a technology that was destined for greatness. Those who are old enough to remember the early days of the internet, also remember all the speculation behind it, the negative press, the overly optimistic and the crash of the dot-com bubble "bursting".
They way it all worked out was very traumatic for many speculative investors. In the early years of the internet, it was very simple to have a company valued in the millions. All you had to do was create a dot-com, go public, and the money would come pouring in. In those early days many companies valued in the millions of dollars had nothing more than an idea, sometimes not even ironed out completely. This did not matter to investors, since they believed there was never a way the stocks would ever crash.
The overly enthusiastic unexperienced investors sold their homes, quit their jobs, and poured every single penny into what we now know was one of the biggest financial bubbles of our time. Of course we know now how it all played out, and we are very aware of the millions of dollars that disappeared into the thin air, almost overnight.
What happened? you may ask - It's actually quite simple to explain. The enthusiasm for the dot-coms was not in any way connected with the realities of their value propositions. This meant, that when investors would buy into a dot-com they did so simply because they were expecting to cash out soon after, and not because of any belief in a company or product.
Eventually the new money dried up, the big players cashed out, and everyone left holding the bags got caught in the crossfire. These recent events should serve as a big lesson for new investors, specially in this new cryptocurrency market.
Not all dot-com companies disappeared
Almost not necessary to point this out, but just in case anyone is confused about the events that followed the crash. As a matter of fact some companies, like amazon and ebay are millions if not billions of dollars bigger today, than before the crash. If we are to be honest with ourselves, there is a very big chance a very similar situation will happen in the world of cryptocurrencies, and we would be unwise to not learn from history.
This graph shows the marketcap valuation of bitcoin in December, when all of us who were part of this ecosystem believed the numbers would never come crashing down. Of course, today the marketcap of cryptocurrencies is much lower, which makes my point even stronger.
As we can clearly see, the crash was really a way of the market shaking off all the projects that offered no real value to the technology sector at the time. All the dot-coms that were part of a bubble came crashing down to zero. The tech stayed, the real companies survived and today we are participating of an economy that relies heavily on the technology that started back in those days.
Cryptocurrencies will follow
It might not be exactly the same, but it sure will be very similar. Today we have a young market full of speculation, with many investors who are not in the least concerned with research or technology. The idea of many is unrealistic to say the least.
Those investors who don't like to learn from the past will probably endure the same fate. They will buy into speculative currencies that offer little to no real value, waiting to 10x before they sell. Most will fail. That might sound harsh, but honesty is a good token to trade.
I believe in real Cryptocurrencies, specially Steem
For me it comes down to the use of a product or service. In simpler terms, if no one is using something, then it does not really matter what my thoughts on the particular product might be. The known concept of supply and demand at its core is the only one I'm really worried about.
In my last post I shared an image that I think makes my point very clear. Steem in the simplest of ways has a huge advantage over many other cryptocurrencies. Steem, unlike thousands of other tokens has not only a great use case, but the highest number of transaction on the whole ecosystem.
This verifiable information not only gives me peace of mind, but also tells me that all who are participating of the Steem ecosystem are at a clear advantage, even on this bear markets.
There are those who believe that Bitcoin itself won't make it, being the argument that it's sure to be replaced by another top player. This may be the case, but I sincerely doubt those predictions will ever become true. What is more likely to happen is that Bitcoin will continue to become the new gold of the markets, leaving other currencies to fight for the title of "the best currency" in the world.
It's time to rethink why we are here in the first place
For each one of us to really take a hard look in the mirror and ask ourselves if we truly understand what's taking place in the world. The reason why the technology of blockchain is sure to take over our financial system in the near future. If we are simply participating of the markets blindly, not understanding the value propositions, we are sure to make the same mistakes those who cried foul made back in the dot-com days.
So I invite you my friends, to take this time not to trade, not to speculate, but to educate yourself on the technology and be ready for a future that is just around the block.
Stay safe, all the best to you all
edit.- had a glitch with the tags, please disregard first tag