Cryptos: too late? too early?
When history matters in understanding the present and future
In this piece, I would like to assess where we actually stand in the ascent of cryptocurrency investments and at which stage of its growth as a disrupting technological feature.
Many people are asking:
is it too late to get into the cryptocurrency space?
I could counter this by asking:
are we perhaps too early?
Few or none really knows.
So, here below you can find a (debatable) analysis that tries to respond to the above questions.
idea inspired by Mr Viktor Shvets of Macquarie Bank
I believe that the easiest thing to do is to try to compare the current crypto ascent with similar situations in history. I have been discussing widely those matters on some previous articles on my Steemit blog by trying to compare today's situation to the DotCom era.
Though I realise now that a much better comparison can be made: that is comparing today's situation with the coming of the cars in the early 1900's
- In 1900, there were around 2'000 car companies that produced 10'000 car a year (some were with steam engines).
- In 1920, there were about 200 car companies that produced 2.5 million cars per year.. and so on
- By the 1980s the number of car makers dropped to 50 and were making over 30 million cars per year..
By ell brown [CC BY-SA 2.5 (https://creativecommons.org/licenses/by-sa/2.5)], via Wikimedia Commons
Why am I comparing cars with cryptocurrencies?
The main link is that both were/are based on strong and evolving technological foundations (that is mechanics and the oil engine for cars and the blockchain for cryptocurrencies). This is what differentiate cryptos from the TulipsMania.
So are cryptocurrencies a bubble? If cars, in the 1900's were a bubble, then yes also cryptos are a bubble. A bubble that may pop but not complete disappear.
Just like cars, the blockchain, hence cryptos, is going to disrupt everything we do, all industries. This is evolution my friends, just embrace it.
Were car makers a good investment in the very early stage of its development?
Given the stats mentioned above, if you were to invest in car makers in 1900, you would have probably found yourself booking some important losses, given the much diminished number of car makers in 1920 (2'000 down to 200).
However, in 1920, would you have started investing then, the returns would have surely been much better (than in 1900).
Back to cryptos:
- Where are we then? in 1900 or 1920?
I think we are somewhere in the middle. Serious matters are to be faced and tackled within this space still. Regulators would soon want to have their say given that its still pretty much the Wild Wild West in the crypto world. Depth of market, custody are only two of the challenges that must be solved. Have a look at what is going on with the Davos conference on the 22nd and 23rd January 2018, cryptos will be a widely discussed subject, this meeting will shine some light on what the regulators and fiat fan club will start doing in the next months.
That said: I truly believe blockchain and cryptos are the future
What do you think?
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Good point: cryptos cannot be compared to tulips, as grounded on a disruptive technological change - rather to the cars industry.
That's spot on! Hodl on
A useful analogy is with the much-lauded Dot.com bubble that reached $6 trillion whereas cryptos have yet to reach $1 trillion - although there is an interesting counter argument to this perspective here
That's indeed a great comparison which I have also discussed in previous articles on steemit. Really good article the one you shared thank you.