Cryptocurrencies was a huge mania from the end of 2017 to early 2018. Was a great time to study the aspects of a mania, so the next time one comes around, I will be prepared. These mania’s happen quite frequently. Many people say they are bullish because of the technology, but to be honest, the market does not care about the technology. The charts display human emotions of profit and greed. We saw this with .com stocks in 2000, and recently, solar and 3D printing:
Does this mean 3D printing and crypto will not have a future? Of course not, just remember that changes in technology can take awhile to happen. After the .com bubble, some of those stocks recovered after 6 years later. So now you are approaching it with the investment (long term) mindset.
I remember vividly, many of my friends who never traded before wanted to invest into cryptocurrencies. They even had apps to track the price when they commuted to work! They wanted to be traders, I told them that these markets are very special, we will not see anything like this for awhile.
Of course, this market lured many new traders in, and at the height of the mania, people were selling off their homes to buy Bitcoin at 20,000. At the highs.
Because this market was not regulated, we even saw many scammers and celebrities lending their names just to pump this market up. SEC couldn’t do anything. People made a lot of money out of it, and unfortunately a lot of first time traders/investors got left holding the bag.
Today, we hear about exchanges closing down and people losing their money. Again, due to no regulation, and no deposit insurance, this money cannot be recovered. We have even heard of exchanges like Quadriga closing, with 190 million being lost as the owner passed away and he was the only one with the keys to access the wallets… now it is coming out he perhaps faked his death to walk away with the money.
Before I speak about use cases and what the future likely is, I want to speak about the current market.
Many people say it is the best time to buy, but there are two things I need to point out.
- A lot of new traders, who jumped into cryptocurrencies, have been left holding the bag, and I know many of them are waiting just for break even in order to get out. They know how wild this ride can be now. This means there will always be a strong sell pressure as Bitcoin goes higher due to people getting their money out.
- I believe institutional money is required to instill a wave of new buyers who could over power the bag holders. However, for institutional money to enter this market, it needs to be REGULATED. It is a tough sell to your fund holders, or shareholders when you tell them about an investment that has no deposit insurance and has a history of exchanges closing. If these markets become regulated, you will see a wave of money come in which will take prices higher…however there is one negative side. Those cryptocurrency enthusiasts who have been saying that cryptocurrency is a way to escape from banks and establishments…well yea…not anymore. It will be controlled by wall street…just like Bitcoin is with Bitcoin futures.
So the use case of cryptos:
Many said it is to hide money. Yes this can still be the case. Others say it is for sending money quickly. This may be so, however, the cryptocurrency node would have to be faster than Visa/MasterCard and from what I know, Ripple and Stellar are the ones close to this.
Now to the more dark side of cryptocurrency:
If cryptocurrency is going to be the future of money, we would want to know who created it, this elusive and mysterious Satoshi Nakamoto. I believe it was the government, although I have spoken with others who say it was created by Lockheed Martin and Raytheon (an AI system).
A cashless society is coming, and what better way to get people to go along with this by easing them with cryptocurrency? We are seeing cash being phased out in Europe and India. China is pretty much cashless, and we have heard stories now how China has implemented a credit score system with their digital money app which forbids people to leave the country if their credit score is bad.
This is what cryptocurrency will be used for. For control. I have spoken a lot about how governments will be taxing everything and anything. A digital currency will allow them to track money so no one can hide money and pay their fair due. You sell something on ebay/craigslist? Taxed. Do a part time job or side job for a neighbour? Taxed.
More importantly, this will be used to get money from small business’. The employee tax bracket is pretty much taxed out. Small business is the next place to tax. There are many loopholes for small business’ such as buying a home or car, splitting income with family members etc. These rules are slowly being removed, but you will not be able to enforce them until we get a digital currency.
How will this come along?
Very easy. The next crisis will cause bank closures as liquidity drys up, and atm’s freeze. The ice-9 even as James Rickards speaks about. This will occur to usher in a new financial system. People will be angry and will demand access to their cash in bank accounts. The government will say sure, you cannot access it through cash, so from now on, we are going digital. This is what app/card chip you will require and we go from there.
I have a friend who works in one of Canada’s top banks, and he has told me that they are already preparing for this. When the crypto mania was hot, these same banks warned their clients not to touch it, but not they are adopting it.
The biggest contention is what currency (if any) will it be?
I have a feeling it could be Ripple. Why? Because you can print as much of it as you want, and it has a fast blockchain (X-rapid). In fact if you to to their site, they have partnerships with major banks in most countries.
So when the time comes, and banks and nations need to be bailed out, the IMF and World Bank can bail them out digitally by creating as much ripple as they want, and put any price they want, then send it to the banks, and just like that, the banks get some liquidity. Heck they may even call this currency the SDR (Special Drawing Rights).
Of course, it doesn’t have to be the Ripple coin…it really is the X-Rapid system. The banks may already have a coin made for this, or could just make one up…however, if the system is already in place, why create something new when you can just use what’s already there… could be though that they do not want the many traders/investors who are holding Ripple to profit heavily off of this.
Time will tell, but I believe this digital currency system is coming. The dangers of course are many. You can be denied access to your funds if you disagree with certain politics or have alternate views etc etc.
Ironically, what cryptoenthusiasts believed would be freedom from establishment and banks, will actually be the tool of enslavement.