BITCOIN: Creative Destruction

If you haven't exchanged a form of fiat currency for bitcoin/alt-coin, then you basically have managed to sit on the sidelines during the coolest innovation of our times. The altcoin movement will be bigger than the change from horse pulled carriages to automobiles, mail to e-mail, dial-up to broadband... you get the point. Altcoins are a fabulous innovation that can cut transaction time from days to seconds.

These future currencies don't come without problems, the biggest being how unstable they can be, but that will change as people have less and less reasons to sell. Until then, this is true. At times, altcoins can seem to be driven by pump-and-dump traders; not investors or users. The volatility of these markets could make the strongest human bipolar.

For now, take a long position

Diversify

Then only throw as much money as you are willing to lose

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Crypto, Monetary Policy, and Global Trade

Apologies for being reclusive over the last couple months. I've been a little busy relocating. Lets discuss some of my favorite topics: monetary policy, global trade, and (you guessed it) cryptocurrencies. First: Hyper inflation, bad... very bad. very very very bad. controlled inflation, ok. Inflation has taken a beating throughout the blockchain community. Mainly from Bitcoin Maximalists. Scarcity, along with supply and demand, creates value. However, scarcity also leads to a decrease in the velocity of money, and lead to hoarding. Why? When resources are scarce, humans conserve. Think of the price of oil. When the price of oil is high, the price of gas is high. When the price of oil is low, the price of gas is low. You can see the correlation by comparing the next two graphs. The price (USD) of oil per barrel. Chart by MacroTrends The price (USD) of a gallon of gas. Chart by Gas Buddy When oil is abundant: supply goes beyond demand (most recent 2014), and p...

Bubbles: Cryptocurrencies, Dotcom, Tulips, USD

There are a few things that we need to look at when comparing cryptocurrencies to bubbles. First, supply and demand. Second, the market. Third, value of money. The cryptocurrency bubble and the tulip bubble have some similarities, as well as some differences. When farmers see the price of crop A increasing dramatically, they have some choices. Ignore the price rise and continue to grow crop B, losing out on the potential gain in income, which some will do. This has no affect on crop A. If they are already growing crop A, then they will be able reinvest excess profits and grow more of their cash crop, crop A. This increases supply of crop A. If they are growing any other crop, and see a price rise in crop A, they will have an incentive to shift from their current crop at the end of the season, and grow a crop that will bring in more revenue (crop A). Increasing supply of crop A. However, increasing the supply of crop A won't happen over night, as crops take months to grow. As c...

ICO, IPO-SHMYPO

In my unprofessional opinion, an ICO (Initial Coin Offering) will replace the IPO (Initial Public Offering) just like the Decentralized Exchanges (DEX) will replace current exchanges, and Atomic Swaps will be fluid in our daily transactions. This will take time, as regulation will be made, and our understanding of blockchain deepens. However, we already have had many ICOs, and we already have a few DEXs. An ICO should be looked at as an unregulated way for a firm in the crypto-space to raise money, and fund their project(s). It is a way for crypto-firms to bypass regulation and raise funds quickly, while jumping onto the cryptocurrency hype, so caution must be taken as most crypto-enthusiasts see ~90% of ICOs failing. In the ICO's current state, when you purchase a coin/token, you don't own a share of that firm. The firm isn't required to disclose information as they would after an IPO. However, if there is a lot of buzz around said firm, their token value theoreti...

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