Could This Just Be A Giant Cryptocurrency Bubble?
Many savvy investors have begun to fear that their investments in crypto-currency and ICOs may be in danger. They believe that the market may be in a bubble and that it may soon pop. With investments in Bitcoin as well as other cryptocurrencies holding no equity value without offering any claim to an underlying asset, the hard value of crypto-currency is at best, shaky.
The value of crypto-currencies is in the belief of value, and the agreement by others that there is value inherently there. However, without anything to back it, the market is looking more like a bubble than ever. With billions of dollars poured into more than a thousand ‘alt-coins,’ as they’re colloquially referred to. These alt-coins mimic Bitcoin in their core construction, being almost entirely decentralized and allowing for free trade on digital exchanges without a central structure or the backing of any bank.
Why ICOs May Be Prepared to Burst
The ICO sector of the crypto-market is the most serious offender, having much in common with the dot-com bubble in the late nineties; with investors putting their faith and massive amounts of capital into an asset without a strong history of producing revenue, and which are only increasing in value because of the belief that the value will continue to increase.
The second largest crypto-currency available at the moment is Ethereum, only standing behind Bitcoin in popularity and value. It was launched in the ICO sector itself a few years ago, and its value has risen well over 3,000% against the USD in 2017 alone. However, not all ‘coins’ have seen this much success and most present significant risk.
The purpose of an ICO is to offer digital tokens to investors looking to support a business. The tokens allow their buyer to redeem them at a later time for a product or service form the company. The value of these tokens can fluctuate, and they can be traded on the open market. The ownership of these tokens, much like traditional crypto-currency, is recorded on a blockchain. A blockchain being an entirely secure decentralized ledger, based on the principles of cryptography.
However, many argue that an ICO isn’t really an investment, as, rather than giving you actual equity, they only provide a token for later redemption. In many ways, this makes ICOs worse than the dot-com stocks in the late nineties. As unlike dot-com stocks, an ICO offers no equity at all. Without backing, and without an existing revenue stream contributing to their value, an ICO is simply a wild speculation, betting on the success of a product in the future; often a product which doesn’t yet exist.
The Difference Between The Alt-Coins And The Giants
At this time, it’s important to make the differences between the two industry giants; those giants being Bitcoin and Ethereum, and the many thousands of alt-coins available on the market. Contrary to the majority of ICO coins, neither Bitcoin nor Ethereum was created to back a specific business. Bitcoin was meant to be a decentralized currency and an all-purpose asset at its core. Ethereum, on the other hand, is meant to support an all-purpose application platform, which has the backing of a number of bluechip companies. This means that Ethereum and Bitcoin have seen wide use, and have seemingly taken on the role of ‘cash’ within the crypto-currency market. Alt-coins, on the other hand, are often simply credits to be redeemed for a limited service.
It’s obvious that the crypto market is in a huge bubble, and it may burst soon, but that doesn’t mean that all crypto will bust. Giants like Bitcoin and Ethereum will likely persist, and new contenders will rise, but the market will balance out, and will likely shift to have more emphasis on tangible value. However, investors in many alt-coins may soon find those investments disintegrate before their eyes.
Another inherent problem with Bitcoin, as well as many crypto-currencies, is that without the backing of a tangible asset, the price is only maintained via supply and demand. This means that it’s entirely possible for the value of almost any crypto-currency, including giants like Bitcoin, to fall to zero.
But Bitcoin isn’t the only crypto-currency in danger. Almost none of them are backed by any underlying assets, and while Bitcoin has more history, and values significantly higher right now, it could bust the same as any other coin. However, if you’d invested years ago, it may seem like Bitcoin could keep on rising forever.
When it comes to crypto-currencies, the inherent value being stored is quite simply, the agreement of the people using it that it has that value, there is no other asset at play, and that can’t be sustained indefinitely. That’s a bubble.
New Green Cryptocurrency Mining Coming Soon: InfluenceMine
On a side note, cryptocurrency mining is going to take a turn for the better. InfluenceMine is supposedly coming out with a super green mining system that they plan to offer to the public to mine their favorite coins for a simple app on their phone. Could this be real and how does it work? I’ll include a video below of CEO Rob Towles explaining the process. You can also stay up to date by following them on their launch page at: http://Influencemine.io