There are these new things in the world called crypto-currencies. You’ve probably heard about them. The most famous and valuable of them (at least right now) is bitcoin. As a collective they are very dangerous. In fact, on the back of this newly found popularity and price, there has been an abundance of scams perpetrated on buyers caught up in hype and sizzle.
However, this is exactly why investors should take flight. Because as much criticism as there has been going around the world of finance about Bitcoin, if you got in at $5, $50 or even $500, you’re very happy right now with that decision, regardless of whether or not it’s speculation and mania. If you got in at $15,000, that’s a different matter. Bitcoin and others are likely to wipe out as much wealth as they created.
The cryptocurrency (a misnomer) is priced just under $5,000 USD per coin (3:08pm EST) and many are calling the bear market for alt-coins over. Meanwhile, Twitter/Square CEO Jack Dorsey believes that bitcoin will be the world’s single currency in a decade. Really? As a collective, alt coins are dangerous.On the back of this newly found popularity and price, there has been an abundance of scams perpetrated on buyers caught up in hype and sizzle. ICO’s are hot right now, but most are illegal securities offerings at best. It would be one thing if they were exclusively available for accredited buyers with the means to risk and lose all money allocated. They’re not and we believe that people are going to get hurt.
Cryptocurrency is Counterfeit.
Despite the IRS designation as an asset, Bitcoin and others are imitation currency produced without the legal sanction of the state or government. Producing or using counterfeit money is a form of fraud or forgery. Anyone starting a cryptocurrency in the hopes of creating a better currency is committing a crime.
Calling cryptocurrencies a digital asset makes it a more likely viable long-term option. However, if the SEC or other regulatory bodies find that many companies are using these assets to sell interests in the underlying organization, the gig is up and the house of cards will fall before any foundation is placed under it, leaving the only real asset associated with this whole thing in the first place — the blockchain technology.
There are thousands of cryptos: Ethereum. Ripple. Litecoin. Dash. NEM. Monero. Zcash. And, the creators and founders have made lots of dollars because of the massive shift to using decentralized currency. All are running on the blockchain thesis, but there are other forms of IP that will emerge as more valuable than the lot of fraudulent money.
In fact, the best part about this year’sCBOE deal is that people can now make money when (not if) Bitcoin implodes. It’s also a way for the exchange to make a little money for itself on this market and if it does become a viable market long-term, it will be the leader.IT IS unlikely that these tokens/coins will go away, rather be implemented in another way or decline in popularity.
It will be interesting to see either way.