A couple of weeks ago I invested in several cryptocurrencies. The entry barrier is really low compared to other investment vehicles. Due to its volatility, it’s easier to invest disposable income and then say goodbye to it. Then came the learning. Bitcoin. Cryptocurrencies. Blockchain. ICOs. There’s a lot to learn. And with some time it’s easy to understand what makes it tick. Here are three things I learned about investing in cryptocurrencies.
The future of cryptocurrency is Bitcoin
There is a lot of competition to Bitcoin at the blockchain level. As it currently stands it is very much in the alpha stages of development. All the forks and copycats that are happening are all attempts to create a better blockchain. Many of those have novel solutions for a cryptocurrency and other uses. But they all have an uphill battle in branding and name recognition. Currently, Bitcoin is king of the branding game. Remember the battle between VHS and Beta; or maybe not.
ICOs are for start-ups that aren’t
Google “Initial Coin Offering” and you’ll get a lot of new cryptocurrencies popping up daily. They are all for “start-ups” looking for the cash to start operation. Investing in ICOs is essentially investing in someone’s intentions. Many may have nothing more than an idea and a website.
People aren’t investing for the right reason
Most who invest in cryptocurrencies are being swept up into a fray of hope. Cryptocurrencies have no intrinsic value even as some are comparing to gold. The only good reason to invest in any cryptocurrency is for the blockchain technology supporting the currency. Or the branding that comes with it and Bitcoin is winning that game. And that’s if society decides that cryptocurrencies are the future.
So, I’m going to keep my couple hundred dollars in my investment for the foreseeable future. If anything, it’ll force me to keep up to date on the technological developments.