This past month has seen quite the bloodbath in the cryptocurrency markets.
All the major cryptocurrencies such as Bitcoin, Litecoin, Ripple and Ethereum really took it on the chin as investors sold off in droves.
So what can learn from this going forward…?
Now…Ripple is a bit different as they want to work with financial institutions contrary to what Crypto is ‘supposed’ to be about…which is to operate AWAY from the banks:
“The reason ripple is surging so much is it’s a bubble,” said Erik Voorhees, CEO of digital asset exchange ShapeShift and a vocal advocate for bitcoin as a way to separate money and the state. “Testing crypto with banks doesn’t make sense. The whole idea of crypto is you don’t need banks.”
Well, at least one bank is (as of right now) dismissing Bitcoin, calling it a speculative commodity:
“I don’t view it as payment system player,” Alfred Kelly said in an interview recorded on Tuesday at the National Retail Federation conference in New York City.
“We at Visa won’t process transactions that are cryptocurrency-based. We will only process fiat currency-based transactions.”
It’s important to understand the difference between Cryptocurrency and Blockchain:
Bitcoin is a cryptocurrency, created and held electronically on your PC or in a virtual wallet. No one controls it or sees it – it is decentralized so no person, institution or bank controls the currency. It was the year 2009 when bitcoin burst onto the financial scene, and soon computers all over the world started running sophisticated programs that would mine blocks of bitcoins by solving extremely complex mathematical equations. Mining bitcoin means to discover or verify new bitcoins because unlike traditional currency, bitcoin cannot be printed. Miners make money every time they discover new bitcoins or verify a bitcoin transaction.
While bitcoin had the power to make transactions untraceable, it was another innovation that promised to make every transaction transparent and permanent. Underlying the use of bitcoin is blockchain, which is almost entirely opposite its more famous alter-ego. Blockchain possesses the ability of having permanent records of the transactions the blocks (the name for their portions of value) are used for, and at any time people can see those changes online in real time. It is this transparency that people have hopes in, but that’s not the only thing blockchain does differently than the cryptocurrency it drove for so long.
In other words, Blockchain is a technology where Cryptocurrency is an asset class.
This is an oversimplification but I’m still learning about this myself. So you should due your own research and due-diligence.
I think it’s pretty simple: We were seeing a bubble and the masses sold their positions after everybody and their Mother was buying in. There was (is) no real fundamentals in place and as a result we’re seeing extreme volatility.
I went in to some detail on an earlier post and video here but I will say…don’t base your entire business plan on it, unless you’re ok with extreme risk.
Whether you want it or not, regulation is coming to Crypto markets in my opinion. What that will look like I have no idea.
But one thing I think it can do is bring legitimacy to the industry.
What are your thoughts? Comment below and tell me what you think.
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