Is this Crypto’s Year?


Hey everyone, it’s the Monday before I start my 8 day shift again, and this now marks the 5th week in a row that I’ve managed to write a post. I think I’m kind of back into the rhythm.

Cryptocurrency (Bitcoin)
Stock Photo from: Pixabay

Is this Crypto’s Year?

I haven’t really talked about crypto for a long time. This is mostly because I don’t really think my general audience is a “crypto” audience. However, I do attempt to provide an unbiased opinion on crypto once in awhile.

Before I say anything else, I must remind everyone that crypto is gambling. I already consider stocks to be gambling. If the whole Gamestop debacle was any indication of what stocks really are, then I assure you that crypto is like the Wild West in comparison.

Only invest what you can afford to lose. Crypto is gambling and the chances of losing everything are not only possible, but probable.

Ok, ok, ok, I got it – it’s gambling… now what’s the hot take?

I’ve said it for awhile, but for the last 5 years, cryptocurrency has been in its infancy. Sure it was interesting as an idea, but as for actual use cases, there were basically none.

Prior to mass adoption, nothing really matters. I didn’t foresee any kind of adoption occurring anytime before 2025, at the very earliest. Mass adoption would be quite a ways off from there as well.

However, coronavirus seems to have turned the world collectively on its head. The new normal may be just “normal” soon enough. I can only assume that we will be seeing an increase in inflation of the US Dollar over the next decade. Cryptocurrency could be a hedge against that, assuming the “horse” you choose survives the next 10 years.

High risk, high reward.

As for me, I haven’t touched crypto since 2017 after I picked my horses (Cardano [ADA] and Ripple [XRP]). I paid my taxes for the paper profits I made (at tax time and for awhile after that, I was actually down). And basically that’s it, I’ve been out of the game since then, just sitting on the sidelines. Also, just to remind you guys, this is a very small amount of “play money”.

Why?

I just find it all so interesting. If Cardano and Ripple were to succeed in their respective visions of “unbanking the unbanked” and “shifting the banks to crypto”, then these are true paradigm shifts in my lifetime.

If that happens, I can tell my kids that I bought a little bit of Cardano and Ripple “back in the day” and tell them all about it.

Right now it seems Cardano has been plugging away moving into the Shelley era and soon the Goguen era. There have been rumors about a major contract in Africa. Cardano has been very active in Africa and has continually stated that they were the first target for “banking the unbanked”. However… who knows if this is true or not. Also, Ethereum, which Cardano has been trying to be the “better version of”, has been having issues with gas prices (transaction costs) as of late. For some, this may signal a want to move on perceived “greener” pastures. This could be a window of opportunity for Cardano to gain traction until Ethereum 2.0 comes. However, it may end up being too little too late for Ethereum.

As for Ripple, it seems they’re having some problems with the SEC as of late. It remains to be seen what will happen. However, if SEC does manage to label XRP as a security, then it could spell trouble (or even doom) for the cryptocurrency. That said, Ripple has been very aggressive with securing partnerships and tying people into their “liquidity network”. It will be interesting to see what happens in the end.

So what does that mean for you?

All that said, the potential “good news” for Cardano or potential “bad news” for Ripple doesn’t change anything for me. With my little bit of money in both, my plan was always to just let them run and see where they go. Most likely my tiny bit of cryptocurrency will go to my children when I leave this world. My hope is that by then you would be able to spend cryptocurrency natively without the need to exchange to fiat. Or it would be an “on the fly” exchange at the Point of Service (POS).

My original plan was to buy 1 bitcoin – back when Bitcoin was around $2000 or so. Then the plan was to give 0.5 to my daughter and 0.5 to my son. However, the truth is that I just don’t believe in Bitcoin long term. I understand the “store of value” argument, but I’ve never liked gold as a store of value anyways. As such, the idea of “digital gold” doesn’t appeal to me. I’m sure people will vehemently disagree with me, but hey, everyone is entitled to their own opinion. I chose two cryptos that I was ok with holding on to for my lifetime and just seeing where it ended up.

So, is this Crypto’s Year then?

In my opinion — no.

We are still years away from any real adoption. In terms of interest, we will continue to see an uptick in interest as time goes on. I think anyone who buys crypto right now for the first time is probably what you would call an “early adopter”. Anyone prior to 2021 would be classified as an “innovator” to me.

The Product Adoption Curve:

Product Adoption Curve

I’ve talked about this, but in general, I’m probably in between Early Majority and Late Majority — that is the “Middle Majority”. However, when it came to cryptocurrency, I felt this was something that could really change the world, so I was ok with “investing” as an “innovator” and just seeing where it all ended up.

This year we may see the cryptocurrency market reach new heights, but that won’t be mass adoption or probably even any kind of real adoption at all. It will just be more early adopters trying out new dApps as well as speculating. That said, we will see some progress. I think that Cardano’s Proof of Stake algorithm going head-to-head with Ethereum 2.0 is a good thing. Competition is good — it breeds innovation.

I am hopeful that we will see at least one “killer” decentralized App (dApp) this year, and not just something like CryptoKitties. Charles, if you’re reading, I’m still waiting for Crypto Capybaras. Seriously though, I am hoping for a dApp that makes people say, “oh wow, it’s cool that we were able to do that in a completely decentralized manner.”

What do you hope for?

I’m still sticking to my original prediction for some degree of adoption by 2025. Mass adoption is still a long ways off though, maybe 2035 or so.

I hope my kids will pay for things in cryptocurrency one day.

TL;DR

Just talking about Crypto.

I think cryptocurrency will grow as an ecosystem this year.

However, I don’t think it will be “Crypto’s Year.”

Finance Fridays Sensei

-Sensei

Agree? Disagree? Questions, Comments and Suggestions are welcome.

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