The “Experts” Are Getting Crypto All Wrong

Bitcoin peaked about a month ago, on December 17, at a high of nearly $20,000. As I write, the cryptocurrency is under $11,000… a loss of about 45%. That’s more than $150 billion in lost market cap.Cue much hand-wringing and gnashing of teeth in the crypto-commentariat. It’s neck-and-neck, but I think the “I-told-you-so” crowd has the edge over the “excuse-makers.”Here’s the thing: Unless you just lost your shirt on bitcoin, this doesn’t matter at all. And chances are, the “experts” you may see in the press aren’t telling you why.In fact, bitcoin’s crash is wonderful… because it means we can all just stop thinking about cryptocurrencies altogether.The Death of Bitcoin… In a year or so, people won’t be talking about bitcoin in the line at the grocery store or on the bus, as they are now. Here’s why.Bitcoin is the product of justified frustration. Its designer explicitly said the cryptocurrency was a reaction to government abuse of fiat currencies like the dollar or euro. It was supposed to provide an independent, peer-to-peer payment system based on a virtual currency that couldn’t be debased, since there was a finite number of them.That dream has long since been jettisoned in favor of raw speculation. Ironically, most people care about bitcoin because it seems like an easy way to get more fiat currency! They don’t own it because they want to buy pizzas or gas with it.Besides being a terrible way to transact electronically – it’s agonizingly slow – bitcoin’s success as a speculative play has made it useless as a currency. Why would anyone spend it if it’s appreciating so fast? Who would accept one when it’s depreciating rapidly?Bitcoin is also a major source of pollution. It takes 351 kilowatt-hours of electricity just to process one transaction – which also releases 172 kilograms of carbon dioxide into the atmosphere. That’s enough to power one U.S. household for a year. The energy consumed by all bitcoin mining to date could power almost 4 million U.S. households for a year.Paradoxically, bitcoin’s success as an old-fashioned speculative play – not its envisaged libertarian uses – has attracted government crackdown.China, South Korea, Germany, Switzerland and France have implemented, or are considering, bans or limitations on bitcoin trading. Several intergovernmental organizations have called for concerted action to rein in the obvious bubble. The U.S. Securities and Exchange Commission, which once seemed likely to approve bitcoin-based financial derivatives, now seems hesitant.And according to Investing.com: “The European Union is implementing stricter rules to prevent money laundering and terrorism financing on virtual currency platforms. It’s also looking into limits on cryptocurrency trading.”We may see a functional, widely accepted cryptocurrency someday, but it won’t be bitcoin…. But a Boost for Crypto AssetsGood. Getting over bitcoin allows us to see where the real value of crypto assets lies. Here’s how.To use the New York subway system, you need tokens. You can’t use them to buy anything else… although you could sell them to someone who wanted to use the subway more than you.In fact, if subway tokens were in limited supply, a lively market for them might spring up. They might even trade for a lot more than they originally cost. It all depends on how much people want to use the subway.That, in a nutshell, is the scenario for the most promising “cryptocurrencies” other than bitcoin. They’re not money, they’re tokens – “crypto-tokens,” if you will. They aren’t used as general currency. They are only good within the platform for which they were designed.If those platforms deliver valuable services, people will want those crypto-tokens, and that will determine their price. In other words, crypto-tokens will have value to the extent that people value the things you can get for them from their associated platform.That will make them real assets, with intrinsic value – because they can be used to obtain something that people value. That means you can reliably expect a stream of revenue or services from owning such crypto-tokens. Critically, you can measure that stream of future returns against the price of the crypto-token, just as we do when we calculate the price/earnings ratio (P/E) of a stock.Bitcoin, by contrast, has no intrinsic value. It only has a price – the price set by supply and demand. It can’t produce future streams of revenue, and you can’t measure anything like a P/E ratio for it.One day it will be worthless because it doesn’t get you anything real.Ether and Other Crypto Assets Are the FutureThe crypto-token ether sure seems like a currency. It’s traded on cryptocurrency exchanges under the code ETH. Its symbol is the Greek uppercase Xi character. It’s mined in a similar (but less energy-intensive) process to bitcoin.But ether isn’t a currency. Its designers describe it as “a fuel for operating the distributed application platform Ethereum. It is a form of payment made by the clients of the platform to the machines executing the requested operations.”Ether tokens get you access to one of the world’s most sophisticated distributed computational networks. It’s so promising that big companies are falling all over each other to develop practical, real-world uses for it.Because most people who trade it don’t really understand or care about its true purpose, the price of ether has bubbled and frothed like bitcoin in recent weeks.But eventually, ether will revert to a stable price based on the demand for the computational services it can “buy” for people. That price will represent real value that can be priced into the future. There’ll be a futures market for it, and exchange-traded funds (ETFs), because everyone will have a way to assess its underlying value over time. Just as we do with stocks.What will that value be? I have no idea. But I know it will be a lot more than bitcoin.My advice: Get rid of your bitcoin, and buy ether at the next dip.

Cryptocurrencies: Real Money or a Fad?

2017 is the year of cryptocurrencies. Bitcoin jumped from a few thousand dollars’ worth and broke records by crossing the $20,000 mark. Ethereum’s Ether is higher than ever. New currencies are popping up every day and people are buying them in a frenzy.So, are these codes of programming real money or a fad that will die in time? Let’s review:SAVING MONEYHave you ever sent money to someone through banking channels? Different banks have different protocols, but all have one thing in common: They charge you for it. Yes, you might say that your bank gives you a few fee transactions a month, but it puts other restrictions where you are forced to pay for those particular services.With digital currencies such as Bitcoin and Ethereum, you still have to pay to transfer money over to someone, but the transaction “charges” you give to miners are much lower than what traditional banks offer you.SAVING TIMESending cryptocurrency to someone living in any part of the world is as easy as writing an email. All you have to do is to ask for the receiver’s address, log in your wallet and send the desired amount. You can then go around doing whatever you do in your daily life and the money will be transferred.UNIVERSAL CURRENCYOK, so the title is misleading a bit. There are tons of cryptocurrency out there, so you and the receiver may not have the same currency wallet. If the receiver is flexible (and you have the convincing power), he or she can set up an electronic wallet for your currency in no time.The most widely accepted currency is Bitcoin and if you have it, you will not face any problem of different currency acceptance.INVESTMENTWith financial crises everywhere and the inflation rate rising rapidly, you will one day find that all those dollars you saved don’t have much buying power in a decade or so. The wise thing is to invest them in something that will not depreciate over time. Enter Cryptocurrencies! Mostly because of the way these currencies are programmed, they will be very limited in circulation, unlike paper based currency where you can just print off more.A simple case of supply and demand will always ensure that cryptocurrencies will have an ever increasing value.So, there you have it: Cryptocurrencies are not a fad in my opinion. All you have to do is know which one to buy.

Practical Tips on How to Trade Cryptocurrencies

For some time now, I have been closely observing the performance of cryptocurrencies to get a feel of where the market is headed. The routine my elementary school teacher taught me-where you wake up, pray, brush your teeth and take your breakfast has shifted a little to waking up, praying and then hitting the web (starting with coinmarketcap) just to know which crypto assets are in the red.The beginning of 2018 wasn’t a lovely one for altcoins and relatable assets. Their performance was crippled by the frequent opinions from bankers that the crypto bubble was about to burst. Nevertheless, ardent cryptocurrency followers are still “HODLing” on and truth be told, they are reaping big.Recently, Bitcoin retraced to almost $5000; Bitcoin Cash came close to $500 while Ethereum found peace at $300. Virtually every coin got hit-apart from newcomers that were still in excitement stage. As of this writing, Bitcoin is back on track and its selling at $8900. Many other cryptos have doubled since the upward trend started and the market cap is resting at $400 billion from the recent crest of $250 billion.If you are slowly warming up to cryptocurrencies and wish to become a successful trader, the tips below will help you out.Practical tips on how to trade cryptocurrencies• Start modestlyYou’ve already heard that cryptocurrency prices are skyrocketing. You’ve also probably received the news that this upward trend may not last long. Some naysayers, mostly esteemed bankers and economists usually go ahead to term them as get-rich-quick schemes with no stable foundation.Such news can make you invest in a hurry and fail to apply moderation. A little analysis of the market trends and cause-worthy currencies to invest in can guarantee you good returns. Whatever you do, do not invest all your hard-earned money into these assets.• Understand how exchanges workRecently, I saw a friend of mine post a Facebook feed about one of his friends who went on to trade on an exchange he had zero ideas on how it runs. This is a dangerous move. Always review the site you intend to use before signing up, or at least before you start trading. If they provide a dummy account to play around with, then take that opportunity to learn how the dashboard looks.• Don’t insist on trading everythingThere are over 1400 cryptocurrencies to trade, but it’s impossible to deal with all of them. Spreading your portfolio to a huge number of cryptos than you can effectively manage will minimize your profits. Just select a few of them, read more about them, and how to get their trade signals.• Stay soberCryptocurrencies are volatile. This is both their bane and boon. As a trader, you have to understand that wild price swings are unavoidable. Uncertainty over when to make a move makes one an ineffective trader. Leverage hard data and other research methods to be sure when to execute a trade.Successful traders belong to various online forums where cryptocurrency discussions regarding market trends and signals are discussed. Sure, your knowledge may be sufficient, but you need to rely on other traders for more relevant data.• Diversify meaningfullyVirtually everyone will tell you to expand your portfolio, but no one will remind you to deal with currencies with real-world uses. There are a few crappy coins that you can deal with for quick bucks, but the best cryptos to deal with are those that solve existing problems. Coins with real-world uses tend to be less volatile.Don’t diversify too early or too late. And before you make a move to buy any crypto-asset, ensure you know its market cap, price changes, and daily trading volumes. Keeping a healthy portfolio is the way to reaping big from these digital assets.

Are You Choosing the Right Stock Market Advisory Company

What do you do if you want to learn driving a car? You will try to find an expert teacher, isn’t it? You do not want to avail the services of a novice individual to help you out, but a professional person can provide you the vital tips and most importantly guide you efficiently. Similarly, when it comes to investing in the stock market for the first time, you require a knowledgeable advice to attain your financial goals and get profitable returns.

If you are a beginner, then it is quite obvious that you may be having no information about the process of buying the right shares in the market. In such a situation, getting the right tips from an experienced financial advisor or a registered advisory company will truly prove to be a great blessing in disguise. However, there are some of the important things that have to be kept in mind while choosing the top stock market advisory company, which are as follows:

How much assistance do you actually require?

Before you make up your mind to hire an advisor, it is imperative that you must first decide about the kind of service you require from them. You may need their help at the beginning or during the time of any issues. This is because an advisor has to formulate a map according to your requirements. Hence, it is suggested to ascertain your needs first and then take further action.

Choose a top ranked advisory company

It is a very important point that has to be taken into the consideration. Availing services of the well known advisory company or a financial advisor is an absolute necessity. Make it a point to carry out a proper background or research work about the company. Check out their credentials, reputation, experience, etc before hiring them.

Asking for a sample financial plan initially makes sense

When hiring a financial advisor, then do not forget to ask for sample plan first. It is imperative to note that there is no such thing called the perfect plan. A sample plan will help you to determine whether an advisory company is actually making sense according your requirements or not.

Conclusion

The financial planners or advisory companies can really turn out to be the greatest asset for you if you choose the best one. They are just like the professional sailors who can help you out to sail through stock investment related problems quite efficiently.

Deepak is a financial advisor who likes to provide quality tips to the people facing any issues with regard to investing in the stock market. He likes to keep himself updated about the stock market by reading articles, news and blogs, etc.

Older posts »