Crypto currencies:
Enough friends have asked for my thoughts that I finally wrote them down in as brief a form as I was able:
Crypto currency is still a tulip bulb bubble at present as the prices are all based on the greater fool theory.
Blockchain is a great technology and will be here for a very long time with a major impact on how business is done, but the value is in the network, not in the currencies which only have momentary value as they facilitate transactions.
We will definitely have “virtual currencies” in the sense that I may one day own (say) an electronic token (ie a crypto currency) that represents a certain percentage interest in a building, or a seat right in the Warriors’ new stadium, or a bottle of wine in storage somewhere, or a given number of kilowatt hours of electric energy.
But currencies that are not representative of real value, only coinage, can be created infinitely. Bitcoin alone has a constrained total circulation, but there are already over 1,500 different ones of those currencies, so in buying one of those currencies as an investment asset one is betting on which will be a major facilitator of commerce and that is a very high risk bet.
Bitcoin, for example, has two primary disadvantages—(1) the underlying technology requires too many computer transactions per trade so there is both a “latency” problem (ie a speed of completion problem) and a “bandwidth” problem (ie a quite low theoretical limit on the number of simultaneous trades the global network can accommodate), and (2) the total amount of power consumed for all those computer processes creates an unsustainably high global cost that is so far being ignored since it is made up of millions of tiny bits of cost shared by all network participants.
Two currencies that I think have “legs” for very different reasons are Ripple and Unikoin. Ripple is getting good traction as the liquidity currency on global inter-bank networks and has good underlying technology. Unikoin is a small currency dedicated to being used on the global betting platform for e-sports.
End of rant!
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