Cryptocurrencies are the new rage. The sales vernacular for this is they are "The Hot Dot”. Most of the time Hot Dots should be ignored and their glow will fade. How can we tell if cryptocurrencies are here to stay or are they another Hot Dot? There are a few experts on this subject, I am not one of them, but I have read some thoughtful and well-researched pieces on the subject and I stayed at a Holiday Inn Express last night.
It would be nice if there were just a few cryptocurrencies to choose from but there aren’t. There are 1,182 and rising. We have all heard of Bitcoin and my instinct is if I’m going to stick my toe in the crypto water Bitcoin is a good place to start. My reasons start with liquidity and end with price transparency. The downside to liquidity and price transparency is they promote volatility, but let’s be honest with ourselves; isn’t that why we are buying Bitcoin NOT IBM.
Two big wigs in the financial services industry have shared their negative opinion on Bitcoin. What are they supposed to say? If Bitcoin and other blockchain supported currencies succeed it will not be good news for the established financial services companies and fiat currencies . Yes some shady characters are using Bitcoin to hide their business dealings. Hopefully that will be addressed and regulated if Bitcoin establishes itself. I wonder if the opium dealers of the dark ages proclaimed “enough with the animal pelts” pay me in coins.
3rd party analysis
If you have made it this far here is your reward. The most insightful and in depth research I have read are James's blog and Patrick's podcasts. Both have street cred and both do their homework before they write or speak. I challenge you to take the time to read and listen to their podcasts. While it may seem tedious and too long for our immediate gratification world if you want to learn about cryptocurrency his is time well spent. I have listened to Patrick’s three podcasts numerous times and I’m still confused but definitely more knowledgeable. Both researchers close with the same disclaimer that their work is NOT a recommendation to buy. I share their warning.
The Hot Dot will usually burn you. There are some that we need to research and blow on the Dot. When it cools down we might find a great opportunity. I’m going to blow on this dot.