On Cryptocurrency

On Cryptocurrency

Up, up, up, way down

Did you get a piece of the Bitcoin craze of the last few years?

I don't talk about it a lot, but I happened to fall into Bitcoin really early on. When I heard about it, it was pennies per Bitcoin. By the time I bought my first Bitcoin, it had risen to $6. I bought 1, and honestly I thought I was throwing $6 away. What was it good for? I didn't know, but it was interesting.

I tried mining for a while. I used to install the mining software on computers at work, and let it run at night and on the weekend. Again, it seemed like an interesting project. This was back when mining on a computer was possible. (It's not possible any more.)

If I recall, the price rose quite a bit after that. It had gone up to $60, and back down to $7. And when it went back up again, I picked up another Bitcoin at $20.

Again, I thought I was throwing away $20. At that time, that was a bit much to be wasting on such frivolous stuff. Man, if I had only known.

At some point, I found a gambling website, and ran my 2 bitcoin up to 8 just by spinning a wheel on the site. I think Bitcoin was up to $100 per coin at this time, so winning $600 on a website seemed really cool. I did lose a bit before quitting, but I still had 4 Bitcoin at the end of that.

I remember hearing Jason Calacanis on TWIT (or one of those shows) say that there was no reason that Bitcoin couldn't hit $10,000. Wow. To this day, i remember him calling that number when Bitcoin was still not even $1,000. What a call!

When it hit $1,500, I told my wife about it. I paid $26 for Bitcoin, and it was now worth $6,000. She told me to sell. She really wanted me to sell it all.

I sold 1. $1,500 profit on a $26 investment can't be beat, and still having 3 Bitcoin after that was OK too.

Now Bitcoin started hitting the news. 

It crashed a bit after that, and took a couple of years to get back to the thousands. Then it hit the news again and the Crypto mania started in earnest. I can't remember the exact high, but it hit $19,000 per coin at some point.

Crash again.

So here we sit, with Bitcoin itself at $6,200. What a massive dip off the peak at $19,000. Should have I sold all my coins at $19K? If I could see the future, I should have. But where does Bitcoin go from here?

Does it start the long, multi-year run up to $20K again? Does it repeat the crash-boom cycle as it has in the past?

Or does it languish, eventually dropping more from here?

I really don't know. But I think the odds of it dropping from here are greater than zero. 

I used to say, in the future, there WILL be a thing similar to Bitcoin. There will be. It's guaranteed. 

The idea of having a trust system that is based in complex math, that results in contracts between two parties that can't be altered after the fact is just too good an idea. Too viral. Too needed.

We don't want to have to go to PayPal (or Visa, or Mastercard, or anyone really) to handle money transfers between two parties. Besides the fees, which are outrageous by the way, sometimes the middle-party makes decisions to influence the outcome.

Sometimes PayPal closes your account or freezes your account demanding more documentation or more information. Sometimes banks refuse to do business with you because they don't like what you do for a living. Sometimes companies charge you for the a service you're not expecting or a high amount you were not expecting, and you have to call them and spend an hour trying to get them to refund it.

We need a system where I can send $1 to you, and there is no recourse. No refunds. No middle party. And no surprise charges.

But is that going to be Bitcoin? Is it going to be Ethereum or Ripple? Or something else?

I suspect the banks (and PayPal) are working on their own cryptocurrency. If the need for this gets too great, they'll flip a switch and suddenly “PayPaleum” will be a thing and vendors who accept PayPal are magically all able to accept PayPaleum. 

That's the problem. The element of surprise is over. The major financial players are all awake to crypto. And they'll be ready to extend their monopolies to that space if there's ever a threat.

The fact that they haven't tells me that they don't see a threat yet. Which worries me too.

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