8 months later, price still in the same range of around $200-300 all year.
Transaction rate has continued to rise steadily throughout the year, though a spike occurred this summer due to stress testing of the network, but has not experienced the rapid growth needed to sustain the late-2013 enthusiasm.
Bitcoin is suffering a bit recently with the Core vs XT debate. If it can make it through this and get to a state with a better block size, without forking and splintering the community, then it will be in better shape.
As time goes on and blockchain technologies continue to be worked on, the likelihood that Bitcoin eventually becomes surpassed/replaced by a useful 2.0 altcoin rises, imo. By ‘useful’ I mean something that could be a useful real world application of the blockchain, and be profitable to holders of the crypto token, rather than just have a value fueled by speculation.
So not something like Dogecoin or Litecoin, but projects that are actually trying to do something cool with the blockchain, such as smart contracts, prediction markets, financial stock/bond/forex exchange, decentralized web, etc. The era when you can just copy bitcoin, and change parameters like block time or switch to scrypt or whatever are past. For a blockchain project to be interesting/promising now, it has to be useful.
However, there is not yet any clear successor. There are a number of promising projects, but most of them are really still in alpha stages of development right now (Ethereum, Bitshares, Maidsafe, etc). They are really at the stage where only super users can do anything with them yet. Ripple is the most advanced and highest market cap, and is being used by a some financial institutions, but it is still extremely centralized, and the value proposition of its coin (XRP) is questionable in my mind, given that multiple companies have cloned the technology, stripping out the XRP token from the network because it really isnt necessary. Still, I own a bit.
Given that I now have the majority of my crypto funds into about 8 or so different 2.0 projects, most of which are in the top 20 market cap of crypto projects.
I think there are a lot of people out there who were told by someone ‘buy bitcoins’, and they did, and they either got in early enough that they made good money, or they bought in Nov 2013 or later and have a loss, and they either bailed since then or they are sitting there, and they dont really know much about the technology. That might have worked in 2011 when barely anyone knew of bitcoin, but at this point it got enough media attention that plenty of people have heard of it, and its going to be hard to make more order of magnitude gains unless it becomes highly useful and adopted.
The real money left to be made in the sector is in picking what 2.0 blockchain projects (either existing or yet to be made) have a future, and buying into them before they become well known. Diversifying among all the most promising ones is probably the best idea, because you only need one to make it big and give you a 100x or more return, and it can cover you even if every other one goes to zero. However, most people find out about cryptos when they are in a hype/pump phase, so if you just buy them at the time you find out about them, you will be looking at a huge loss, every single time. You have to either research every project and determine which ones are both promising and currently low prices relative to their price over the last year or two, or you have to wait until whatever coin you just found out about has a large correction. For example, Ethereum just came out and got a lot of hype this month, but its priced at around 5-10x the IPO price right now, (the price investors bought it for in early 2014). If you buy now there is a good chance youre buying the hype bubble, better to wait until it has corrected and stabilized in a price range first.
One very neat thing about cryptocurrencies to me is that its like an entirely new venture capital market ,that is open to everyone on earth, not just to wealthy ‘accredited investors’ with a $1M+ net worth. Anyone can help to fund IPO crypto startup projects, and has the chance to be their own venture capitalist and try to pick something that will succeed. Its so much better than funding a kickstarter for something you like, and then having no equity at all in the project you helped make possible.
I still think there is probably a place for Bitcoin as the store of value coin, at least if it can be forked with community approval and become more useful (larger block size). Most other proof of work coins are pointless in my mind, though coins that try to improve on the anonymity features could have a place (dash/bytecoin/monero are the main contenders there).
Most of the useful blockchain 2.0 projects that are trying to do something other than being a store of value have discarded proof of work, or are in the process of doing so (Ethereum), because its too expensive to secure a network that way when your goal is to, for example, provide smart contracts or prediction markets. Also, other security algorithms don’t waste lots of electricity to run a bunch of ASIC miners, which would be a huge problem for the earth if bitcoin actually became the primary currency.
Disclaimer: I own at least some of every crypto I mentioned in this post. Except Litecoin, because its pointless. Doge is pointless too, but I still own a little because its fun, even though I think it will probably eventually die.
So, if I am reading your mood right, Bitcoin is looking old and tired, but those sexy 2.0 alts, they are so fine :-) The only problem is, you can’t choose one :-D
Bitcoin is suffering a bit recently with the Core vs XT debate. If it can make it through this and get to a state with a better block size, without forking and splintering the community, then it will be in better shape.
And without the mining pool becoming too centralized.
This post was written in January 2015
It is now August 2015 and the price of Bitcoin is about $230. Not much volatility, the price didn’t go anywhere.
So, eight month later, any need for updates or staying the course?
8 months later, price still in the same range of around $200-300 all year.
Transaction rate has continued to rise steadily throughout the year, though a spike occurred this summer due to stress testing of the network, but has not experienced the rapid growth needed to sustain the late-2013 enthusiasm.
Bitcoin is suffering a bit recently with the Core vs XT debate. If it can make it through this and get to a state with a better block size, without forking and splintering the community, then it will be in better shape.
As time goes on and blockchain technologies continue to be worked on, the likelihood that Bitcoin eventually becomes surpassed/replaced by a useful 2.0 altcoin rises, imo. By ‘useful’ I mean something that could be a useful real world application of the blockchain, and be profitable to holders of the crypto token, rather than just have a value fueled by speculation.
So not something like Dogecoin or Litecoin, but projects that are actually trying to do something cool with the blockchain, such as smart contracts, prediction markets, financial stock/bond/forex exchange, decentralized web, etc. The era when you can just copy bitcoin, and change parameters like block time or switch to scrypt or whatever are past. For a blockchain project to be interesting/promising now, it has to be useful.
However, there is not yet any clear successor. There are a number of promising projects, but most of them are really still in alpha stages of development right now (Ethereum, Bitshares, Maidsafe, etc). They are really at the stage where only super users can do anything with them yet. Ripple is the most advanced and highest market cap, and is being used by a some financial institutions, but it is still extremely centralized, and the value proposition of its coin (XRP) is questionable in my mind, given that multiple companies have cloned the technology, stripping out the XRP token from the network because it really isnt necessary. Still, I own a bit.
Given that I now have the majority of my crypto funds into about 8 or so different 2.0 projects, most of which are in the top 20 market cap of crypto projects.
I think there are a lot of people out there who were told by someone ‘buy bitcoins’, and they did, and they either got in early enough that they made good money, or they bought in Nov 2013 or later and have a loss, and they either bailed since then or they are sitting there, and they dont really know much about the technology. That might have worked in 2011 when barely anyone knew of bitcoin, but at this point it got enough media attention that plenty of people have heard of it, and its going to be hard to make more order of magnitude gains unless it becomes highly useful and adopted.
The real money left to be made in the sector is in picking what 2.0 blockchain projects (either existing or yet to be made) have a future, and buying into them before they become well known. Diversifying among all the most promising ones is probably the best idea, because you only need one to make it big and give you a 100x or more return, and it can cover you even if every other one goes to zero. However, most people find out about cryptos when they are in a hype/pump phase, so if you just buy them at the time you find out about them, you will be looking at a huge loss, every single time. You have to either research every project and determine which ones are both promising and currently low prices relative to their price over the last year or two, or you have to wait until whatever coin you just found out about has a large correction. For example, Ethereum just came out and got a lot of hype this month, but its priced at around 5-10x the IPO price right now, (the price investors bought it for in early 2014). If you buy now there is a good chance youre buying the hype bubble, better to wait until it has corrected and stabilized in a price range first.
One very neat thing about cryptocurrencies to me is that its like an entirely new venture capital market ,that is open to everyone on earth, not just to wealthy ‘accredited investors’ with a $1M+ net worth. Anyone can help to fund IPO crypto startup projects, and has the chance to be their own venture capitalist and try to pick something that will succeed. Its so much better than funding a kickstarter for something you like, and then having no equity at all in the project you helped make possible.
I still think there is probably a place for Bitcoin as the store of value coin, at least if it can be forked with community approval and become more useful (larger block size). Most other proof of work coins are pointless in my mind, though coins that try to improve on the anonymity features could have a place (dash/bytecoin/monero are the main contenders there).
Most of the useful blockchain 2.0 projects that are trying to do something other than being a store of value have discarded proof of work, or are in the process of doing so (Ethereum), because its too expensive to secure a network that way when your goal is to, for example, provide smart contracts or prediction markets. Also, other security algorithms don’t waste lots of electricity to run a bunch of ASIC miners, which would be a huge problem for the earth if bitcoin actually became the primary currency.
Disclaimer: I own at least some of every crypto I mentioned in this post. Except Litecoin, because its pointless. Doge is pointless too, but I still own a little because its fun, even though I think it will probably eventually die.
So, if I am reading your mood right, Bitcoin is looking old and tired, but those sexy 2.0 alts, they are so fine :-) The only problem is, you can’t choose one :-D
Diversification is good.
And without the mining pool becoming too centralized.