Anyone taking in news over the past month has been informed of the exponential rise in the value of crypto-currencies (cryptos). To the average person interested in growing an investment, albeit a new and volatile type, they hear the news, find an online exchange and put some money in. Especially since Thanksgiving, the mad rush to invest has spurred a whole industry of article writing to advise the masses. About half to two thirds seem to be pessimistic about cryptos while the opposite party, including some respected economic news outlets are guardedly optimistic. So who’s right?
Just to get this off my chest, there is one characteristic of a poorly written and shoddily researched article about cryptos: They all mention the tulip mania in jolly old Netherlands. Any time you read about tulip mania and cryptos in the same article, just close it out. Aside from the superficial similarities of two rapidly escalating ‘assets’, cryptos are not apple to oranges with seventeenth century tulips. However, when you see the comparison, take that as an indication that a) the article was actually written by a robot or b) a lazy-ass journalist all too willing to ape his peers and plagiarize other lazy writers. Most articles also bring up the more generalized attribute of a ‘bubble’. This is valid. Yes, cryptos will be, and maybe are in a bubble, but as an asset class, it’s in good company; witness gold and other precious metals, fiat currencies, and real estate….hello! All have bubbled and will do so again, probably in your lifetime. A bubble does not make an asset unreal as some of these writers attempt to assert.
The three articles I present have only a little to do with crypto-currency, but that’s for a reason. There is an underlying technology for cryptos that will be as or more important than digital currency. Blockchain. My apologies dear reader if this geeks you out. The selected articles are as simple as I could find but the important thing as you skim them is to see the potential reach of blockchain. The reason I bother to point this out is because in the dozens of articles I’ve read about cryptos, few bother to explain what it is or why it’s important. But if you want to want to make money in cryptos, you should know something about the technology. That will help you understand who to believe when you read the thousands of articles out there about cryptos. I’ll summarize like this: Block chain is a new fundamental technology built on top of the internet that is almost as basic as the internet itself. Has your work and life benefitted from servers and databases? Blockchain is that basic, so even if you don’t understand it, do understand that blockchain has a much higher utility than a tulip or even gold for that matter. Let that sink in for awhile.
Articles:
A Brief History of Blockchains, by Jill Carlson, Medium
This article IS a primer on cryptos in relation to blockchain
Could Blockchain become the mainstream platform for digital transactions?
,by Taru Khurana, Cisco.com
Provides a fundamental illustration of how blockchain works
Estonia, The Digital Republic, by Nathan Heller, NewYorker
To understand how much broader applications work, consider the example of Estonia which incorporates blockchain along with other technologies. Even if you’re a Luddite, you need to appreciate how the rest of the world is already far ahead of the United States and to get a sense of where we may eventually go. Money and cryptos are just the bare beginning.
