Late to the cryptocurrency markets, I have been following Bitcoin and altcoins for a little over two months. Here are my observations of what is happening in the cryptoverse.
First, I think there is some truth in what Jamie Dimon had to say about Bitcoin. It is as if the Emperor's new clothes are showing. We are experiencing a de-coupling of Bitcoin as the go-to currency as its allure fades.
I can understand why people who have been trading in cryptocurrencies long-term would wish to believe in Bitcoin and its continued longevity, but it is being superseded in utility, application and appeal. People new to cryptocurrencies are pouring into the market. While they may start out with Bitcoin, they keep reading and branch out.
An argument proffered is Bitcoin's usefulness for trading other cryptocurrencies. Yes. I get that. If you make a packet in other crypto ventures and ICOs, it is useful for both buying in and cashing out, without having to revert to fiat. This is actually money-laundering, in my opinion. I can see that Bitcoin can also be useful for buying things both locally and from overseas, etc. without creating a paper trail through one's bank. If that is its appeal, better coins exist.
Besides the widespread availability of alternatives, what I think is going to cause Bitcoin to lose popularity in the long term, and fall in value, is the high planetary cost of mining.
In my second Steemit piece, I likened the increasing proliferation of cryptocurrencies to the Pokemon craze of the late 1990s. In it, I drew an analogy between the demise of the Pokemon craze due to the introduction of an ever-dizzying array of new Pokemon characters which children found overwhelming to the current state of play in the cryptoverse, where it is impossible to keep up with ICOs - although this is being reined in. I'm not suggesting that people will switch off cryptocurrencies, as children did from Pokemon, but people new to the crypto market will not feel the same attachment for Bitcoin as long-term holders seem to because it hasn't rewarded them in the same way, while there are many other coins, offering a diverse range of features. In this way, Bitcoin will continue to lose market share. The way that the value of Bitcoin is reflected in the wider cryptoverse, so that any dips and rises in Bitcoin are mirrored, is a danger to the whole market - even though Bitcoin's features aren't universal. It is not one size fits all. Bitcoin isn't synonymous with the entire cryptocurrency market, but because of branding, this isn't widely understood.
The advantage of Bitcoin as a coin to trade for other coins in exchanges is, I believe, at risk. Currently, I can buy most popular cryptocurrencies through an Australian exchange using fiat in Australian dollars. Obviously, I pay a premium for this service, but it's seamless - and if I were buying through overseas exchanges, I would still have to pay the fiat transfer fees. This way, there is one transaction and I am paying for the convenience. When I bought my first Bitcoin through Coinbase, it took about three weeks for the account to be accepted; I was buying in Euro because I happened to be visiting Europe when I set up the account. Because I was transferring money using an Australian Credit Card, I was restricted to a 500 Euro account limit per week. The attractions of a hoard of Bitcoin acquire appeal under these circumstances, I must admit. Swapping between denominations, exchanges and with the added disadvantage of quantity restrictions imposed by Australian banking regulations to prevent money-laundering and other nefarious activity, caused me not a little inconvenience and frustration, not to mention a fairly significant transaction impost. My point is, exchanges make the market, that is, the collateral that is accepted for purchase (country-specific banking regulations aside).
Well, I sold out of the Bitcoin I'd purchased under those painstaking conditions on the Friday before the big slide, which has continued, at a 50% profit. I believe there are a lot of vested interests keen to maintain the value of Bitcoin. However, one of its key requirements to maintain value is confidence. There are so many competitors out there that Bitcoin is being eclipsed - in both appeal and utility. If I had a tonne of Bitcoin right now, I would actually use some to buy gold.
Which brings me to another point. Financial experts cite Bitcoin's lack of a "standard" against which to measure - and appraise - its value. Well, Bitcoin is the standard for cryptocurrencies, which is one of the reasons cryptocurrency traders and loyalists cite to defend its position as a standard. But in my opinion, I think that Bitcoin - and other cryptocurrencies - need to be quoted against a gold standard - or fiat linked to the gold standard. I feel that gold holdings will in the future be recorded on a blockchain ledger - and Bitcoin and other prominent cryptocurrencies will be measured against it. Steps are being undertaken that will pave the way for this to happen:
https://www.cryptoninjas.net/2017/08/21/4-startups-bring-gold-blockchain-choice-challenge/
There are some economic undercurrents afoot that will become clear in the next few months. Currently, both Russia and China are moving towards pegging their currencies to the gold standard, making them less reliant upon the US$ petro-dollar to set their value. These changes will be reflected by similar shifts in the cryptocurrency markets.
Blockchain technology is here to stay, as is the ability to shift reciprocal value via cryptocurrency coins. Merchant adoption will follow ease of access and utility. I view cryptocurrency as a means to build retirement wealth, so it's for the long haul, performance permitting. I can't help seeing the responsibility for maintaining private keys as a risk for holders. We are all ageing at the same rate, though some are at a different rung on that ladder, and it is a medical fact that people over 40 begin to experience increasing memory loss. Improvements in the private key domain would be welcomed. Perhaps a system could be developed whereby an app will recognise the holder and give access. It could be a device attached via a USB cable that triggers on breath chemistry recognition, or DNA - access being denied if any stress or anxiety is noted :-) Although this might give rise to further anxiety and stress....Perhaps it could be a 2FA process and be coupled with voice recognition.
I see a continued unwinding of the marketshare of Bitcoin, as well as a continued slide in its comparative price and value. I also see exchanges in the future trading cryptocurrencies for gold.
The gold standard isn't dead - it's been hibernating in a manipulated holding pattern, ready to be unleashed once global citizens were sufficiently laden with debt. I think that's about now. Cryptocurrency exchanges are wealth spinners. I can absolutely see people being able to trade for gold coins or denominations in bullion, transactions that will be recorded on a blockchain, and the actual gold being apportioned a weight and a certificate. The "holder" will get a private key to their share of the gold in the vault just like they do now for cryptocurrency.
Children need to be taught the universal languages of computer programming as trading borders melt away and robots take over the menial tasks of factory workers and day-to-day living. Perhaps blockchain can deliver the much-vaunted UBI, funded by the public service jobs it renders obsolete.
Image of gold bullion from this site:
http://www.mining.com/web/bank-of-england-offers-free-virtual-tour-including-its-gold-vault/