If you’ve been paying attention, you’ll know that there is a compelling case to invest in or speculate in cryptocrrencies, whether you believe cryptos have longevity or not. We are due to see one of the world’s fastest-growing markets in recent history – or possibly ever.
But in case you’re still sitting on the fence, here are seven simple reasons why it’s essential you and your family get some exposure:
1- This is the first major asset class to be created since 1694.
No, that isn’t a typo. The last time a major asset class like this was introduced to the world was the British government’s Gilded Edge Bond in 1694. The interesting thing here is that human nature never changes. When shiny new things enter the scene, people are naturally curious and capital flows in. Basic economics dictates that when capital pours into an asset, prices rise (all things being equal) and when capital flees or is extracted from an asset, prices drop. With cryptos, capital is pouring in. At the beginning of 2017 the market cap was $17.7 billion and by the end of the year it was touching $800 billion!
2- Almost half the people on the planet don’t have access to the Internet or a bank account.
Around 3.2 billion people are not yet online and don’t have a bank account. Many large corporations are addressing this and it won’t be long before big companies will be beaming free Internet to the whole of the African continent and South-East Asia, where most of this demographic live. This, combined with very cheap (under $25) smartphones, will make the early twenty-first century the New Age of Enlightenment. These may be lofty dreams, but many estimates say this will happen within the next ten years. And when it does, it’s extremely probable that crypto accounts (which you can create in minutes) will be more popular than traditional bank accounts.
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3- The cryptocurrencies market cap is exploding
The year 2017 was a big one for cryptocurrencies, in both capital and the number of cryptos coming online. The market cap grew by over 4,500 per cent and, although I don’t think 2019 will equal the same percentage growth, it will dwarf 2017 in actual quantities of capital pouring in. While 2017 didn’t hit $1 trillion, during 2019 I expect to see multiple trillions entering this market. We are standing on the precipice of huge inflows.
Another factor is the upward pressure that the introduction of cryptocurrencies exchange-traded funds (ETFs) will have on the market. An ETF is a financial instrument that trades like a stock but mimics the price of the underlying asset. This is how traders can trade exotic assets like oil, gold, uranium and soybeans without actually having to take delivery of them. What is happening at the moment is that a flurry of Bitcoin and cryptocurrency ETFs are about to come online, which will allow people to play with the cryptocurrencies market without actually investing in cryptos. The crucial thing to note is that with most ETFs, in order to set one up, you have to buy the underlying asset first in order to launch and sell your ETF. In simple terms, this means that, if I wanted to set up a $100-million-Bitcoin ETF, I would need to go and buy $100 million worth of Bitcoin. All of this will add positive pressure to prices.
4- Blockchain will consume the planet just as the Internet did.
Blockchain or distributed ledger technologies (DLTs) will continue to disrupt and streamline any and all industries they touch. I cannot stress enough that what the Internet did for communication in terms of sheer disruption/innovation, cryptos will do for money and blockchain tech will do for trust.
Every middleman business will become extinct within 10–15 years, as an efficient market has no need for ‘margin slicers/flow inhibitors’. These include business brokers, estate agents and even accountants to some extent. One thing I’ve been saying for a while is that it won’t be long before someone puts a estate agency completely online on a smart-contract-based blockchain, where users will be able to buy a house for less than $10 in fees and in less than ten minutes. There is absolutely no reason why anyone should wait months to sell their house and be fleeced to the tune of thousands, all the while being delayed by the various middlemen.
Blockchain tech will make its way into anything you can imagine, from your smart devices at home to air traffic control, automated cars, auditing, remittances, voting systems, land registries, medical records, insurance, trading and financial services.
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5- We are nowhere near ‘Peak Bubble’.
I’ve mentioned several times already that this tiny market is set to explode in terms of market cap, talent attraction, investor attraction and government regulation. This bubble is most likely to blow the previous tech bubble out of the water in terms of its size and speed.
A rough rule of thumb, with game-changing innovative tech/industries like this, is that the bubble is likely to grow to at least twice the size in half the time and also crash harder in half the time. On that basis, we should be looking at a $20 trillion market cap by the end of 2019, followed by a sharp crash spanning 9–15 months, with a 90 per cent or more decline in prices and quantity of cryptos. Whether or not it will play out like that, nobody really knows, but this is a fabulous opportunity in the short term to jump into this soon-to-be-rising tide and capitalize on the growth.
6- It’s potentially the best hedge against sovereign intervention and market pandemics.
There are many uncertainties in the markets, but one thing it’s safe to assume is that whenever a new unregulated market comes on to the scene, governments and their regulators won’t be far behind to sanction and impose measures ‘to protect the public from unregulated/unruly investments’. That’s the pretext they normally use to approach these things, but the objective is really to try to control it in order to collect the necessary taxes they feel are owed to the coffers. What history beautifully illustrates, to those who study it, is that, whenever a government has tried to ban, fix the price or control a certain asset, it doesn’t always go to plan and, in most cases, the very asset they were coming down on ends up growing even more. This happened with gold in the early 1930s, when the USA tried to ban private ownership of gold, and you can go all the way back to the Roman Emperor Diocletian in 301 ce, who imposed the ‘Edict of Maximum Prices’ in an attempt to address the world’s first outbreak of hyperinflation. One of the measures he imposed was a ban on selling salt above a certain amount, the infringement of which was punishable by death. This was important for him, as all soldiers were paid in salt (this is where our word ‘salary’ comes from). Despite this, the price of salt continued to rise.
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Whatever the world’s governments try to do, the complexity, flexibility, stealth and invulnerability of cryptocurrencies will make it all futile. Cryptos are like the fabled Hydra, except it has tens of thousands, if not hundreds of thousands, of heads distributed across the world.
If you really wanted to, you could completely mask all your crypto activity by using privacy coins like Spectre, which completely obfuscates all transactions, addresses, wallets and messaging using ring signatures, stealth addresses and TOR OBFS4. You don’t need to know what all those terms mean but, in essence, Spectre coin offers complete privacy and using TOR OBFS4 allows undetected use of TOR in countries that block it, such as China and Iran.
Regarding market pandemics, what you’ll find is that when a market collapses, as the stock market did in 1987, 2001 and 2008, investors flee to areas of perceived ‘safe-haven’ such as gold and silver bullion, land, the US dollar, the Japanese yen and cash in general. No one can say for certain, but I believe cryptocurrencies will be added to this basket of safe havens. The cryptocurrencies market isn’t battle-tested yet; we have seen it only in the post-2009 economic boom. What will be fascinating is what happens to cryptos during the next stock market crash. If I were to put money on it (which I am), I’d say cryptos will do well.
According to Forbes at the end of 2017 there were 2,043 billionaires, and according to Credit Suisse there were 35 million millionaires. This doesn’t account for all the ‘black money’ people in the background, so these figures are rather conservative. Credit Suisse stated that the richest 1 per cent now owns 50 per cent of the world’s wealth. That’s a total combined wealth of $280 trillion. If these people just allocated 3 per cent of this wealth to the crypto market, we would see $8.4 trillion flooding the market and booming prices. I believe that this is already starting to happen, which is why we saw some irregular inflows and outflows of market cap running up towards the end of 2017. This is an overt ‘tell’ that the Big Money is pulling the market back down while loading up more for themselves.
7- This is the biggest bubble and ‘greater fool’s game’ ever.
What’s happening now is a huge short-term bubble, and it’s the public wading in that will boom and pop it. This was originally a reason I kept cryptos at arm’s length, but I decided to open my mind and hunt for the opportunity. If I’m correct and we do see all this capital and interest flooding the market and the crypto market cap hits $10 trillion or more before it starts popping, this presents us with the three biggest ever profit-making opportunities, as outlined in This Post
- Exponential growth
- Shorting it
- A slow rally.
That’s why I’m so passionate that everyone needs some exposure to this. To miss out on these opportunities is simply sacrilegious. You will never in your lifetime see another net-worth leapfrogging event like this, ever.