This article is not a CoinShop.us BUY Recommendation. We offer opinions, explanations, and answers to questions about cryptocurrency. We are not advocating investments or even participation in these markets. This analysis may support or refute strategies for investment in crypto assets.
What about Cryptocurrencies make them valuable and growing in popularity? Peer-to-peer transactions, cross-border transfers, and a store of value are the legitimate uses of cryptocurrencies. The market for crypto is volatile and its future is uncertain. Even estimating the number of users is impossible.
Estimates point to about 140 million bitcoin users in 2018. The ethereum wallet provider MetaMask reported 192,000 weekly active users in April 2019. Millennials, in particular, have shown a preference for, and awareness of crypto assets.
Crypto assets’ value proposition is programmable ownership, and an asset class beyond the reach of governments,
Bitcoin is considered to be similar to gold-- a liquid store of value. Its cryptographic properties give it qualities that make it difficult to seize and put its supply outside the control of governments, the decisions of central banks.
Cryptocurrencies, led by bitcoin, introduce verifiable scarcity. Bitcoin cannot be duplicated. It can be owned in the same way that a $20 bill is owned, or the way a certified coin is owned, with assurances as to its scarcity. It brings those qualities of ownership into the digital world.
The big question for investors looking into crypto is, do bitcoin and other cryptocurrencies look like the assets of a company that's heading into a disappointing IPO, or like a fast-growing opportunity that still has a lot of room to run?
With cryptocurrencies, the responsibility for its safe-keeping is in the hand of the investor. Crypto assets are “bearer assets,” they are not issued to a specific person, and if access to the wallet where they are held gets misplaced, there is no recourse. If a third party gets access to the wallet and moves the digital coins, they are gone.
The potential for theft is the deepest pitfall for cryptocurrencies. The system is too complicated for the average investor, especially the Babyboomer generation. In my own experience, after studying crypto for a few months and making a small ($300 Bitcoin, $300 ethereum, $100 Zcash), investment, I am not comfortable with my own level of technological savvy to effectively buy, sell and hold onto my digital currency.
Alexey Andryunin, a 20-year old college student from Moscow, became a sensation after he opened up to CoinDesk how his company was helping little-known crypto projects get traction via inflated trading volumes. In a video interview, he further explains the business of market manipulation and explained why he believes the cryptocurrency market rules make manipulation inevitable.
In the crypto markets, exchanges earn revenue from transaction fees and listing fees. Pumping up false volume with wash trading has allowed new market entrants to rise to the top of large listing services like CoinMarketCap.
The asset category is new and highly volatile, difficult to define, impossible to predict. Valuation theories that do exist have not yet stood the test of time.
As an investment, cryptocurrencies in their present state have too many risks and perplexities for us. CoinSHop.us does not recommend Bitcoin or any other cryptocurrency investments at this time.
To make it a sound investment, it will need vastly improved security for owners and simpler processes for buyers and sellers. It is wise to take operational considerations alongside investment decisions.
With cryptocurrencies, we cap our position size instead of using stop-losses.
Cryptos are so volatile they'd stop you out about every other month. We only put in as much money as we would be prepared to lose if the position went to zero.
We will be monitoring and following the progress of this asset and make further recommendations when we find it appropriate.