Source
Since signing up to Steemit, inevitably I have been exposed to lots of crypto currency reading. Most of it ranging from enthusiastic to outright manic. I found it so refreshing to read this well thought out post by Preston Byrne, a lawyer in the crypto space, who coherently argues for the opposite case, it can soon all come tumbling down...
https://prestonbyrne.com/2017/09/01/the-bear-case-for-crypto/
Myself, I am trying to wrap my head around the whole thing...
I believe that the technology definitely is here to stay, but which particular coins will prevail remains to be seen.
As with the whole internet bubble, you have as many tribes as there were companies/coins , all swearing that their favorite would rule the world! Afterwards, it became evident that a huge portion of internet "greats" simply disappeared and those that were considered the early winners, have become irrelevant a mere decade and a half later.
At least with the internet bubble, critical thinking about these companies was easier because you could look at the business model from the point of view of the average user and see if it made sense.
Cryptocurrency is more opaque to me, unless you are pretty deep into it, it is difficult to get a feel for it and what it could mean. Like having a creditcard in 1950's I guess...
The technology, the use cases, the gap between the promised Walhalla of crypto payments and the stark realities of a few quick back -of-the-envelope calculations of what it would actually take to make it work at scale,... it inspires little confidence.
Remember virtual reality that was supposed to rule the world by now? Great potential and so many potential use cases... What happened to that? Where's my holodeck? In many cases technology, although valid, doesn't take off because of timing rather than anything else...
Is the cryptocurrency technology useful? Undoubtedly yes.
Is it going to go mainstream? I think for daily use as an average person there are still too many hurdles.
It is going to get there someday but security issues, handing fees, acceptance etc. will stand in the way for most people.
Are the current prices warranted? Probably not for 95 % of them... lots of magical thinking going on it seems.
I am willing to believe the concept has value, and it is an exponential technology.
But the manipulations are outrageous and obvious.
Too many ICO's (maybe even Bitcoin variants) seem to be blufpoker , hoping to ensnare enough people and cash out before it all comes tumbling down.
In the midst of all these hundreds of coins undoubtedly there are few that may become the future giants, but there are no guarantees on anything, (see pet.com, Myspace, AOL, Yahoo, ... ).
In the mean time, can you make money off trading in crypto currency?
Most definitely it looks like for a while at least.
But, how long before the musical chairs stop though?
As valid as the concepts are, the whole ICO situation seems so manipulated it reminds of the penny stock shutdown in the 80's which was well described in the post !
If you are willing to take a punt, you can undoubtedly do well because the upside is so high, and if you are levelheaded enough to only risk what you can afford to lose, you can somewhat limit the downside.
But with this whole emotional situation, I see little critical thinking going on, I would love to find an equally balanced and well thought out post for a continued bull market. If you want to be able to think critically, you need credible sources on both sources of the argument.
I am still trying to make up my mind myself. I am convinced that the whole concept of cryptocurrency is valid. It is fun to see it grow, but the whole exuberance, genuine or maybe manufactured seems too much...
I remain skeptical, nothing can keep going up for ever, sooner or later the musical chairs stop.
Still considering jumping in for a little while and have some fun though......
I am a total newbie in this, no preference one way or the other, would love to hear from the veterans in this space what you think about the article!
What critical thinking tools would you use on this whole phenomenon? Or just stop thinking and jump in :) ?
EDIT... The publication of the post got screwy, first it showed only half the post after publication, so I rewrote it, then the missing words reappeared. The blockchain creaking.... ?
very strange, when I clicked post, the text was way longer, when I checked 9 minutes later only half of the post was published, a lot of text was missing!
EDIT, even stranger after I rewrote, now the missing text reappeared again...
It is completely over hyped, but imo it is promising bc:
smart contracts are powerful financial instruments, and they basically simplifying the whole financial processes. Like investing even in only remotely useful ideas.
As a result, ICOs based on basically options modelled as smart contracts are allowing the allocation of capital much more efficiently. An example is that blockchain is thriving in Africa. Bc in Africa the financial industry is not so well developed like in Europe, Japan or America.
ICOs are new, and hyped and hot, and as always a lot of fantasy is going into this still new technology.
I mean so far more than $2bn was invested in ICOs. That is a huge number.
We will see what will survive.
I totally agree that the concept itself is probably valid and valuable.
My doubts are related to the ability of the tech to live up to the promise. Critics say that the code of these smart contracts is very vulnerable to hacking. And that is when talking about the serious ones who actually have tech, a lot of ICO's seem to be based on pure smoke and mirrors. A great talk about the security issues is from John McAfee recently about inherent security issues:
The scary bit also as a casual onlooker is his remarks on loosing several thousands of dollars simply due to user error on his part (John McAfee is probably one of the most techsavvy users around) The potential to lose your money seems to be larger at various stages. Especially interesting his remarks about phone based wallets.
may be it is an odd comparison, but the first wifi routers you could buy had no encryption, you could easily hack your neighbour and capture his data.
websites had no ssl (even until 3-4 years ago).
adopting early is always riskier and less convenient.
it's part of the experience:-)
Thanks for that post it's a well argued post and somewhat alarming. I had not seen the the source article you posted before but I came to a similar conclusion myself which prompted me to post this blog earlier this week.
https://steemit.com/bitcoin/@cryptojaxx/bitcoin-is-unstoppable-is-it-really
The question is not really if the powers will interfere but when. Things are starting to look decided riskier now. The recent news from China and news today about by JP Morgan CEO is yet another attack from the establishment and is another sign that storm clouds are gathering.
But storms can do damage and blow over so I'm still hopeful that cryptos can pull through this challenge like they have pulled through previous setbacks and come back even stronger.
About pulling through, I have no doubt that the serious ones will remain albeit much lower valuations. But which ones are "serious"? 5 out of 100? 1 out of 100? As a potential user, I still need to think way too much about where to keep any crypto... see the John McAfee video... with all his tech prowess HE lost money doing simple transfers...
Exchanges don't seem that solid and stable even disregarding the legal threats...
No way I'll ever put it on a phone wallet after listening to McAfee's talk...
Trezor etc seems a bit of overkill if you start with a few hundred bucks but of course should that grow, it can be too late for solid security measures...
Yeah the tech is currently way too immature for widespread market adoption. Non-techies are not going to be able to deal with safe handling all the different passwords and private keys for each wallet.
There will have to be a whole lot of dumbing down of the UX without losing security and utility before cryptos can really be mainstream.
Then there's also the deflationary problem as I've blogged about recently.
https://steemit.com/cryptocurrency/@cryptojaxx/why-you-re-always-gonna-have-a-hard-time-spending-your-cryptos