Bitcoin and the majority of altcoins are at a 13 month low and some analysts predict further falls.
Miners around the world and especially in countries where electricity is expensive are selling off or hibernating their equipment. The bubble has well and truly burst from a coin price perspective.
But is it all doom and gloom? Are we seeing the beginning of the end for cryptocurrencies?
No. Absolutely not.
Right now mining is an opportunity, the fact that miners around the world have sold or turned of their equipment means the collective hashrate has fallen dramatically and the difficulty level has therefore dropped pretty much across the board.
This means when you mine now, you earn more coins than before, so if you hold them now, you’ll be in a much stronger position for when the market bounces back.
“A side effect of the falling difficulty is that solo mining may also become viable for miners. Now they have a very realistic chance at mining entire blocks of coins, rather than earning the typical fragments from being part of larger pools. In some circumstances, this opens the doors for some statistical advantages that can’t be clearly shown with online mining calculators or $ per day standard charts.”
Josh Riddet Easy Crypto Hunter
The below chart shows the falling difficulty level (green) and the increasing block generation time (blue) for Bitcoin mining. A direct result of the collective Bitcoin hashrate dropping since early November.
Source: https://bitcoinwisdom.com/bitcoin/difficulty Dec 2018
You have to ask yourself, ‘what is my business model?’ Am I looking for instant profit like when I bought my equipment back in 2017 when the markets were continually heading north with the velocity of a SpaceX rocket? Or am I investing in my future under the passionate belief that cryptocurrencies will one day rule the world?
“I create YouTube tutorials about Crypto mining with GPU’s because I still have the same feeling as back in 2010 when my cousin introduced me to Bitcoin mining: “This is the future and i want to be a part of it. In 2016 I saw the startup of the 1MW Genesis mining farm with sapphire cards and at the same time was making my own 3-4 Year Mining ROI Plan. I know people are concerned about the long return at present, but I can tell you that my €25000 setup made me 350 Ethereum a day back when the electricity cost alone was equivalent to 275 Ethereum a day.”
Bitcoin turned 10 this year, Ethereum is 5, the majority of other altcoins are between 1-4 years old only. Cryptocurrencies are all startups or early stage scale-ups at best. The internet took 10 years to reach the same levels of hype as crypto did in 2017 and then it infamously burst with the dotcom crash of 2001. Internet businesses collapsed, investors lost a lot of money and a whole host of traditional style businesses at that time (high street retailers for example) publicly said ‘I told you so.’
Fast forward 5 years from that point and Facebook was launched, Amazon was a household name globally and broadband subscriptions in the UK alone had climbed from 200,000 in 2002, to 13 million (The Independent:) by 2010. Jump to present day where our work and social lives rely on the internet, and the biggest companies in the world (the so called FAANG of Facebook, Alphabet, Amazon, Netflix & Google) are all tech companies with services centered around the internet.
Amazon accounts for over 40% of all online sales in the US and was the first US company to reach a $1tn valuation. Facebook has over 2bn users and Netflix are dominating streaming services. Those who failed to see the importance of embracing the technology curve have shut their doors, entered administration and disappeared into legend. Kodak, didn’t move quick enough, Nokia, played it too safe when Apple was innovating the iPhone and Blockbuster? GONE!
The below chart shows the impact of the dotcom crash on the tech market between 2001 and 2003, before the much steadier pattern of growth began in 2004. This can be attributed to the intrinsic value of internet services and user mass adoption maturing.
And that’s exactly it; maturity.
A newborn baby cannot walk, but as a toddler or child, they will rise and fall, scuff their knees and rise again to dust themselves down and learn not to fall in that same way again. As the child matures, so does their approach to life and growth goes from a physical meaning to one of wisdom and life achievements through adult life. Now an elderly person, they start to fall again, joints begin to creak and soon they will be gone. Perhaps a little morbid, but the point is nothing lasts forever and the value of their experiences, both good and bad, enable a new generation to step in and advance human civilisation further.
Business, governments, monetary systems are no different, everything matures with age before being replaced by a new generation of services, policies and systems.
Cryptocurrencies such as Bitcoin offer a true global currency without borders, without friction, with lower transaction and processing costs and far greater efficiencies for business and individuals. It provides the unbanked with a means to manage their finances, it removes the need for accounting and it eradicates manipulation from a central government or organisation. We’re here because of the past, because of the rise of technology and because of the falls in our traditional fiat monetary systems. Are their teething problems? Yes of course. Crypto is a toddler still finding its feet and the industry and technology as a whole has a lot of maturing to do before it can be mass adopted. But it is happening!
2019 should be a significant year with more institutional investors moving into the market. Poloniex, Grayscale, Bitfinex and Goldman Sachs backed Circle (to name a few) are offering institutional crypto investment services. ETFs & ETPs for crypto assets are mentioned across the media. Countries like Malta, Gibraltar, Japan & Switzerland are advancing regulatory frameworks and Santander have started using XRP for its cross border payments.
Over-the-Counter (OTC) Bitcoin trade volume vs Mastercard revenues 2018
There’s serious money pouring into crypto from the top; just look at top chart above and how Bitcoin is increasing trade volume year-on-year and how that trade volume compares to Mastercards annual revenue in the second chart, but what’s happening at ground level? Do we need an Amazon or an Ebay to start accepting Bitcoin as payment, or do we need a Facebook to launch their own token? Time will tell, but for mass adoption, we have to be able to use cryptocurrencies effectively at every layer within our monetary system and that means continued advances in user experience. When it becomes just as easy or even easier to buy something with cryptocurrencies as it is to use a debit or credit card, then mass adoption becomes an inevitability and that experience is closer than you may think!
“Go back 50 years and most of the world didn’t have indoor plumbing or electricity. A lot of great things have happened moving forward in 50 years. If you’re a pessimist, you’re not realistic. The optimists are actually the ones who accurately predict the future because the best of these things happen.” Tim Draper Venture Capitalist.”
Tim Draper Venture Capitalist