Member Neil’s Crypto Journey
Recently I asked long term Forex Mentor pro member, and new YIF member here, Neil McIver about his crypto journey.
Neil is a “tech guy” from the USA who has been living in Ecuador for over 20 years. He has bought crypto during it’s “wild west phase” and seen and no doubt had extreme highs and lows along the way!
I asked Neil “I know you have been involved a lot longer than me, what’s your take on where crypto is going next?”
“That’s a good question. Prior to about 2019, bitcoin has experienced phenomenal cyclic growth since its inception in 2009 when it was conceived and developed in direct response in protest to the 2008 financial crisis and massive bailouts. The first official BTC transaction
was for 2 large pizzas and the cost: 10,000 bitcoin.
The pullbacks from highs have been huge, as big as 87% and there have been about 5 or 6 of those in the years from 2009 to 2018. But since 2018, when it hit it’s high of just under 20k, bitcoin seems to have broken that cycle, pulling back briefly to the mid 3k level.
This year with the pandemic and recovering rapidly, but further breakouts to the upside just haven’t happened, being overdue.
I think the reason for this broken cycle is the access day traders now have to bitcoin. Before 2018, there was no way to really day trade it but now with exchanges, day traders are milking bitcoin for dollars, buying low and selling high, and that has essentially placed a tax on
bitcoin investors which I think has stunted it’s traditional exponential cyclic growth and is why bitcoin has pretty much calmed down.
Maybe that’s a good thing in one way as one complaint about bitcoin/crypto is the extreme price swings.
Where it goes from here?
I see that as determined by the current financial crisis due to lockdowns and stimulus. The US stimulus packages and vastly increased Fed Reserve balance sheet has all the ingredients of inflation. Dollars can be printed, but free-market crypto cannot so crypto is in limited supply.
Member Neil’s Crypto Journey
On top of that, the word now seems to be central banks are leaning toward a new financial system and a digital fiat currency. One thing holding back crypto is average people being unfamiliar or uncomfortable with having digital money on their smartphones, but I think if/when govs
officially sanction digital fiat on phones, it will essentially serve to validate to the public the idea of free-market crypto as a payment method.
On the minus side, most free-market crypto is really not usable for point of sale purchases at, say, supermarkets, because you cannot wait 30 minutes to an hour at a checkout counter waiting for a bitcoin transaction to go through. Visa & MasterCard work for POS transactions
because they are centralized and can go through in seconds. So crypto has to solve that problem which is hard for a decentralized monetary system.
I know you know Mike Maloney, and he put out a video a couple months ago interviewing the maker of the EOS (pronounced ee-oss) alternate crypto and allegedly solved this issue with it being both speed and transaction volume capable, even well surpassing what visa & MasterCard is doing now. It’s also not a mined crypto but works on an automated inflation of the EOS token supply which solves the problem of 51% attacks bitcoin is subject to (a problem which becomes more real as bitcoin can now only be feasibly mined by major computing centers). The EOS maker has given heavy thought into balancing both fairness and market speed needs and the design of EOS encompasses that.
In theory, it can work but I think is still somewhat untested as a model, even 2-3 years after it’s creation. EOS has its detractors, but it certainly has pioneered a solution cryptos need to compete as a general currency that no other crypto has yet done. It’s a bit long at about 75 mins, but I think EOS is mostly covered in the first 25 mins or so.
Member Neil’s Crypto Journey
Another negative on crypto is safety. I’ve given a few presentations about crypto to a few groups in restaurant settings locally and gave away a small amount of bitcoin to a random winner to both add some liveliness to the presentation and also to demonstrate a real bitcoin
transaction. One woman I gave some to about 2 years ago went to get a bit more serious this past March and couldn’t remember her wallet pin.
So she restored her wallet from her seed phrase and shortly thereafter, her crypto was transferred out of her wallet. When I questioned her, she revealed she stored her seed phrase digitally on the cloud using another app on her cell phone. So I think it was at some point during that
recovery process when her seed phrase was stolen and her bitcoin was lost, very possibly with spyware on her phone that may even still be there. It was only about $18 worth so a cheap lesson, but storing crypto on cell phones has to be somehow made safer for average, non-computer-type people, and that is a challenge.
So those are the elements in the crypto world as I see it right now, the good, bad and ugly. In the long term, I see crypto seriously competing with central bank digital token/fiat currency. Govs won’t like it, but they cannot stop it. It can be a cat and mouse game but the good guys making crypto have the advantage of hiding wallet apps on various devices and doing whatever they need to so that crypto can be usable. In that sense, I see crypto as the world’s first “living currency”. That is, a currency that is capable of adapting to changing bureaucratic
conditions and market needs.
Gold and silver have the advantage of being real & tangible money but crypto has the advantage of being far more divisible and transactable and therefore superior as currency in our modern digital world.
Bitcoin is currently king, holding right now about 75% of the total crypto market cap. That’s high based on historical benchmarks and it’s due for a correction in favor of what I call major altcoins: Bitcoin cash, lightcoin, ethereum and a few others. I think bitcoin will remain
king for the time being but it does only hold that status because it was first.
It’s really inferior to numerous other cryptos as it’s slow and far more expensive to transact. Since the software can always be upgraded, it’s theoretically possible for any crypto to be upgraded to address any shortcoming (being a “living currency”) so bitcoin improvements can’t be ruled out, but yes, I think I’m agreeing with you that a lesser coin could take the crown from bitcoin at some point, and it would happen when superiority in speed, transaction volume & transaction cost becomes apparent and relevant in the marketplace.
So, that’s my take on it.