There has been a lot of controversy and disagreement on the viability of cypto assets like Bitcoin. It’s been called the next “store of value” (akin to gold), a highly secure medium of exchange, an innovative piece of computer science, as well as an energy intensive, speculative scam. There are plenty of smart, informed financial minds on both sides of the argument.
Today the market value of crypto assets is over $1 trillion. The $100 billion IPO of Coinbase is seen as a validation of the asset class. Crypto bulls say there are many applications and use cases that will spring forth from the core technology. Its utility may have several applications, though they are not being well articulated at this point. Does that make it a good investment idea?
In some ways it reminds me of the dot.com era. Visionary analysts touted the dawn of the “new economy.” Clicks meant more than cash flow and customers! I remember asking the CEO of B2B company who was looking to raise money, “what is your business model?” It was a reasonable question since they had some technology but no definable product line. He looked at me like I was an idiot for asking, and replied indignantly “we are a B2B company.”
Many Webvan type businesses died after receiving large scale venture funding. A lot of promise and hype went for naught. And then there was Amazon, Google, Facebook, etc. who sprang from these roots. Mark Cuban likens the crypto movement to that era and he may be right. How to pick a winner in the haystack? Your bet is as good as mine! But be sure to classify this is a bet. It’s too early to call this nascent asset an investment.
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