Cryptogeddon – The beginning of the end of Cryptos
Cryptogeddon simply means the beginning of the end of cryptocurrency
Detractors of the crypto industry have been predicting that the industry will collapse for many years now. They make comparisons to the dot-com boom in the 90’s and predict that the bubble is bound to burst.
And with the recent downturn in crypto markets, the doomsayers are predicting that the crash will come soon.
Are they correct?
Has cryptogeddon started?
Do we need to get out while we still can?
Let’s have a look at some of the facts so that we can make an informed decision.
Are Cryptos Just A Passing Fad?
There is no doubt that they are the current flavor of the month, as it were. Investors worldwide have been throwing money into the industry, hoping to hit it big. If we look at the market cap for the industry over the last few years, it’s clear that there has been a massive upsurge in interest over the last year or so. See for yourself in the graphic below
So yes, similarities can be drawn to the dot-com boom of the nineties. And, yes, the bubble will burst at some stage. It’s logical because the current fervor for investing in this industry has led to investors ignoring potential red flags.
Despite the fact most ICOs don’t even make it out of the planning stage and into a working application that is released, investors are still gaga about investing in them. Everyone is hoping to find the next Bitcoin opportunity.
To say that the crypto industry itself is a passing fad, however, is not accurate. Bitcoin, believe it or not, has been around since 2009 and currently has a market cap exceeding $113 billion. So, it clearly is not a here today gone tomorrow operation.
If you want to see some other success stories within the industry, go over HERE. It shows the top performing cryptos at this stage and the statistics are pretty impressive.
We don’t see those companies tanking anytime soon because they have thought out their offerings carefully and proven that they can work. The truth is that the blockchain tech that makes cryptos work does show real promise. It’s a very malleable tech that has a lot going for it.
But like the dot-com companies in the 90’s, there is a lot of potential to make money. So, while everyone wants to get in on the ground floor, there are many companies that are trying to take advantage. Some have rushed into the process without thinking through the actual implementation of their idea, and some are just outright scams.
These companies have very little chance of success and are unlikely to last for long because the idea they are based on is unsound. So, when the bubble does burst, these companies will be the first victims.
Some Companies Will Survive Cryptogeddon
Those companies that are based on solid principles and utility, like Ethereum, for example, will take a knock when the bubble bursts but will recover. Think of them as the modern-day Microsoft or Apple. They have staying power because they are based on applications that have real-world value.
And, if we examine the historical performance of these companies, we’ll see that they have already weathered some serious storms. So, in our opinion, we’re not facing the total annihilation of the industry that the doomsayers predict.
How Do We Survive Cryptogeddon?
The question then becomes, how do investors weather the storm when the bubble does burst. The answer is that you need to keep your head, both when investing and when deciding to sell. Start off by being selective about the cryptos that you invest in. Do your homework properly ahead of time – do keep up to date about news in the industry and cryptos that have the industry buzzing.
Do read through the whitepaper that the company puts out carefully. Yes, it’s boring, but this is like any other investment portfolio, you have to know what you’re getting into. Critically analyze the proposal, asking the following questions:
- How solid is the idea? Is this a problem that really needs to be solved?
- Does the proposed solution make sense?
- Does the team have the know-how to not only arrive at the solution, but also the business acumen to bring it to the market and make it a success?
- How much thought have they put into the proposal? Is there a carefully laid out plan, or just a bunch of nebulous ideas without much information about the practicalities?
Next up, diversify your investments within the industry, as you would normally. Get a good mix of different potential applications. That way, if some of the investments don’t pan out, you have a chance of making up your investment with the others. This way the effect of Cryptogeddon can be minimized, if at all it will come.
Now, kiss the money goodbye. We’re not saying this to scare you out of investing, but rather to prepare you for the inevitable dips in value that are bound to come. You don’t want to invest your rent money in the hope of making a quick buck. If that’s what you’re planning, you are starting off with a bad hand already. Cryptos are still growing and there’s no clear sign on when they’ll stop.
My Conclusion on Cryptogeddon
There is a lot of risk here, and there is a better than average chance that your investment might be lost in its entirety. If you approach it with the view that this is a complete gamble, and that you could lose the money at any stage, you won’t be as likely to invest more than you can afford to lose.
But, even more importantly, you won’t be as tempted to dump everything when the market does drop again. That means that you’ll have a better chance of riding out the vagaries of the market over the long term.
By doing your homework carefully, though, and by maintaining the right attitude, you increase the odds of being a winner with this type of investment. It is bound to be a bumpy ride, but the crypto industry is a long way from being over and done with.