Early Investing in Bitcoin, Microsoft and Amazon; How Do the Investments Compare?

Bitcoin Investment Now Synonymous To Microsoft And Amazon Investment In 2000

Bitcoin market is showing mixed signals, making it hard to make that vital decision of whether to invest or not. This situation is similar to that big tech companies like Microsoft and Amazon were about 20 years ago.

Digital Coins Market Struggling Again

In the last few weeks, the volatile nature of the cryptocurrency industry has been apparent. Prices of digital coins have been fluctuating wildly over a window of a very short period. About three weeks ago, Bitcoin (BTC) surpassed the $8, 000 mark, going up to $8,400. Investors got excited believing that another major bull run was in the offing only for the coin to shoot down back to around $6,500. The hope that the long bearish trend that has characterized this coin for almost a year now was coming to an end was dashed just as quickly as it had started.

The bull run was short-lived dashing investors and speculators’ hopes. Now in mid-August, BTC has since gone back to its struggling ways and is pushing down threatening to go below $6,000. According to many crypto enthusiasts, if BTC goes below this level, then it could get damaged permanently, ending its long struggle for dominance. Many are hoping that this does not happen since if it were to happen, BTC would never be able to achieve its intended purpose and potential.

Bitcoin seems to be in a bad position, but it is worse with altcoins. At the time of penning down this article, almost all cryptos were on the green side. Ethereum (ETH) has been going down significantly in the last two days. Ripple, (XRP), a coin that has shown some potential has since dropped 93% from its record high.

Many people in the crypto industry are trying to figure out the reason behind this bearish trend. Meltem Demirors, the Chief Strategy Officer of CoinShares thinks that this trend is due to lack of institutional investors in this industry. He says that such investors have kept from investing in the crypto market considering the markets behavior. Some have completely lost interest in this market thus keeping the much-needed money to spearhead and grow the industry.

Demirors continues to say that the current crypto situation is due to the fact that these coins are still valued by their price. Even though price is an important consideration, it is also vital to look at the intrinsic value these coins have as well as their goals and technology. There are many digital coins that have show potential to change various industries like banking, but have been unable to do as much since investors are still valuing them in terms of their prices. The sad aspect is that most if not all altcoins’ prices are determined by the behavior of BTC.

New coins have especially been hit hard by the bearish movement. This situation has left blockchain start-ups that have intentions of establishing their own coins using Initial coin Offerings (ICOs) with limited options. These new companies can either liquidate their assets and save a bit of what they have at the moment or risk it all and hope for the best in the coming days. Looking at the options, these start-ups do not have much of a choice. This trend is definitely is not how business that hope to be successful in the future should be operating.

Many ICOs are trying to raise start-up capital using either of the two dominant digital coins; Ethereum and BTC. However, these firms do not have any control of the coins’ market prices and are left constrained with the prices going down at such an alarming rate. There are stable coins out there though, and which can work to maintain their value, but the big question lies in which of those coins can be trusted.

Is History Repeating Itself?

Demirors thinks that this is so. He says that the current crypto situation is more or less like that of great tech companies about 20 years back. People had little faith in companies such as Microsoft, Amazon and Intel. These companies struggled a lot to get a foothold in the tech industry. 20 years later, the companies have grown tremendously and are now among the leading tech companies in the world.

Everyone that made the conscious and risky decision to support the mentioned companies waited for almost a decade to realize returns on their investments. Their patience and risk appetite eventually paid off. Most of them are now very rich.

Demirors notes further that new technologies that seek to disrupt the conventional nature of things often take too long to be understood and appreciated. Considering that people have been using physical conventional money as a means of exchange for thousand of years, it will be very difficult for cryptocurrencies to get the much-needed mass adoption.

This change, he says is much bigger. Digital currencies have just sprouted almost from no where and threaten to take over the place of conventional money. Even with the numerous advantages that this form of currencies present to the world, people will still find it very difficult to shift from their traditional way of operations and ditch conventional currencies for the digital ones. This situation is especially true for the older generation who own much of the worlds’ wealth and thus still calling the shots.