Weekend Update: Here’s how Crypto Potentially becomes Priceless
Well, while no one was paying attention. Traders packing it in for the weekend...Tier-1 Crypto decides to breakout. Sneaky little devils. With my entire Crypto coverage list breaking out tonight, I felt it necessary to muse about Crypto in general.
You see, I post my analysis here often. Many of my followers and passive readers don't know the abuse one subject's themselves to (Comments and Direct Messages) when you post something like Solana, ADA, ETH has bottomed...and Bitcoin is close to confirming a bottom.
The trolls come out to attack.
Most of it I'd like to think is in good fun and in the spirit of healthy debate. However, some of it gets personal. But tonight I can continue to relish in my analysis that after just over a year...November 2021 to be precise, crypto is now behaving in bullish fashion. Nonetheless, tonight I wanted to detour to share with you this weekend, how I think (Emphasis on think) Tier-1 Crypto can become potentially priceless...so follow along with me.
Remember the German Mark?
The Mark was the fiat currency of Germany from 1871 till January 1, 1999 when the country adopted the Euro. But what happened to the Mark? The Notes? What happened to the actual notes?
It’s hard to research the details but as much as I can ascertain, the German Central Bank burned the notes in their possession, exchanged Euros for Marks within their banking system (and burned the exchanged Marks). Same with the country’s coins. But we’re talking about the Mark...so we’ll leave coins out of this discussion.
What I found was interesting was that even today Germans hold Marks for posteriority in the hopes one day they will be worth a lot of money to collectors. But today, collectors who buy German Marks are not even paying face value. So how could something that clearly has value one day....be burned as worthless the next because a new fiat currency has supplanted it? I will submit to you two words. Two words that made you value the German Mark pre-1999.
PERCEPTION AND SCARCITY
That's it. Why do we value Gold? It's scarce. We deem it Precious. Why did we value the Mark? The German government backed this piece of paper and told us it has value. So our perception of the Mark had value. But in reality the Mark never had any value other than our Perception (based on our trust in the German government and the country's economy, and also the German Central Bank's ability to add or withdraw liquidity making it more or less) scarce.
Bitcoin has a market capitalization of $400.17B, Ethereum's is 189.83B, Solana is $9B, and Cardano's is 12.21B. Why?
Because Traders and Institutions perceptions of blockchain technology, associated projects, partnerships, etc. However, the one thing that makes Fiat currency different from Crypto is there is no Central Bank relationship. There is no endless printing of Marks, Dollars or Euros. Bitcoin and Cardano have a maximum supply. I cannot speculate how a crypto reaching max supply would affect other tokens like Solana or Ethereum that have no max supply. What I can tell you for a fact from an economic standpoint is if the US Dollar had a maximum supply today you would not be concerned with 6% inflation. We would have Hyper Inflation that could potentially be uncontrollable. Goods and services could easily become unaffordable for most people to acquire. The wealth gap would widen to unimaginable chasms. Suffice to say, you or I would not want to reside in those economies.
Let me just leave you with a possible thought. Let's assume none of us has a good grasp what Crypto looks like 20 years from now. But in the off chance, the slim chance, it's future value cannot be perceived today...as an owner of crypto...do you want to trade out it?
Best to all,
Chris
You see, I post my analysis here often. Many of my followers and passive readers don't know the abuse one subject's themselves to (Comments and Direct Messages) when you post something like Solana, ADA, ETH has bottomed...and Bitcoin is close to confirming a bottom.
The trolls come out to attack.
Most of it I'd like to think is in good fun and in the spirit of healthy debate. However, some of it gets personal. But tonight I can continue to relish in my analysis that after just over a year...November 2021 to be precise, crypto is now behaving in bullish fashion. Nonetheless, tonight I wanted to detour to share with you this weekend, how I think (Emphasis on think) Tier-1 Crypto can become potentially priceless...so follow along with me.
Remember the German Mark?
The Mark was the fiat currency of Germany from 1871 till January 1, 1999 when the country adopted the Euro. But what happened to the Mark? The Notes? What happened to the actual notes?
It’s hard to research the details but as much as I can ascertain, the German Central Bank burned the notes in their possession, exchanged Euros for Marks within their banking system (and burned the exchanged Marks). Same with the country’s coins. But we’re talking about the Mark...so we’ll leave coins out of this discussion.
What I found was interesting was that even today Germans hold Marks for posteriority in the hopes one day they will be worth a lot of money to collectors. But today, collectors who buy German Marks are not even paying face value. So how could something that clearly has value one day....be burned as worthless the next because a new fiat currency has supplanted it? I will submit to you two words. Two words that made you value the German Mark pre-1999.
PERCEPTION AND SCARCITY
That's it. Why do we value Gold? It's scarce. We deem it Precious. Why did we value the Mark? The German government backed this piece of paper and told us it has value. So our perception of the Mark had value. But in reality the Mark never had any value other than our Perception (based on our trust in the German government and the country's economy, and also the German Central Bank's ability to add or withdraw liquidity making it more or less) scarce.
Bitcoin has a market capitalization of $400.17B, Ethereum's is 189.83B, Solana is $9B, and Cardano's is 12.21B. Why?
Because Traders and Institutions perceptions of blockchain technology, associated projects, partnerships, etc. However, the one thing that makes Fiat currency different from Crypto is there is no Central Bank relationship. There is no endless printing of Marks, Dollars or Euros. Bitcoin and Cardano have a maximum supply. I cannot speculate how a crypto reaching max supply would affect other tokens like Solana or Ethereum that have no max supply. What I can tell you for a fact from an economic standpoint is if the US Dollar had a maximum supply today you would not be concerned with 6% inflation. We would have Hyper Inflation that could potentially be uncontrollable. Goods and services could easily become unaffordable for most people to acquire. The wealth gap would widen to unimaginable chasms. Suffice to say, you or I would not want to reside in those economies.
Let me just leave you with a possible thought. Let's assume none of us has a good grasp what Crypto looks like 20 years from now. But in the off chance, the slim chance, it's future value cannot be perceived today...as an owner of crypto...do you want to trade out it?
Best to all,
Chris
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