crypto, crypto, crypto...

One of the most common and interesting topics in my recent conversations is around cryptocurrency. I wrote about Bitcoin over 4 years ago (link here). Since then, the topic has gained more popularity and a lot more money has flowed into the space. Elon Musk, the CEO of Tesla, has become a figurehead for cryptocurrency. Tesla invested part of its cash reserve into Bitcoin, Elon cryptically tweets about Dogecoin (which was originally developed as a joke) and announced Tesla would accept Bitcoin as payment for their cars and then changed that policy, sighting that the energy usage is not sustainable enough and is hard on the environment. It is amazing the influence he seems to have over the cryptocurrency market, even addressing it recently on Saturday Night Live.

 

Below is a recap and updates to some of the information I wrote about four years ago.

 

  • I mentioned the first real-world transaction for bitcoin was in 2010 when 10,000 bitcoin were used to buy two pizzas, which would have been worth about $40M in 2017. Today those 10,000 would be worth over $300M.
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  • The overall market capitalization of Bitcoin was around $45 Billion. Today it is around $600B.
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  • Since the invention of Bitcoin, other digital currencies including Dash, Ethereum and Litecoin have also become fairly popular. All of these coins still exist, and it is estimated there are around 8,000 different cryptocurrencies.
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  • Governments could try to interfere. China has since banned cryptocurrency transactions. Congress and numerous states have introduced bills and have pending legislation regarding cryptocurrencies.

 

One thing that has remained consistent is that cryptocurrencies remain very volatile. Take a look at the price range for what are probably the three most talked-about cryptos recently.

 

                              Recent Price       One Year Price Range     Current Market Cap (approx.)

Bitcoin                  $32,500                 $8,608 - $64,788                               $600B

 

Ethereum            $2,000                   $221- $4,372                                      $225B

 

Dogecoin             $0.22                     $0.002277 - $0.737567                   $27B

 

 With thousands of cryptocurrencies, I don’t believe they can all coexist successfully forever. There will likely be some that rise to the top (maybe some that haven’t even been invented yet) and many others will likely fade out. If you are interested in cryptocurrency, it is important to do your research. That said, as much research as you do, keep in mind that the concept and technology are still fairly new, and lack a long enough track record to draw any firm conclusions.

 

In my last letter I said, “The concept is intriguing and I look forward to seeing how it develops”. Though we are several years down the road and there is a lot of momentum in the space, I feel similarly today. 

 

 

 

Advisory services offered through Arbor Point Advisors. Securities offered through Securities America Inc., Member FINRA/SIPC. Arbor Point and Securities America are separate companies. CA Insurance #0E88557

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Advisory services offered through Arbor Point Advisors. Securities offered through Securities America, Inc., Member FINRA/SIPC. Arbor Point Advisors and Securities America are separate companies. This site is published for residents of the United States and is for informational purposes only and does not constitute an offer to sell or solicitation of an offer to buy any security or product that may be referenced herein. Persons mentioned on this website may only offer services and transact business and/or respond to inquiries in states or jurisdictions in which they have been properly registered or are exempt from registration. Not all products and services referenced on this site are available in every state, jurisdiction or from every person listed. CA Insurance #0E88557

Advisory services offered through Arbor Point Advisors. Securities offered through Securities America, Inc., Member FINRA/SIPC. Arbor Point Advisors and Securities America are separate companies. This site is published for residents of the United States and is for informational purposes only and does not constitute an offer to sell or solicitation of an offer to buy any security or product that may be referenced herein. Persons mentioned on this website may only offer services and transact business and/or respond to inquiries in states or jurisdictions in which they have been properly registered or are exempt from registration. Not all products and services referenced on this site are available in every state, jurisdiction or from every person listed. CA Insurance #0E88557​

Rancho Bernardo Financial Planner