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.
- The overall market capitalization of Bitcoin was around $45 Billion. Today it is around $600B.
- 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.
- 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.
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