Sunday, April 22, 2018

Cryptocurrencies are DOOMED !



Given that cryptocurrencies are going through a minor recovery of sorts, it is time to have an update on cryptocurrency investing.

April 2018 is a very fortunate month for folks who are interested in this asset class. This is because Barclays Bank has devoted most of their Equity Gilt Study 2018 report to technological disruption and cryptocurrencies. While I do not have the actual report, the Economist has summarised what it had to say about the state of cryptocurrency investment world.

The basic gist of the study is that cryptocurrencies have peaked. There will no longer be another upside like what the luckier millennial investors have just enjoyed. The reality that this investment class does not produce a dividend is now sinking in.

Cryptocurrencies also face four challenges :

a) There is a lack of trust in cryptocurrencies. 

Generally speaking, people trust currencies backed by government.

b) Cryptocurrencies lack sovereignty. 

Governments and businesses hate it because there is potential for tax avoidance.

c) Third is privacy. 

Once you lose your private key, every transaction made on the wallet will be revealed.

d) Irreversibility. 

Finally blockchain transactions are hard to reverse.

Where cryptocurrencies remain relevant are in societies where trust is minimal or already lost. It is not difficult to imagine that cryptocurrencies will be quite useful in  a failed state like Venezuela.

How Barclay's bank concluded that the peak is over for cryptocurrencies is super interesting because they got their whiz kids to model the euphoria like an infectious disease. There is a ridiculous ramp up of prices at first but eventually the disease fizzles out as a large part of the population is immune to it. Once prices falls, investors lose hope and sell. Soon prices fizzles out, just like the way a fever breaks.

I really want to get a copy of the report because the approach to model cryptocurrency as a disease outbreak is really cool and amazing and can be reapplied for other asset bubbles.

For now I have concentrated my cryptocurrencies in my Coinbase account and will be liquidating it soon since Coinbase will no longer work with XFERS on 15 May 2018.

If I just retrieve my cash into my margin account, I would have enough to sustain my mortgage payments, effectively attaining my biggest resolution I have set for myself this year.

( If a reader is a a private wealth client of Barclay's bank and access to the document, I'd be most grateful if somehow you can send me a link to a PDF copy)




5 comments:

GMGH said...

Hey Chris,

Wanted to chime in on point 3 and 4.

Regardless of private key ownership, all transactions made on non-privacy blockchains are public and open to all to see. Keeping your private key properly safe-guarded does nothing to prevent identification of your public key address and tracing of all your funds.

Blockchain transactions are not hard to reverse - they are nigh impossible. It is more of a feature, rather than a challenge.

Unknown said...

Clickbait title. Shitty article. No research. Stop writing stuff you don't know about

Christopher Ng Wai Chung said...

GMGH,

Thanks for visiting.

I was not clear with the privacy issue. You are right. What I'm saying is that if your private key is compromised, all historical transactions based on your public key will be tied to your real identity.

For point (4), in the last TechLaw conferences, the hackers were poking fun at a patent that proposes an editable blockchain. Never say never, since Ripple is not even decentralised.

Regards

Christopher Ng Wai Chung said...

Unknown,

Thank you. You are the reason why I write articles like this !

Regards

Verseun said...

Unknown nick- unable to refute any points. Nothing salient pointed out.

Kid throwing pebbles in the dark.