Cryptocurrencies has been on fire. The financial media cannot stop talking about Bitcoin making new all time highs. You have celebrities such as Katy Perry asking Warren Buffett about Bitcoin. Don't believe me just click on this link (not fake news) Katy Perry Asks Warren Buffet About Bitcoin. Here is my take on cryptocurrecy such as Bitcoin. I will refer to Bitcoin as representative of all cryptocurrenices.
Bitcoin is clearly in a bubble. However I don't expect to burst anytime soon excluding government crack down or hacking. Bitcoin similar to its fiat cousins like the US Dollar is backed by nothing. Bitcoin and fiat currencies have no intrinsic value and have no commercial uses. Unlike Bitcoin, fiat currencies are backed by their governments. However, unlike Bitcoin, fiat currencies can be printed to infinity while Bitcoin cannot.
US Dollar is the world's reserve currency for many reasons such as stable economy, rule of law, strongest military backing and stable government. Bitcoin has none of these supports so it is unlikely to become the world's reserve currency. Bitcoin is a good way for spy agencies, criminals, investors, people trying to bypass currency controls in their home country to move money discretely since there is no centralize control over the network.
The underlying technology is called the Blockchain which is a ledger type of system of computers. I admit I still lack an understanding of how the Blockchain works but I do know enough to say this technology will change our lives. Wall Street watch out. I have missed the boat on Bitcoin to make some serious money. I advise people to put no more than 5% of the net worth into Bitcoin or any other crypocurrency. You have to think of it as lost money in order to make some real money.
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