Cryptic Thoughts
Crypto is probably the trending thing on the internet right now. People losing their minds over the crypto boom that is happening all over the world. Everyone wants to get their chunk of crypto and become a billionaire. But amongst all of these I am boggled with only one question. Should I invest in crypto? Well, then the question that comes to my brain is, “Should I invest in rupee?” It sounds absurd right? because what bitcoin or for that any other crypto-”currency” is supposed to be an universal currency. And if a currency in itself is volatile then why would anyone even invest in it? Imagine one mango costs a rupee today. I know that for the inflation to take hit and increase the cost of a mango would take sometime (removing the factors of demand and supply). But when you try to allocate a value to an asset in crypto it is so volatile that today the mango might cost one bitcoin (I know I am making a grave mistake comparing one rupee with one bitcoin but can’t help it) tomorrow it might cost may be a 100 bitcoins. Then we would be in a turmoil whether it is the demand for the mango that has grown or it’s just the currency that is creating the chaos.
Another interesting comparison that I found in recent times related to the crypto(especially bitcoin) is people keep comparing the asset class of crypto with that of gold. (Honestly, because that’s the only thing that it can be compared with). Gold is limited in it’s resources, so is bitcoin. So it’s value is going to keep increasing as gold. So the questions that arise here is, Is crypto that scarce? I know that bitcoin has a cap and the statistics of the bitcoin mining shows that almost all the bitcoins would be mined by 2025 if grown at this pace. But, the question here is crypto is that scarce? I mean, there are a lot of cryptos available out there. But we have to understand that there is only “gold” not some “lite-gold” that is another gold which has lower value. Second point being adoption. Gold as an asset class has got adoption from centuries and has steadily grown over the years. It is very linear in nature not exponential. But the issue here again is the adoption. Because gold as an alternate form of currency is accepted by everyone around the world. But does bitcoin (or any other crypto for that instance) has got that adoption? I would not jump into conclusions here. But I must admit that Tesla backing out from bitcoin adoption is a serious blow to the adoption of bitcoin. While Musk is promoting another coin, we got to wait for it’s adoption and see if that gets the adoption that a crypto is actually supposed to get.
I am really fascinated by the technological and organizational changes that blockchain as a technology is going to bring into the nature. Like the IPFS, the decentralized, censor-free, freedom internet. Or a decentralized market that Ethereum is trying to build. But when it gets to the finance and money making side of it, may be it’s too soon to comment anything about it? Is it a bubble? Is it a possible future currency? If yes, then which crypto is it going to be? Lot of cliffhangers but fingers crossed and waiting for a new decentralized world.
