What’s Going On With Crypto?

A year ago, I invested $1,000 in bitcoin (BITCOMP). Today, that’s worth $10,000.

OK, I made those figures up. I actually invested and have invested and keep investing in bitcoin and, more importantly, ether – the currency of Ethereum (ETH-X) – in which I have more confidence for the future. I don’t sell them – HODL guys, HODL – but the last year has been interesting. In March, $1,000 invested would be worth $10,000 today so, the bit I didn’t make up there is the multiples.

I have a good memory and remember buying some bitcoin when they were $60 each. Now they’re over $30,000 and nearing $40,000 each … oh and now nearing $30,000 again.

I have a bad memory: I invested $1,000 in bitcoin when they were $60 each, but left them on Mt.Gox as a value store and then Mt.Gox disappeared and lost them. They would have been worth almost $600,000 today. Whatever.

Q: What’s going on?

A: Banks have woken up to cryptocurrencies.

JPMorgan Chase (JPM) are predicting bitcoins will break $146,000 per coin in the long-term whilst a Citibank (C) analyst has predicted over $300,000.

Meantime, I’m sitting here and wondering: has the world gone to pot? Or, rather, is the world smoking pot?

I can completely understand why people are buying bitcoins and ethers as, whilst we are in crisis and lockdown, they think it’s an investible asset. Digital gold. Amazing.

But when reality returns, there’s also a huge likelihood of a massive sell-off and removal of investment in what bankers have called a Ponzi scheme for the last decade.

Now, this is where it gets weird: it’s a Ponzi scheme and has no backing, asset or governance; it’s an investible asset, and everyone is getting a piece of the action. In fact, the real bottom-line here is that bankers are making cryptocurrencies respectable, as I blogged recently.

But then you have to come back to the truth: money is just a construction; Countries are just a creation; Governments and companies don’t exist; and your life is a blue pill (see Matrix).

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