Friday, December 15, 2017

A rational point of view: The future wealth in the Blockchain won't come from Bitcoin, but from the innovations that come after

Yes it is very true that people are making very good profits from trading cryptocurrencies like Bitcoin.  However just as the way Wall Street scoffed the internet back in the early 90s by saying it would have little or no effect on business, so too will the real wealth of blockchain technology not come from dabbling in the pond of cryptocurrencies, but in the technology and innovations that will come from the platform years from now.

Recently a group of archaeologists and anthropologists published a really interesting, comprehensive study of prehistoric civilizations and their sources in wealth. 
It turns out that the most prosperous people and civilizations across ancient history– and I’m talking 10,000+ years ago before any recorded history– were those who harnessed new technologies to become more productive. 
Back then it was all about agriculture. 
Quite simply, the people and civilizations which embraced and used the technology prospered. Those who didn’t got left behind. 
We’ve seen this over and over again throughout history. The printing press. The advent of machinery in the Industrial Revolution. The emergence of the microchip. The Internet.
Now it’s the technology behind cryptofinance which absolutely has revolutionary power to disrupt the existing financial system. 
Think about it– every single financial function that banks currently monopolize, from deposits to lending to money transfers and currency exchange, can already be done better, faster, and cheaper outside of the banking system. 
On the flip side, it’s obvious that a lot of people have made a lot of money in cryptocurrency. 
And that’s great. Plenty of money has been made… and there may likely be plenty more money to be made speculating in the cryptocurrencies themselves. 
But the big money has always been made by the folks who were on the forefront of developing the technology and applying it to bigger and bolder uses… NOT speculating on price volatility. 
Back in ancient times, once people discovered that horses and oxen could multiply the labor of human beings, there were probably plenty of traders who made money speculating in animal prices. 
But the real wealth was made by people who applied that new ‘technology’ to bigger problems and fundamentally changed the way their societies did business.
This will very much be the case with cryptofinance. – Sovereign Man
If you really think about it, the total market cap of all the cryptocurrencies is around $500 billion, but the market cap of Amazon.com alone is $567 billion.  And their value is not based on current earnings and fundamentals, but in the expectation of their ability to innovate in online retail over the long haul.

Most cryptocurrencies will be like the Dot Com companies... rising in price over a period of time, then crashing out of existence once the mania that drove them dies off.  But the fundamental technologies outside of cryptocurrencies is where the real money will be made during the next chapter, and the smart people are preparing for, and investing in that future.

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