On 10/25/17, Kim Iskyan from Stanberry Churchouse Research published in Daily Wealth about investing bias holding people back from cryptocurrencies simply because it’s something they’re unfamiliar with.
I would value his thoughts on something I’ve never heard before: Because cryptocurrencies are *too* easy to create, there is almost no cost to enter the business. There will be thousands of different cryptocurrencies. Bitcoin will be just one of hundreds, with no market distinction making any one better than the other. Since there is no “brand name” behind a crowd-sourced and crowd-capitalized equity, it may have little marginal value.
There is no “industry sector moat” effect protecting Bitcoin and preventing others from entering the market. The cost of entry for competitors is simply too low. It will be like Xerox losing their edge to photocopiers and Kleenex being taken over by facial tissues. Or like the IBM PC yielding to import clones.
8 November 2017 update – it’s happening. Now we have companies pushing ICOs (Initial Coin Offerings) and selling their newsletters about how to pick the next great coin (the link will try to play a video – just close the window after about 15 seconds, choose “stay on page”, and it will let you read the text). There is no financial regulation on creating a new coin and cost of entry is simply a computer and a blockchain. As each new coin hits the market, it shows huge percentage gain while the price is so low and everybody learns about it. I wonder what will happen when we have coins for each franchise, or each movie star, or Star War coins, or TV show coins, or what not. Pretty soon the type of coin will become a commodity.
People at this point are thinking about profits from one type of coin. Instead, think of types of coins as types of stocks. Some will bust. Some will do very well. Where is the entrepreneur who puts together the trading screen for 1000’s of types of coins just like we have now for 1000’s of stocks. Well, actually we already have the World Coin Index.
Science coins, social network coins, gold backed coins, e-commerce coins, video streaming, marketplace, trademark coins, travel coins, real estate, mining, chatting, sports.. and the list goes on. A hundred today with dozens of new ICOs closing before the end of 2017.