Concerning the future value of different cryptos it really helps a lot to think more in use cases that are needed and why they are right now or in the future might be needed … and not so much about the price a certain crypto asset has right now. It’s much more important to answer these questions:
– Is it likely for the project you’re thinking about investing in that there REALLY is a use case in FUTURE? And is the trend for the use of this rather down trending (like may be the current financial systems) or up trending (like Virtual Reality or the Internet of things)?
– How much competition is there already? How much growth of competition can there be expected in general, the near future and in long term? How fast and easy might it be for an investor/new project to come in “and do the same” (Is it pretty easy, only achievable with much effort or close to nearly impossible)? EOS is in my mind a good example of “only achievable with very much effort” or rather “nearly impossible” in that case.
If there is a market leader/dominator in a special field: Why does he have such a dominance? Is this justified? Or is it mainly because there aren’t any other competitors yet and may be another new project could and would do the job better?
I think the answer to most of these questions gives you good reasons to think more positive or negative about certain crypto currency projects. From an investment opportunity you’re probably looking for the project that is most likely “secure” on it’s way to and in the future.
But how to determine that, even by answering these questions above can be very difficult. For example with competition it’s really not that easy I think, let’s view three different cases:
– Strong and a lot of competition will normally bring out a good product in the end. If you’re in such a market before others it’s usually most of the time a huge advantage. But it’s only a chance that you profit from that – not for sure.
– If there’s no competition at all this would be theoretically better for investing and would make things a lot “easier”. But very low competition usually means that the market isn’t interesting, or at least fair to say “not interesting enough” at this moment in time for most investors. This doesn’t mean that the market is not worth to have a look or even focus the research on. But it’s compared to other markets harder or it will take a longer time for a good ROI and therefore for most “smart” investors probably mostly just don’t have the time and resources for these markets compared to more “interesting”(faster ROI) markets.
– And if you are a pioneer in your field, you might be miles ahead of thinking and nobody else gets it. So in that case you wouldn’t have any competition because it’s simply not possible.
The price of something for example is also always relative. Of course, it simply is the current value of something which is determined by different factors. But that’s just the price that other people are in this special place of time are willing to buy or sell it. This does not mean at all that the price is justified (I think Ripple is a good example for that…).
There may always be whale or shark investors who are willing to pay very much higher prices just to gain more percentage of a special currency or for other reasons. This always “disturbs” the “real” price something has.
So all these questions and the answers to them should also always be rethought with caution to adequately fit in the “big picture”.
So what comes into my mind when thinking about this is for example the following:
– On “short” term (relatively short in “the big picture”, so let’s say 3 years from now): Great for Ripple may be, because it is the unreachable market dominator in some parts of the finance sector because it’s basically owned by them who want to use it (Is this fair to say..?!). BUT this is still centralized and will as further time will go show the weaknesses more and more in comparison to decentralization. Because of that it will probably decrease in value because the use case for centralization financial “things” will simply decrease.
– On “long” term (relatively long in “the big picture”, so let’s say 5 to 10/15/20 years from now): Great for projects that focus on future trends & problems that actually REALLY NEED to be solved rather than old stuff which value in future will decrease because it will be replaced with something new or better or simply disappear because it isn’t useful anymore.
I wrote some articles about coins that I think respond positive to most of the questions I asked above there. Here are the links:
A special coin which immediately comes into my mind when rethinking about all of this is VIBE [LINK]. They have a very nice concept for Virtual and Augmented Reality in combination with blockchain technology. So they are some kind of in the field of virtual reality which is pretty sure an upward future trend. Also they have – to my knowledge – not really any competition at the moment. Or if I’m wrong with that it’s probably fair to say that they are one of the more known projects in that field. I think it’s the case I described where a project is really ahead of his time. So it’s more of a question WHEN they will be successful then IF – I think.
The price of the coin is extremely volatile so far since one enormous pump action last year when it went up from like 0,25 $ to 2,25 $ in a very very short amount of time – only to fall down as fast as it grew. For a long period it then didn’t move very much at all until it recently started to become very active again. Let’s just have a look at this chart, it says it all:
So from all I said looking at this chart with overall positive answers to the questions above I guess investing at this point would probably have good chances for a great outcome in the future.
I’ll end this article with a video from CryptoDaily’s which reminds me on something very important which I did not really cover in this article but is also very important in the context of all of this: The relation of price and adoption.
Feel free to leave a comment if you agree or disagree and if you think I have brain bug anywhere don’t be shy to tell me 🙂
This is not financial advice, but my opinion. You should also never ever listen to what somebody says blindly and do what they tell you – this concerns investing in crpyto currencies, any investments in general and your life – YOU make your own decisions!