Hi. Jim Rohr here.
Pay close attention. I hope you learn something here as I did.
I am commenting to the cut copy below which are comments by Mr. Matt Frankel, posted as a chat dialogue on The Motley Fool.
It will make sense I promise. Read my comments and then read the chat with my comments in mind.
Point 1 - Value is determined by scarcity, and demand. The more of either the higher the perceived or real value. In both cases one could make the argument that some coins are going to be in demand and some not. Market cap and trading volume are indicators of what others think. Follow the trends.
Point 2 - In the end it will be like all markets - a 3-4 person race. Look at rental cars as an example but others could be sited. There is Hertz as #1 and then there's everyone else. Market share will be divided by the leaders...the rest playing catch up. Or phones. Samsung, Apple and everyone else - Nokia, LG and Motorola.
Point 3 - The "hidden message" here in his comment is simply this: Dollars can be manipulated because they require a custodian - the FEDRES and US Treasury. AND the value of a dollar as to spending power is falling and has since its creation in 1913. This is why you can't afford the new _______________. Not so with Crypto. No custodian and no market manipulation per se. As in Point 1, crypto is scarce and the market is saying we (the market and consumer) need an electronic payment system in an electronic world. If you are holding cash be prepared to have it eaten away to almost worthless in the next year. It's lost half its value in the last 10 years. That's your 401K spending power being absorbed. Concerned yet? Pay rising to match the 50% loss - measured at 0.7% per month? I doubt it.
Welcome to the new world of "the store of value."
In one camp is gold and silver. In the other is Crypto. In the third is the dollar. If you are holding the first two, your good. If your holding the latter in an inflationary cycle, you're well - betting on deflation - and that my dear friends is a fool's bet. (Think - a dollar buys more during deflation. Get it. So what's the opposite condition? Dollars don't buy squat in an inflationary condition. Think - inflation = cheaper payoff of debt. Who has the most debt? Right. Got it.)
(Jim Rohr 2020)
Frankel: Well, as far as mainstream adoption as a currency, there's two use cases, there's adoption as a currency and, kind of, as a store of value. So, as a currency, I see three main obstacles to really mainstream adoption of bitcoin. One, it's very volatile. You don't want to buy a type of currency that could be worse twice or half as much in a week. And if you don't think bitcoin could do that, look at some of the charts from the past few years, bitcoin can go up or down by a few thousand dollars in a week. So, that's another thing, the volatility scares people away.
No. 2, there are too many cryptocurrencies [laughs] and it's easy to make a new one. So, when I was checking just before we were on the show, there are over 4,100 active cryptocurrencies right now. I mean, most of them aren't big, but there are a lot of big ones. There's over 10 that have a $1 billion market cap or higher. There's a lot of cryptocurrencies out there, and it's pretty easy to, for institutions if they want to, to make their own. So, the idea of bitcoin at first was one central currency, but if there are 4,000 of them [laughs] floating around, it's not really that... it defeats the purpose.
And No. 3, as you mentioned, there are some really easy ways to pay with [laughs] U.S. dollars right now with a lot of these fintech innovations. I mean, I tap my wallet on a card reader at some places now and I could make a payment. I mean, U.S. dollars aren't that tough to use anymore. So, in my mind, for bitcoin to get mainstream acceptance, it needs to do something that you can't do with dollars, which I get that there's a lot of use cases for international money transfer and stuff like that, but between volatility and the fact that there's literally thousands of them. And the innovations in dollar-based fintech, I really can't make the mainstream use case myself.
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