My Quick Notes on Cryptocurrencies

I have lately taken a deep interest in cryptocurrencies. Reading on this is really like going down a rabbit hole. The thinking is impressive and the stories captivating.

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Canbike.org

This past week there has been a “civil war” in the Bitcoin world. The main contention is about an upgrade which some view as overdue to increase the transaction size of Bitcoin. Some users want the network upgraded to Segwit2 while others want to stick to the current segwit1. The way bitcoin development works is that there needs to be consensus on the upgrades and only around 30% of the users have approved the upgrade which is way below the required 95% for this upgrade. So the upgrade did not go through and the people who really wanted the upgraded started withdrawing their money and their resources from the Bitcoin Core (the original bitcoin) and taking it to Bitcoin Cash. The result was that the Bitcoin Cash price skyrocketed. The resolution of this issues is yet to take place. Drama galore!

Three things I have learnt in my readings:

  1. The risk profile is very high. One should be prepared to lose their entire investment if they chose to invest in these cryptocurrencies.
  2. The fear of regulation overhangs the cryptoworld. No one knows what the government and the regulatory agencies may do with the cryptos.
  3. Most of the products here are at the initial development stages and expect a lot of changes, sometimes sudden including the disruptor being disrupted.

I close with this citation from a Bloomberg article today: “Crypto trading is not for the novice investor”.

Author: Mokaya Erick

I am a learning investor who writes to make my thoughts clearer. I am interested in investment research and analysis, financial modelling and portfolio management.

3 thoughts on “My Quick Notes on Cryptocurrencies”

  1. Erik
    Your analysis on $BTC is very interesting. I would liken the current proposed fork to the situation we saw in August. For me personally, the only thing I see really hampering the growth in value long term of cryptos would be if a national government imposed sweeping regulations. Until that point, it operates outside of some of the core financial assumptions that most other asset classes abide by which makes them so unpredictable.

    Liked by 1 person

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