Envy the Bitcoin millionaires? Should I invest - SWOT Analysis

This is the billion dollar question that is on everyone’s mind. Everyone includes those who missed the bus, either knowingly or otherwise.

So here’s my two coins(cents) on the topic:
The short answer is that there isn’t one. However, I will go with those who think “if you have some extra cash which you are willing to bet upon, put it in. If you are lucky, it will give a return of 10x or 15x or 100x... who knows. But if you are not, it might go down to 0.1x.”

There are opinions sitting on both sides of the fence. Some betting it’s going to be a million dollar coin in the near future. And, there are others thinking it’s just a bubble waiting to burst, or maybe it has already started leaking if we consider that the coin had touched the $20,000 mark and came down to $7000 in a matter of few weeks. During this period, depending on the day and the news doing rounds globally on that day, it has seen as much as 15% + or - change in the price going up or down. After Bitcoin enjoyed such a sharp growth, some pundits suggested Ethereum to be the crypto-currency for 2018. However, in the same month, when ETH touched a high of $1400, if followed with a low of $700 price. So both of these currencies have seen a 50% (actually, more) drop from their peak price in Jan 2018.

What came as a surprise to me is that, not just these two coins, but almost all of the top Alt-coins have fluctuated in the same 50% range. What does this tell us, I think it seems to suggest two things:

1. This whole pricing is purely speculative; and
2. While everyone of those Alt-coins were launched touting a different adaptation, their pricing fluctuation still seemed to be tied to Bitcoin’s. Without getting into the in depth reviews, this may suggest that, investors really do not seem to appreciate their individual strengths or; there isn’t a scale which can be used to measure their relative performance (this will require detailed understanding of their technology and their application).

We have heard of those lucky ones who had bought a bunch of these coins when their price was still under $10/$100. Obviously they are 800x/80x richer today. But without feeling too bad, if we look objectively at those people, we can easily characterize a few traits, that they have had a risk taking ability, or a gamblers instinct, and they had that extra cash lying somewhere. They probably forgot about it, or even regretted their decision for a while before this took off.

Well, if we think that this insane growth that was witnessed in the last 6 to 8 months of 2017 will repeat, then it might force us to believe that it would be a good reason to not miss this second bus. A comparison of this to the build up & the crash there after of the 2008 crisis; while the market had a rapid increase in reaching the peak in 2008, after the crash it has taken almost a decade for the market index to return to that peak.

So in all likelihood, and now am biting my tongue, it seems the chances of history (100x growth in a short span under a year) is unlikely to repeat today.

Should I invest in Bitcoin - SWOT Analysis:
Strengths

• As of today, if the pricing for most of the Alt-coins seems to be tied to Bitcoin, investing in Bitcoin probably carries the same risk without diversifying (Some experts seem to suggest to spread the crypto-portfolio across multiple promising coins)
• Since it already touched 20K once, it is likely to hit the same number again, maybe in couple of years if not months
• The general awareness about crypto-currencies has grown considerably, which has a direct relation to its potential acceptance or adoption. So this surge in awareness could benefit their future adoption as a legitimate means to trade or barter

Weakness

• Not enough adoption despite being in existence for almost a decade
• Apart from a quick remittance benefit, there hasn’t been any use case identified where the blockchain technology would enable to accomplish anything which cannot be achieved using traditionally used means and techniques (the blockchain fans will probably jump at this statement - I do know there are 100s of new start-ups trying out different applications, but what I mean to say is that there hasn’t been a new facebook - yet!)
• In the present form, volatility. Sellers will be apprehensive of selling their goods in exchange of crypto-currencies (instead of fiat currencies like USD) if it can fluctuate 15% in a single day

Opportunities

• If this currency gains attention, the fact that there can be only 21 million of these coins will automatically mean, the intrinsic value would increase
• From a purely speculative perspective, since the prices as of today are still lower than 50% of the peak, the prices could go build up again
• To identify any use case where a decentralized currency can be disruptively beneficial. Identify any application for usage of distributed, open and decentralized ledger (or smart contracts).
• Invest in the stocks of companies designing new products based on the underlying blockchain technology rather than investing or buying the actual coins per say

Threats

• Many other Alt-coins have come up that seems to address either or both of the problems of higher transaction fees and ability to handle large number of concurrent transactions
• Since Bitcoin was born/created as a disruptive force against the current financial markets and regulators it is facing resistance in getting acceptance as mainstream currency. Possibility of larger financial conglomerates to adopt the blockchain technology and implement a SWIFT Next (or whatever copyright they come up with) that fulfils the instant remittance use case while retaining the underlying/existing fiat currency structure