The Cryptocurrency DotCom Bubble
Most Cryptocurrencies today are nothing more than “Pump and Dumps” – and in the Cryptocurrency Unregulated Market, the startup CEOs are pretending it’s “different this time around.”
Most Cryptocurrencies are no different than DotCom Companies in 1999. They use the EXACT SAME FLAWED ECONOMICS.
Why did DotCom companies fail? They raised cash to pay their staff with IPOs. When they spent the cash to pay salaries, and pay for their computing power to stay online, and ran out of money, they died.
Imagine a DotCom, that instead of getting cash from you, gave their employees a bunch of shares. You buy in, because it’s going to the Moon! Then when all the company employees over time SELL shares to pay for their living expenses, and when the company SELLS shares to pay to stay online, what happens to the share price? It starts dropping.
And when the dump happens, that’s the end.
- Because the employees are mandatory sellers (they have to pay rent!).
- Because the Computer Server companies running the program are "mandatory sellers" (they have to pay their costs!)
And when the shares get sold and the share price keeps dropping, eventually there’s no more money for keeping the DotCom employees paid, and the DotCom online (its biggest expense) – then it goes BANKRUPT.
Most Cryptocurrencies today are NO DIFFERENT.
They pay their employees with the ICO, and PUMP its price as high as it can, because those employees are selling their shares. And the Computer Servers getting paid to keep the Cryptocurrency online are selling their shares. The price “has” to be high because once the price plateaus, and those costs start deflating the share price – just like in the DotCom Bubble – it’s THE END.
I just saw one recommended yesterday. Over 20 People on Staff. Now, WHO THE HELL is paying their RENT? I estimate at least a $4m annual labor expense. Add other normal startup expenses, you’re looking at $8m a year. How is that long term sustainable? Does anyone even care? NO.
The servers keeping the “ICO” up and running cost 10% OF MARKET CAP A YEAR. What happens when that COST starts weighing on price??? Does anyone even care? NO.
Because Cryptocurrency investors are the same kind of fools who didn’t care about economic fundamentals in the DotCom Bubble, and are getting pumped. And this bubble is riding on the same Greater Fool Theory that all other bubbles ride on.
There’s a sucker born every minute, but not every second, and when you run out of other suckers, the only sucker left is YOU.
Check out my Other Articles:
Detailed Economic Thesis on HOW HIGH Cryptocurrencies (Real Ones) are going
https://steemit.com/cryptocurrency/@cryptonomics/the-coming-crypto-superspike-this-bubble-is-small-compared-to-what-s-coming
https://steemit.com/dash/@cryptonomics/the-coming-paradigm-shift-in-cryptocurrencies
Yeah Im really against all these ICOs, it was bad when people created coins and pumped them, but at least the number of suckers was fairly small.
Well. the future will tell if you are right or not. For now, crypto currency is the way to follow. No reasonable person will invest money he/she is not willing to loose.
ALL OF HISTORY says I'm right :)