When I was first bought crypto currencies, in April of 2021, I knew very little and mostly agreed with Charlie Munger’s comments on crypto. However, I’m come to realize that his views were a bit simplistic and perhaps pedestrian.
Munger said people invent cryptos and create value out of thin air. This is incorrect, at least for many cryptos. You do have coins like DOGE and SHIB, which are essentially priced on hype, but have little intrinsic value, but there are many other coins that have promising technology behind them, specifically, their blockchain. This is where the value is, or more accurately, the potential value is.
The current run in crypto is based partly on hype, but also about the technology involved and it’s potential to impact the world of finance. Let me give an example already taking place.
Many gambling websites have been cutoff from accepting credit and debit cards. The credit card companies explicitly ban credit card usage on these sites. The gambling sites adapted and now accept Bitcoin as payment. This completely bypasses the financial industry. They can no longer dictate rates or who can and can’t accept their cards. Plus, transfers of crypto is permanent and there can’t be charge backs. It’s very much like cash, but virtual.
This example is just a scratch on the surface of the impact these virtual currencies can have. However, most will not be successful and investments in these highly speculative.
Here are some crypto’s I’ve been following.
ADA – excellent new blockchain, that hasn’t been fully released yet. Proof of stake. Will offer contracts in July 21. Founded by one of the members who founded ethereum. Responsible for a lot of academic work on blockchains.
ETH – moving over to ethereum 2.0, using proof of stake. I consider it the second generation of blockchain after Bitcoins. Nfts and other contracts are set up with ethereum.
ALGO – part of a third generation of blockchain that solves many of the problems with regular proof of stake. Also has automatic staking.
Nano – fast, cheap. Need more info
ONT – high interest. Mostly related to identity via blockchain technology