With the price of Bitcoin dropping through the floor (down 23% on the $US at the time of writing - although this is high likely to change by the time I finish this post) has the cryptocurrency bubble finally burst?
Well who the hell knows! Certainly not me, or I imagine for that matter anyone else right now, but what I can say is that today, my crypto learning curve has certainly killed Bitcoin for me.
What's led me to this conclusion?
Firstly, you should know I'm a total novice when it comes to cryptocurrency. I'd kind of heard about it but it wasn't until a chance meeting with a cryptocurrency guru, @heiditravels, that I started to consider it seriously. And when I say seriously I mean I've been reading white papers, I've been reading a lot articles from reputable (and less reputable) sources and I've been doing my homework and that's because when it comes to money I'll be the first to admit I'm pretty risk averse. Everything else in life I throw caution to the wind and live from one adventure to the next but because I don't have a lot of money to 'gamble', buying Bitcoin was a big deal for me.
Am I just pissed off about missing the boat?
I guess yes and no. I took my time to get my head around all of this. If I'd bought in at $100 I'm sure I'd be laughing all the way to the bank but I didn't. If I'd taken the leap and transferred my meagre savings into Bitcoin when I was told about it, then perhaps the answer would have been yes. I mean it was less than $5000 to 1 BTC when I first got the nod so I would have trebled my money, right?
But I took the cautious approach. I started by investing in some alt coins to learn how to trade (that's worth a whole post in itself), to get a feel for the market volatility, to find out how to safely store my currency and to make the mistakes that I think all of make along the way without taking a big financial hit. Seeing the market collapse, of course I'm going to say no. When I bought those alt coins BTC had already hit $16k so I'd be sitting on a substantial loss if I had.
So why am I single handedly ready to kill off the pioneer of cryptocurrency?
It's not about the volatility in the market.
The reason I became so enamoured with crypto is because of the underlying anarchist within me. I'm as conventional as the next person, well maybe not the next person but let's say as conventional as their slightly wacky Aunt, but I'm sick and tired of being beholden to the system.
I live in South Africa but a chunk of my income still comes from working as a TV director in the UK and I get a trickle income from selling stock footage which is paid to me in US$. As you can imagine, the first line of the Bitcoin white paper was a pretty big hook for me......
"A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution".
What's not to love about that? A future system where I don't have to incur ludicrous charges every time I transfer my US$ earnings into a UK bank account before using a third party to get them into South Africa. At each stage I get hit with exchange fees and commissions but least with these financial institutions I know what my transaction charges are at each step of the process. I may not like it but I know what hit I'm going to have to take and through careful planning I've managed to get it down to between 1.5%-2% of the total transaction amount. So out of the $100 I'm paid, I have $98 to spend. Can you see where I'm going with this?
Transaction fees - the final nail in the Bitcoin coffin
Average transaction fee currently sitting just shy of $59. Need I say more?
It may just be my naivety in the crypto space but if Bitcoin isn't going to be a peer-to-peer version of electronic cash, then what the hell is it? This is where the collective mind needs to step in to further my education because for now, and in my humble opinion and in the slightly bastardised lyrics of that iconic anthem by Edwin Starr......
Bitcoin - what is it good for? Absolutely nothing.........say it again y'all!
Bitcoin regularly drops 40-60% after hitting new highs. Then it goes back up and surpasses its old highs.
Cryptos approaching mainstream adoption in 2018-19. I prefer litecoin and etherum myself. Litecoin is way way way undervalued.
Just buy and forget about it until 12/31/18 or 12/31/19. You will be very happy you did!
Thanks @wokem. I'm not worried about the volatility and do get that it's probably a great long term investment but is it dead as a useable form of currency? I mean $59 transaction fees, it's a killer, drop my measly $100 into Bitcoin and wave goodbye to more than half of it. Non starter really. I made my first investment in IOTA because I'm struggling to see the difference between the big financial institutions and Bitcoin miners right now and totally agree about Litecoin, sent a few pennies in that direction too.
Bitcoin is a good trading vehicle. Buy low and sell high.
With transaction fees that high, it's only a good trading vehicle if you're in over $5k. But is it over as a useable 'currency' to make those small casual transactions Satoshi dreamed of? I guess like everyone else I'll just have to stare into my crystal ball for the answer to that one! And like everyone else, wait to see if the lightning network will bring the much needed changes.
Some exchanges offer off chain trading, ie. gdax.com (the same company as coinbase, but coinbase charge fees). With limit order, you can trade them free.
Thanks, I finally found my way to gdax having made the costly mistake of trading through Coinbase, if only I'd known then what I know now!!!!
Sadly that doesn't help get round the Bitcoin transaction charges but who knows what will happen there and gives me more incentive to research some more alt coins