Over the past year and a half, I earned a reputation as InvestorPlace’s unofficial “cryptocurrency guy.” But with the benchmark bitcoin price melting down after a meteoric run to nearly $20,000, the segment has gone quiet. That said, we’re witnessing a recent resurgence in the blockchain space, so here I am.
To celebrate my return to cryptocurrency editorialism, I wanted to go deep. Numbers and stuff. I intended to write the kind of article that would both earn me respect from my editors, as well as their frustration as they poured over the data. But then I realized that going that route would completely negate the point about investing in bitcoin.
The cryptocurrency concept has two seemingly related components: the blockchain platform, and the investment thesis for bitcoin and other digital assets. A common mistake is assuming that blockchain’s many complexities have some correlation with crypto valuations. I’ve seen many convoluted write-ups in this sector that explain everything without explaining anything at all.
In reality, whether a cryptocurrency rises or falls depends on investor sentiment. If demand exists, that particular token will likely increase in value. If not, the price will plummet. It’s that simple.
Admittedly, bitcoin is cloaked inside this new blockchain technology. Because of the decentralized, open-source nature of the platform, bitcoin trades at all hours of the day (and night). Moreover, a regulatory body doesn’t exist. Essentially, the users police themselves. These and other eccentricities give the appearance that virtual currencies are different than any other investments.
They’re not. Of course, bitcoin and the blockchain represent the evolution of financial technologies. But the investment catalyst — supply and demand — has remained the same since the beginning of civilization. The only thing that has changed is the target vehicle.
Bitcoin Is All About the Basics