Prediction: At some point Crypto Currencies will all become worthless.
I know that this is a strong statement that will irritate many but a review of the facts about the underlying basis for its value can lead to no other conclusion.
Crypto Currency Dynamics: The brilliance of cryptocurrency is in its structure which gets rid of the need for intermediaries in its monetary system. No Governments or banks needed. This is brilliant. The cost of intermediaries on a system is high, I won't go into that but if you look it up there is plenty written about it.
Demand for crypto is strong and growing. People are learning about this new interesting monetary tool and seeing some get rich and it is very enticing. People are justifiably curious and more and more people are dipping their toes into the space.
The Crypto Currency Myth: Supply of crypto is limited. This is the crypto lie that everyone seems to be swallowing. The whole valuation argument for crypto is that it is limited and no one can print more. This is simply wrong and is the sole reason for the current pricing of cryptocurrencies.
The reason that the lie has persisted is that each "Brand" of crypto is extremely limited in supply. But if there is no real difference between the "Brands" then why would we pay more for one than another?
It is a commodity. It is very cheap to create and there is very little differentiation and no barriers to entry between the various "Brands" of crypto. So why would you choose one over another?
Economics 101: If a store announced that they would accept transactions in any crypto currency, what would happen? No one would care which currency you had. They would all become interchangeable. Their prices would eventually merge. Many people would create new cryptocurrencies to put money in their own pockets and the supply of crypto currencies would be driven to near zero.
In terms of our current monetary policy, this would be similar to having the government say that anyone could print dollar bills on their home printers and they would be acceptable as legal tender. Why should dollar bills that I print be any more or less valuable than ones that you print?
If someone acts to limit the crypto currencies that are "valid" then we have created a new intermediary function. How would they be compensated? Do they collect a small fee for every crypto exchange? This would solve the unlimited supply issue but it re-introduces intermediaries.
Final Thoughts: Crypto will continue to be valuable as long as people buy into the idea that it has a limited supply. In other words, as long as they distinguish between "brands". When the brands are no longer viewed as distinct and unique the values will quickly merge and go to zero.
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