Growth & Future Potential
You'll notice that this website is filled with cautionary tales and caveats: about the risks of investing in cryptoassets, about security risks, about financial risks, and about technology risks. You'd think that we're very negative about the entire cryptoasset sector. That's not actually the case. We think that the market cap for cryptoassets as a whole will rise very significantly in the coming decade. Although many of the existing cryptocurrencies will turn out to be scams, or will fade away due to lack of development or technology issues, we think that a small number of existing currencies, platforms, and projects will experience tremendous growth. The problem is trying to pick the eventual winners. Also, it's important to remember that many of the most significant cryptoassets that we'll use five years from now probably haven't even been invented or dreamt of yet today. Someday, there will possibly be a Crypto 3.0 which will outshine all currently popular cryptocurrencies, and relegate them to the dustbin of history.
Future Market Cap Predictions for the Entire Cryptoasset Industry
For the past couple of years, when "experts" have tried to predict the growth of market cap for bitcoin and for cryptoassets in general, they've often been proven wrong - to the conservative side. However, past history is not a guaranteed indicator of future performance. Here are several articles talking about future market cap. Are these just pie-in-the-sky predictions, or will they prove in hindsight to have been prophetic of cryptoasset potentials? We'll let you be the judge.
https://www.coindesk.com/standpoint-founder-bitcoin-asset-class-will-grow-2-trillion-market
What is the Current Size of the Cryptoasset Market Cap compared to Other Financial Instruments?
The following article, one of our favorites, will give you a very good idea of just how small the cryptosphere is at the current time, in comparison with things like silver, gold, stocks, bonds, national currencies, real estate, debt, and derivatives. Obviously, despite phenomenal growth over the past few years, crypto still has a lot of room for growth.
http://www.businessinsider.com/infographic-how-much-money-there-is-in-the-world-2017-10
What do this Website's Authors Think?
We've tried very hard not to make any comments that encourage readers to invest in cryptoassets. Rather, we've tried to take the approach that IF you're going to put money into these markets, you should be as educated as possible. You need to understand the financial risks, and you need to know how to minimize your security risks.
In the period from 2010 to 2017, bitcoin went through tremendous growth, and millionaires were created. The same thing happened with a number of alternative cryptoassets (altcoins). In the run-up to 2018, a lot of people said that year would be "the year for cryptocurrencies" or "the year that crypto would go mainstream." Expectations were high that rapid growth of market valuations would continue throughout 2018. They did not. There was a massive market correction of more than eighty percent. Most cryptocurrency investors who sold their holdings lost a lot of money.
Past performance is not an indicator of future growth. While we concede that future markets could continue to grow rapidly, remember the phrase, "Too far, too fast." There WILL be many more market corrections in the future; the size and chronological duration of these corrections is the only unknown.
The authors of this website also believe that volatility in crypto markets will diminish significantly within another decade or so. Bitoin has already gone through at least eight major market corrections in the past decade. As one more example, we could point out the period from late 2013 to late 2015, which had another extended correction in BTC of around eighty percent. That is just one of several similar historical examples. A correction of that magnitude can certainly happen again.
Does this mean that we are bearish on the future of cryptocurrencies? No, not at all. We just want investors to temper their expectations. It is typical for significant long-term growth to be tempered by corrections as the markets become overbought and need to revert to the mean. We do believe that the long-term trend is upwards.
We also believe that between 2020 and 2025, there will be a separate phenomenon which takes place, and it will happen much more gradually than a specific market correction. We believe that there will be a long-term "flight to quality." We believe that investors will eventually start focusing upon better research with respect to specific investments. Our feeling is that within 36 months, eighty percent of the existing "top 100" crypto projects (by market cap) will have fallen out of the top 100, or will have stopped trading entirely. Some will die a gradual death or fade into obscurity (due to being outshone by better technology), and others will fail suddenly and in spectacular fashion when something specific goes wrong. The current market (Summer 2019) is characterized by restrained speculation, which is a marked improvement from early 2018. At that time, large numbers of small investors were throwing money at projects they didn't understand, hoping to be part of "the next bitcoin." Lessons were learned. Being an early adopter in the space is beneficial, and it's hard to go wrong in a bull market, but eventually the market will turn, just as it did during the dot-com boom.
Investment Recommendations
If you are determined to invest in cryptoassets, we must recommend seven key steps for your own protection:
1. Educate Yourself. Learn as much as possible about the markets before putting any money in. You can start by learning everything on this website. Read every page in the "Basics" and "Security" and "Resources" sections, and if you don't understand them completely, re-read them a day later. Keep doing this until everything on this site makes perfect sense to you.
2. Limit Exposure. Never invest more than you can afford to lose. One hundred percent of investors believe that they're going to make money with their investments, otherwise, they wouldn't invest their money. At best, fifty percent of investors will actually make money. Many will lose.
3. Diversify. Your cryptoasset investment portfolio should be diversified between several assets, each of which is assessed based upon the criteria in our Evaluating a Project page. Also, your overall financial investments should be diversified, and you should not put 100% of your assets into crypto. At a minimum, keep enough money in a savings account to help you with basic living expenses for at least three to four months, in case you lose your job and need to cover expenses such as food, shelter, clothing, and transportation.
4. Be Analytical. Leave emotion at the door. Being emotional about your investments is the fastest way to losing money on your investments. Reassess every investment on a regular basis, with a critical eye. Don't be scared to admit that you were wrong, and don't throw good money after bad.
5. Be Patient. Many crypto investers expect that their investments should make money within days or weeks. Think for the long term. If you're convinced that a project has good long term prospects, be prepared to wait for a few years for those prospects to come to fruition.
6. Have An Exit Strategy. Above all, have long-term goals. Be prepared to start unwinding your positions (selling a portion of your investment) as you reach certain growth levels. It's good to have a long-term plan about what you're going to do if you actually make money on your investments. Be debt-averse. If you can have a goal such as paying off all of your student loans, or paying off 40% of your outstanding mortgage balance, you're going to start setting yourself up for long-term financial success.
7. Pay Your Taxes. Nobody likes to pay taxes, but don't let greed catch up with you. It is absolutely inevitable that governments will target tax evasion of cryptoasset investments with an increasing vengeance in the near future. Protect yourself by learning how your trading or investments are taxed, and meeting those obligations.