Don't Let FOMO Hold You Back from Investment Success
"Brian, it's crazy bro, nobody understands what's going on!"
"Each bank has 5 super economic geeks who get it, but no one listens to them!"
This was my friend of 30+ years at lunch earlier this week.
He works for a well known consulting firm. I won't reveal the name, but you'd recognize it if you heard it.
The topic was Bitcoin and crytpocurrency.
"We have a 26 year old kid who wrote a whitepaper on blockchain after a few months of research, every bank wanted to hire him," he said.
He said the kid now works at one of the largest banks in the world heading up their crypto group.
The groundswell around cryptocurrencies and "digital assets" seems to know no bounds.
It's currently being driven by what's known to psychologists as FOMO (Fear of Missing Out).
But it's hard to know what will happen. These banks have at least proven the technology is worth exploring, and are willing to throw money at anyone who has even a slight inkling of what is happening.
From my friend's perspective: "The banks are interested in the technology, how it can be useful to them, they could care less about the coins or tokens."
But it's the coins that drive the eco-system.
Take "mining" for example. Digital currency miners use highly specialize semiconductors calles ASIC chips to solve complex puzzles in order to secure the blockchain. They are rewarded with "coins" that are worth $USD (at least for now - one Bitcoin is currently trading for +$2,800, that's more than an oz. of gold!).
But without the reward, what's the incentive to mine?
Bitcoin mining has led to a boon for producers of these ASIC chips. AMD recently beat revenue expectations even after they anounced two months ago that digital currency prices have driven unprecedented demand for its graphics cards. Nvidia will report earnings next and is expected to crush it, their stock is up almost 300% in the past year.
However, despite large fluctuations in price, Bitcoin mining becomes more difficult by the day. It requires more and more processing as the eco-system continues.
So no matter what the price of Bitcoin or any mining based cryptocurrency does, demand for processing will only increase.
Luke Burgess is our resident gold expert, but he's on the bitcoin bandwagon as well. He doesn't see them as competing but actually members of the same non-government family.
"Bitcoin actually can't be manipulated as easily as gold, it's way more transparent", he told me.
However Luke isn't recommending to his readers to purchase Bitcoin. Instead, he's recommending to invest in the underlying technology. He's made a pretty compelling argument here.
President, Angel Publishing
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