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Calling Altcoins’ Death Ignores Disruptive Power of Tech Innovation

September 3, 2019


Calling Altcoins’ Death Ignores Disruptive Power of Tech Innovation

As bitcoin crosses the 70% dominance level of “market cap” for the entire cryptocurrency (really, digital assets) market, we hear a new wave of predictions that “altcoins are dead” or that they will never recover.

This is the height of ignorance. Most of these commentators don’t remember prior waves of crypto development, and B.S. (Before Satoshi) were probably popping pimples more than champagne. As for the older commentators who don’t have the excuse of youthful ignorance, they are guilty of forgetting how innovation fundamentally disrupts existing markets.

To say that ethereum is dead — never mind its place at the vanguard of smart contract ecosystems — is further to judge the value of innovation by the current trading price of the tokens issued by these protocols.

Tokens are not securities, for the most part; tokens and coins are most certainly not equities. They do not represent shares in the intrinsic value of the issuer, and as such, they are not truly indicative of the value of the issuer at all!

You want the proper analogy for tokens and coins? They are software products, products issued by their issuer and rights to participate on the issuer’s network. They are really indistinguishable from those old shrink-wrap software licenses that you’d accept by installing software 20-25 years ago off CD-ROMs.

But this is the analysis you’ll never hear from the speculator community which only cares about trading, and ignores development.

Moreover, the calls for the death of altcoins blatantly ignore the evolution of equities. Just look at how the 30-stock membership in the Dow Jones Industrial Average has changed over the years.

For example, if you go to 1 B.S. (Before Satoshi), or 2018, you’ll see that only 20 of the 30 stocks today were also part of the Dow Jones back then. That’s one-third turnover for the world’s benchmark equities index in ten years. Now, many of the dropped companies are still around, or merged, but they’re not as dominant.

Now move further back: Nearly one-half the average in 1999 isn’t on the DJIA today. Remember Sears (which went bankrupt last year)? Or Eastman Kodak? And look at crypto of yesteryear: Are you still holding Namecoin?

If you applied the altcoin-is-dead model to the Dow Jones over the years, you’d have missed out on Apple and Microsoft and you’d still be holding American Can Corporation, Kodak, Sears and AIG.

Ask real Wall Street veterans how that worked out!

If there’s any field that represents technological disruption — if not the very concept of what represents media of exchange and stores of value (including stores of data!), it is crypto. But today’s “investment paradigm” is subject to huge swings in sentiment as well as fundamental change. The leaders of crypto remember this. So should you.