The most popular cryptocurrency is Bitcoin but there are hundreds of others. If you visit my page for exchange rates you will find the current value for more then 300 different cryptocurrencies. In this article I am going to talk mainly about BitCoin but I have the same opinion about most other cryptocurrencies.

cryptoThose who invested in Bitcoin a few years ago have seen fantastic returns and there are a lot of Bitcoin millionaires and some Bitcoin billionaires out there. That have attract a lot more investor to different cryptocurrencies. Investors who hope to make the same profit.

These new investors are too late to the party. They can not make the same type of profits as the early investors did. It is not possible for Bitcoin and other cryptocurrencies to keep rising as they have in the past. If they did it would not take long for them to be worth more than all the money in the world.

Later investors will earn smaller profits or more likely large loses. The risk that you will lose money is now too high for it to be worth to invest in Bitcoin or other cryptocurrencies. The upside is not large enough to justify the downside.

Many of the recent investors in Bitcoin can attest to this as they have might have lost as much as 50% of their investment. Many of them are waiting for bitcoin to raise again but I think it is unlikely that Bitcoin will reach new heights. There are however likely to be a few death bounces that will be good opportunities to sell to minimize your loses.

The situation for most other cryptocurrencies are similar to Bitcoin although some might not have peaked yet.

The biggest bubble in history

The biggest bubble in history was the dutch tulip mania. Tulip bulbs sold for fantastically high prices. At the peak you could buy a house for the same price as one bulb. The bubble did eventually burst and many tulip investors lost everything.

It is my firm believe that Bitcoin (and other cryptocurrencies) are a bubble on the same scale as tulip mania. Perhaps even greater. Bitcoin value have risen to an extremely high valuation without any real reason for this. The only reason that people think that Bitcoin is worth as much as they do is that they think it will be worth even more in the future. That bitcoin will become something else in the future and that it therefore is worth a lot today.

This is sign of a bubble for two reasons. There is no evidence that Bitcoin will play an important role in the future and even if it will there is no reason to pay a high prices now. It is insane to pay the future value today.

Yes future value should influence valuation but so should risk. You should never pay the full value that an asset might have in a possible future.

Pump and dump scam

Cryptocurrencies a have a lot in common with a pump and dump scam. Hype from early investor keeps driving up prices to every higher prices and the only ones who benefit from this are the early investors. The late investors might earn money but most of them will be sitting with the bag when the bubble burst.

This was not always the case. I think early adoption was honest. But sometime during 2017 Ii think everything changed and a lot of people hyped the currency simple to increase their own fortune and to be able to sell their Bitcoin at an inflated price. To be able to exit before the bubble burst.

The real value

It can be really hard to know exactly what the correct value for BitCoin and other cryptocurrency really is. It is a new type of asset and no one knows exactly what the future holds. With this said. I believe the correct value of bitcoin to be zero or very close to zero. The currency  is worthless on the regular legal market.

How can i say this. Simple. 2017 proved that cryptocurrencies do not work and they can not replace Fiat currencies for most regular transaction. They do not work when you wan to do everyday transactions. Why do I say that. Because the cost of using Bitcoin is too high. The transaction fee when you spend BitCoin today is USD30 or more. That is the fee the miners charge to register your transaction in the block chain. This price is only going to go up as the data power needed to process the block chain grows.

No one is going to want to spend USD30 in transaction fee to buy a USD 10 pizza. Now one is going to choose to pay for their new USD 600 laptop with bitcoin when the transaction fee is USD30 or 5%. The fee to use a Fiat currency and a credit card is a lot lower. Most people is going to chose the option that is cheaper to use and this means that BitCoin will never find wide mainstream use. It is simply too expensive to use. The only people who are going to want to spend Bitcoin to make small transactions are the people who already made a fortune on Bitcoin and we can not all do that. It is impossible.

Cryptocurrencies are a nice dream. But they do not work in the real world.

Not with our current computers and computing powers. In 10-20 years. Maybe, but not now. And if a cryptocurrency reach the mainstream in 10-20 years then it is unlikely to be one of the ones on the market today.

Are all cryptocurrencies bad investments

No. I can not say that all cryptocurrencies are bad investments. If you are able to get in early in a small currency that turns into the new big things then you to can make a lot of money.. But most new currencies will fail to become big. Do not invest more then you can afford to loose. Because you are not investing. You are buying a lottery ticket.