Why Most Crypto Payment Methods are Not Worth Your Money
Although I always want to share positive news about the world of crypto, this time I have to highlight something that isn’t as positive, but nonetheless, equally as important for you.
This article provides you with information to better understand the truth about the current crypto market place, so you can best avoid common rookie-investor traps this coming crypto boom cycle.
Firstly, we buy crypto-assets for one of two reasons — to use or to speculate for profit.
There is no current crypto usage that justifies even 2% of its value, so when we see the prices of coins today and their prospects for the future, the value is all speculation. However, the issue simply is that the crypto market will boom by 10 to 20 times over the coming months and years, but only a few investors will win in this market. I fear that all the investment remaining for the losers of the race will be lost, as history shows in every technological sector.
I remember when there were 10,000 social media companies. When the titans of media — Rupert Murdoch, AOL, Liberty, fought to buy MySpace, Bebo and others. When ‘gurus’ crowed about one social media platform or another and billions were invested, and they lost nearly all their cash.
There was only one use case, and Facebook won the race.
What about the next crypto boom?
As you’ve probably heard by now, the next crypto boom has already started.
I often see people who found success in the first boom lining up to claim their titles in the next boom, not understanding that second waves are always different. They don’t understand that this will be the boom of the big guys — the professionals, and the ‘alt coin’ market is going to get a very rude awakening.
The realities of the multi-trillion dollar payments/crypto-currency opportunity
There is no denying the biggest crypto opportunity in the world today is in ‘payments’. There are lots of players hoping to win and I suspect many, many more will launch over the next 12 months.
For all the buzz, solutions and hype, this market is very simple. A company seeks to make payments (transferring value between two parties) easier, faster and cheaper. For this there are new crypto-currencies, payment apps, merchant websites and wallets. You can send money (value), store money or spend money.
They will brag about the simplest wallets, banking the 2 billion unbanked, creating the new ‘reserve currency’, keeping money private, etc etc. There are hundreds of crypto-coins related to these new offers. Endless opportunistic developers and entrepreneurs are backed by a host of millions of hopeful speculators.
And guess what? 99% of all of these businesses/coins will be dead in two years.
I have been involved in or researched this space since 2015. Speculate if you wish on these opportunities (as I have), but always remember that only 1% will win. Remember the public, who is wanting to send, store or spend, just want simplicity. The merchants using crypto are even more conservative. So there will be only one winner in each space.
Look at your local banks and shops — there is only one currency used and only a couple of payment systems. The idea that there will be lots of currencies for customers to switch between is very unlikely.
Your national currency will become crypto, either its own blockchain or a stable coin. Many countries have already announced this. And everyone hoping to win the merchant war needs to understand that their competitors are now Facebook, WeChat, Visa, etc. Companies with massive resources, scale and branding. And even then, only a couple will win.
So, who will win in the end?
People investing in crypto-currencies, i.e. crypto for payments, need to understand that only a couple out of the hundreds out there will succeed. A couple in each region. So in all of Europe, one, maybe two cryptos will survive.
All else will become worthless at a speed that will shock you. In Asia, everyone will have to compete with the ‘WeChat coin’ (to those who try I wish you good luck). In many places, you will have to compete with Facebook’s Globalcoin. Again, good luck!
Not only will just a few crypto-currencies win, so will a few wallets or apps. Don’t forget that within 12 months, all social media companies, phones (iPhone/Samsung, etc) and banks have their own wallets and payment apps. And when scale and trust is everything, do you really think a ‘cool, new, innovative fintech app’ will win?! Again, unlikely.
For of those ‘global currencies’, remember you need to have massive merchant use and effective competitive exchanges in all countries to succeed. Otherwise, your coin is worthless. The next couple of years will be crazy with endless opportunities jostling for space, while the new companies without massive resources, especially for customer acquisition, are stillborn.
My prediction is that the ‘winners’ will be a couple of currencies in each of the five major regions of the world. A couple of niche currencies to hide money illegally and a couple of payment wallets or apps. I would not invest nor speculate on anything else. You are dicing with death.
Although this article isn’t as positive as what you might have wished, I hope it comes as a warning to you, and makes you think more carefully about your future investment decisions. We will see the ‘winners’ in this massive second crypto boom will win like nothing seen before, and others will miss out. With so much misinformation promoted, I hope it has been useful for you. Till next time!