This is our first Cryptocurrency news so I thought it’s a good idea to give some basic background information of the industry.
Cryptocurrency is still thought of as Bitcoin (BTC) by many people. There are in fact 5,392 app. Crypto’s being traded with a total market capitalisation of $201 Billion as at May 1, 2020.
The Top 10 Cryptocurrencies by Market Cap. are:
- Bitcoin (BTC)
- Etherium (ETHER)
- Ripple (XRP)
- Bitcoin Cash (BCH)
- Cardano (ADA)
- Litecoin (LTC)
- Stellar (XLM)
These top 10 form 75% of the Total Market Cap. of all Cryptocurrencies.
Cryptocurrency (or crypto currency) is a digital asset designed to work as a medium of exchange wherein individual coin ownership records are stored in a ledger existing in a form of computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership. It typically does not exist in physical form (like paper money) and is typically not issued by a central authority.
Cryptocurrencies typically use decentralized control as opposed to centralized digital currency and central banking systems. When a cryptocurrency is minted or created prior to issuance or issued by a single issuer, it is generally considered centralized. When implemented with decentralized control, each cryptocurrency works through distributed ledger technology, typically a blockchain, that serves as a public financial transaction database.
In 2010 the price of Bitcoin was under $1 and in 2017 the price reached $1,7900. The highest price BTC has reached is $19,783.
The reason BTC is expected to soar from where it is priced today is due to the artificial money printing around the world.
The purchasing power of the USD has been eroding for decades and has lost 96% of its purchasing power over 100 years. European countries wanted to standardise world trade transactions so in the 1870’s the Gold Standard was adopted. This was a guarantee that the government would redeem any amount of paper money for its value in Gold, which meant transactions could occur –without the task of moving Gold Bullion or coins– but with Paper Currency now having a guaranteed value by way of it being tied to Gold.
World War I was the first nail in the coffin for the International Gold Standard as it was temporarily suspended during this period to finance the war. When President Roosevelt confiscated the remaining gold in Private hands in 1933 inflation sent many businesses bankrupt. Gold went from $20.67/oz to $35/oz. The exchange value for all currencies was set in 1944 by way of The Bretton Woods Agreement which obligated member countries to convert their foreign currency holdings to Gold at these par values.
The value of the dollar subsequently increased, even though its worth in gold remained the same. This made the USD the de facto World Currency.
President Nixon took the dollar off the gold standard in 1976 to try to curb rising stagflation which resulted in other countries free to print their own currency. This has caused the lack of value in paper money around the world and with each round of money printing the currencies lose more value each time.
New to investing? Read about How to keep your investment decisions simple.
This article does not take into account the investment objectives, financial situation or needs of a particular person or entity. Before acting on any investment strategy or advice you should first consult with your current ASIC accredited investment professional or seek out a compliant investment professional for such.