As cryptocurrencies are attempting to mount a comeback following a disastrous drop in January, some financial experts still foresee a demise of the current generation of cryptocurrencies.
However, the same experts also are confident that the next generation – Cryptocurrency 2.0 – will learn from the current shortcomings and evolve to play a significant role in money transactions of the future. JPMorgan Chase CEO Jamie Dimon has called bitcoin a “fraud,” that is “worse than the tulip bulb” and warned that “It won’t end well”.
But that was before he softened his opinion on cryptocurrencies and agreed that the “blockchain is real.” Aye, there’s the rub.
While Dimon might have warmed to the blockchain idea, he still is not a believer in cryptocurrencies – at least not in their current iteration. He is not alone in this belief. Many financial industry experts are intrigued with the potential applications of the blockchain technology for processing payments, verifying ownership, managing contracts, etc.
Steve Strongin, head of global investment research at Goldman Sachs, likens the current generation of cryptocurrencies to the companies that were part of the dotcom boom in the late 1990s. After that bubble burst, none of those companies survived – at least not in their original iteration. However, those companies did establish the groundwork and revealed some deficiencies that allowed the second generation of dotcom companies – such as Amazon, Google, eBay, etc. – to overcome their growing pains and thrive.
Therefore, even if none of the current cryptocurrencies survive – and that is a big IF – the blockchain technology will continue to evolve in ways we can not yet imagine. Few years from now, the current batch of cryptocurrencies will appear extremely rudimentary, compared to the evolved versions of cryptocurrencies at that time.
As of noon on February 8, 2018, bitcoin was trading around $8,200, which was 740% higher than it was one year ago, almost 60% below the December peak of nearly $20,000 and 17% higher than the 2018 low of just below $7,000 from February 4, 2018.
Ned Piplovic is the assistant editor of website content at Eagle Financial Publications. He graduated from Columbia University with a Bachelor’s degree in Economics and Philosophy. Prior to joining Eagle, Ned spent 15 years in corporate operations and financial management. Ned writes for www.DividendInvestor.com and www.StockInvestor.com.