Future of Crypto: What could make or break crypto (+your queries)

My Doge millionaire story became a bit popular recently (429 views as of today) and with that amount of queries on my mail also increased.

Can we buy Dogecoin right now? Who is your friend who became a millionaire? Can you tell me where to buy it? Is there any other coin which I can buy now? Dogecoin is falling, will Elon musk disown it (like he did for bitcoin)? is it really going to the moon? can you tell me some site to buy it? is it legal in India? what if the government bans it? and the list is endless…

I had to spend many hours just answering these calls so I thought it's better to write a post to answer all these queries, from the perspective of a fundamental investor.

There is a famous saying in the fundamental investor world when everyone is talking about the asset, it's the best time to sell it. For time and again, this theory has proved right and the simple reason for it is the cycle of human greed and fear.

That was written a week back (I couldn’t post it due to professional commitments), but I hope you can make more sense of it now. Anyways, so let us first find out what the future of crypto could be followed by answers to your queries.

I believe the technology surrounding the cryptocurrency, the decentralized mechanism, and its use case are worthy successor of the problem of record-keeping and centralization but is it possible that cryptocurrency will become an asset class in the future? just like gold, real estate, or a fiat currency like USD or INR?

Let us consider that crypto becomes an asset class in the near or far future because of its record-keeping and decentralized attributes. But who shall decide the transactional value of crypto? ah! wait.. well which cryptocurrency first of all?

Would you like to hold Bitcoin or Ethereum or Ripple or the world’s favorite Doge or that matter Doge killer SHIBA? or what SafeMoon!…ELONSTOP…OMG! You name it, there are more than 7459 different cryptocurrencies available for trading with 1642 coins becoming defunct (as owners sold everything and the ecosystem collapsed, now no buyers, people left with just a hashcode in their wallets).

So how do you think the cryptosystem should run then? Currently, every currency has a lot of dependency on the community (the rise and fall of Dogecoin can directly be linked to Elon musk HODL). Some of them even have control with coin developers and administrators, where they can increase or decrease the supply of coin at will, and for any currency to be stable, these are the bare minimum attributes that need to be controlled.

Well, as you see it’s not easy to control either of them here, producing a cryptocurrency on the computer is a matter of hours (DogeCoin was reportedly created in 2 hours!), and deciding its attributes are like deciding the outcome of the project in an office meeting (at least as of today, that’s how cryptos are made.)

Then there are concerns regarding transaction costs, the biggest hyped crypto, the darling of crypto class, Bitcoin could eat up energy need of a small country every year, on the other hand, the public ledger keeps growing with every transaction in an unscalable way. Cases are the same with most of the transactional currencies, they need one or other resources, like recently launched CHIA, it needs storage rather than CPU.

If I am a crypto lover, and I believe in technology, I would tend to believe that these problems, will be sorted with the advent of technology, after all, crypto is a great way to decentralized and reform the whole money system, which it is…But wait! Let us understand the true implication of decentralization first.

Who decides that the USD or INR you hold has X/Y value? a centralized institution like a federal bank or RBI right. But who decides the value of crypto, well that’s none of their business so it's you and I, the community, or another name of it is herd…

Consider the herd of people (mostly maniac for profit, all they want is to buy so that they can sell to someone at a higher price) deciding the value of your asset? How comfortable will you be holding such an asset? Definitely great as long as everyone is enjoying the new highs every day, but it can create havoc once it starts a downward journey.

Imagine saving a million dollars in crypto today, and finding it worthless on the day of your retirement? or at the time of your children's higher studies or your planned marriage? or that emergency fund! the list goes on…

The herd mentality is akin to crowd justice, mob or kangaroo courts and we all know the instability they bring into the social fabric of any society. The decentralization of financial assets can have far more dangerous implications than we have ever thought of.

We have heard stories of the crypto millionaire, students putting their college fees, mortgage, house rent and what not to cryptocurrencies and getting rich, its good as long as everything is going green but when the tides turn (simply because of greed and fear cycle), will you still enjoy losing your mortgage or college fees or life savings to crypto?

There can be a bloodbath on streets (similar to Wall street/Dalal street) and then expect federal agencies to jump in (they are just waiting for an opportune time to pounce) and term the whole crypto saga illegal (China has already done it, which means half of the active world is shut out for crypto) and many of them would be following it sooner or later.

So the crypto as an asset class at least in the decentralized form can most likely be used for ransomware (as it provides anonymity), illegal trades (great in evading taxes), and funding inhumane causes (a perfect cocktail of everything they need).

I recently realized that Etherum co-founder bucked the trends and donated 5% ($1.4bn at the time of donation) of his SHIBA coins for the Indian covid relief fund but they could hardly sell 20% of it as the price plummeted to 90% less (it was Rs. 0.0050 at the time of donation and 0.0006 at time of writing this article), Imagine how cruel it is for someone who needs fund and before they could liquidate, it becomes worthless because of decentralized nature of it.

Anyways, I see both the transactional speed (bitcoin is slowest, around just 4.5 transactions per second) and decentralized nature, the very USP, going against the cryptocurrencies in near future.

Enough said, but as I have been proven wrong once, I won’t take a chance this time to deny a hashcode of software to my reader's wallet, so for that purpose please find the answers to your queries here.

Q. Can we buy Dogecoin right now?

A: No one can stop you to buy, you can choose to stay on earth or go to the moon.

Q. Who is your friend who became a millionaire?

A. Read the Disclaimer of that story.

Q. Can you tell me where to buy Cryptocurrency?

A. If you are in the US, you can buy in from either the publicly listed Coinbase or my favorite Binance. If you are in India then you can either use BuyUcoin or the Binance owned WazirX.

Note: I have personally tried opening an account in all of the above for the purpose of this article, but I am neither promoting nor affiliated with any of them. If you want to read about the experience of account opening (albeit a frustrating one), do let me know.

Q. Is there any other coin which I can buy now?

A. I assume it means coins other than Doge, you can buy any coin depending on your pocket size. In the list of most popular cryptos, BITCOIN is the costliest and SHIBA is the cheapest as of today. But I personally recommend not to burn more than 1–5% of your own money (not borrowed please), this can be very very risky.

Q. Dogecoin is falling, will Elon musk disown it (like he did for bitcoin)?

A. Elon musk can only answer it, ask him here.

Q. Is it really going to the moon?

A. If Elon has his way, it certainly is, after all, he has the deepest pocket on the planet earth and probably the moon as well.

Q. Is it legal in India?

A. Yes, as of today (22nd May 2021, 11.47 PM) it is legal, but I hope you have a bank account that has not blocked access to the crypto world.

Q. What if the government bans it?

A. Simple, you will lose the money invested. So invest only that money which you can afford to lose.

I hope the above queries have helped you in some or another way. My analysis was more from practical aspects of cryptocurrency rather than technical aspects of it but nevertheless, I would personally suggest users exercise caution while investing their money in cryptocurrencies.

Disclaimer: Cryptocurrency is the riskiest asset known to invest in the world to date, I recommend readers to follow their regional financial institution guidance regarding the same. The coin mentioned in this article are for discussion purposes only and no way carries a recommendation to buy or sell them. I might be wrong in my analysis, please do your due diligence before investing in this asset.