Just to disclose immediately, I do have investments in cryptocurrencies for a number of years. I bought some Bitcoin core and Etherium during the bear market (after the prior crash).I di not pick up the bottom, but entered BTC at below 10k. Later on I have diversified part of the BTC holding to NEO (after the NEO big crash).
Having said that, I always had a small portion of my portfolio allocated to it, as I actually never truly believed in crypto and just wanted to participate in the next "bubble". And theoretically we are here, but we can still go higher. But I want to share my story why I was a crypto sceptic and why and how BCH changed my mind.
Why I was a sceptic and how I tried to find how crypto can create value
Already when I bought Bitcoin I have noticed that just transferring BTC between my 2 different accounts was super expensive. Hence with high transaction costs and also in general volatile prices - I understood that this thing is super hard to use as a currency. Basically at that time the only use that I saw would be some shady transactions where you either selling something illegal or try to avoid taxes, capital controls, etc. This was not something that I was really interested investing in.
After that I heard the thesis, that BTC is just like gold, but better. And initially it made a bit of sense, as indeed it has a limited supply and unlike gold at least in can be used as some sort of currency, where you an get super small pieces to be sent for product. But this is only initially males sense. Gold is indeed limited in the supply, but BTC is just a computer code in essence. Basically a normal programmer can create one. OK, it can not be called BTC, but it can be just another cryptocurrency. And how many of them we have on coinmarket cap? A lot. We can create an unlimited amount of codes. Plus, did you see the price action of gold recently? If we use cryptocurrency just as a replacement of gold is this growth reasonable?
Then I have started to look for other usages of crypto. I have to say I was looking into any reasonable applications in life. I found crypto.com (CRO) - I found their debit cards quite cool, but mostly due to the fact that they gave a good cashback on card transactions. Those are actually a norm in US, but we do not have any cashbacks normally in US. But then I realised that there is nothing that crypto actually adds there. You just use your fiat currency and a company crypto.com prints you their tokens while most probably collecting some fees from visa for issuing their cards. Again, I can in theory pay with crypto from that card, but with the volatility of prices - you can not really use crypto. One way would be to pay with crypto and then immediately buy it, but that is no different from paying just with fiat + normally to but crypto, you need to send cash to your app which again has some credit card or bank fees. So you just have additional fees.
Then I have thought that use of crypto could be beneficial for vendors/shops. In theory they can avoid visa fees or if they are more progressive - fees of Square. The shops pay a fee everytime you pay with your card (normally 2,5 - 3,5 %) . If you see how much VISA or MASTERCARD or SUQARE or PAYPAl earn - you can understand that it is indeed a huge market that could be disrupted by cryptocurrencies. Here I found COTI coin (built on ethereum) that I thought could be cool. They have plans to create the POS machines (machines to read cards) and other software for merchants, that for example automatically does accounting for the merchants, transfers payments into stablecoins (if shops do not want to risk with the price volatility of crypto), if wanted immediately put stable coins on deposit that currently earn more interest than normally fiat. They have also created a pool of cryptoccurencies, that in theory the POS machines could receive payments in any cryptocurrency, so it would not matter what the clients want to pay with. Sounds good right? But, there are few problems:
1) There are still some fees
2) Why would an average person pay in crypto? For example my dad? He receives his salary in fiat. Why to bother and transfer it to crypto an pay in crypto? I would say only if the products are cheaper. So then the shops could make discounts for those paying in crypto, as they save on visa card fees, if the payment is in crypto. But what could be a discount? 1-2% max. Because the shop saves 2,5-3,5% on visa fees, but it still has some small crypto fee, give s client a discount of 1-2% and also wants to earn an extra 1-2%. Otherwise why to even bother with crypto. So my dad can get an extra let's say 2% discount in shop. Is that enough for him to switch to crypto? And the main problem is again fees that you pay to top-up the wallets. Normally most of them will charge you extra 2,5% transaction fees. So my dad will pay 2,5% to get an extra 1% discount in shop. Not worth it.
So with this approach shops might benefit from crypto, but the normal buyers will still not be using it. OK maybe someone will pay with crypto, but rarely. Honestly, read any crypto community - no one wants to pay with it. Everyone wants to buym hold and sell at the top.
How BCH changed my mind
I know it was a long read, but here we are. BCH is what changed my mind and I want to share my thoughts with you.
Recently I heard about read.cash and noise.cash.
First negative reaction: initial thoughts again were that this will not work. The authors are paid to write something and it can be only done because someone donated to the project. What will happen when funds will end? Again we will need new donations. No value creation rather re-distribution. Plus I have visited the websites and noticed that a lot of time the articles were not really interesting or even written mostly to beg for some small amount of money or just post anything to earn coins.
With time though, the posts were cleaned and I have realised that read.cash could be equivalent of the reddit and noise.cash could be an equivalent of twitter. And it all clicked.
I often do research for investment ideas on twitter and reddit and often some people do such a good research that nothing additional is required. When the investments play out well - I would not mind giving a tip or a share of gains to the person who did the full research. But how to do it? Normally to find a person that you do not know write him a personal message (if those are not closed) and then ask a person I do not know for all his bank details to tip him. And on the other hand what if the person will receive hundrets of those tips (like on read.cash) ? does he want to share his bank account to that many people? does he want to see all those small transactions? Will those transactions be suspocious for the bank or paypal and the account will be blocked for some time? Obviously the great solution would be to have a built in crypto solution on the platform. A perfect peer-to-peer payment system with small fees and no need to have to much personal data shared.
There is already a "award" button on reddit, but you can give some pictures as an award. Useless. I see that this might be done to avoid some tax questions if the "awards" would be in fiat. But crypto is a perfect solution for it.
Now, Tesla already committed to crypto. I know it is a useless BTC and Musk made it just for hype, but more and more corporations talk about crypto. What a perfect solution would be t introduce rewards in Twitter. And we know that Jack Dorsey (CEO) likes Bitcoin, but with some education people could explain him, that due to transaction costs, BTC will not work as a system to introduce tips, but Bitcoin Cash could work. He could be educated that BCH is actually a Bitcoin, but that one for the actual peer-to-peer transactions. Then everybody on Twitter could buy some BCH and donate if they want. The similar set-up is already in place and proven to be working in noise.cash. Yes this would maybe kill read.cash, but I guess creators would not be against even sharing how the set-up is done to introduce it in twitter. Market cap of BCH wold explode and crypto would be actually used in a useful way.
Taking the above into account, I have invested now in BCH and flipped my BTC to BCH (I still keep my NEO due to it momentum currently and some ETH).
1) I wanted to more actively participate in the community - hence this post. Later I will try to maybe post also some investment analysis on certain companies I did, to share the investment ideas (something like seeking alpha or reddit). Maybe those can be shared on twitter and other platforms and hence raise interest from other investment public.
2) I wondered whether someone should write a letter to Jack Dorsey or Twitter communications showing the possible introduction of "tips" in twitter and use of cryptocurrency - Bitcoin for it, but the Bitcoin that has small transaction fees,e.i. BCH. I am "too small" to do it, but someone old in the community could do it in a smart way. Maybe even trigger a change.org petition, so that the idea is supported by public. Maybe this will force Jack Dorsey to look into it.
Happy bull market to everyone )