The above quote is from The Economist – an internationally known magazine. For a person who has ever piloted an airplane, “tailspin” is a frightening thing. You have to react quickly and correctly, or you are a goner.

Just yesterday, my wife, who is one smart lady, said to me, “If you say something with conviction, most people will take it as fact.”

I majored in economics in college. I was a long-time subscriber to The Economist. I respect the magazine and seldom take issue with their views.

However, in this case, I think they are not well informed about the subject matter they are writing about. But then, very few people really understand crypto-currencies, and I confess to belonging to that group. But I do have a bit of understanding – at least enough to know that most of the cryptos out there will likely become worthless in the foreseeable future. But, and that is a very strong BUT, there are a few that will likely last for a while because they have something that the market wants and needs: they have a limited supply, they serve a useful purpose, they are liquid, they are secure, and they are, more or less, anonymous to exchange. Currently, from where I sit Bitcoin, Ethereum, Ripple and a few others look like they have staying power.

Obviously, governments are going to want to control them. And to some extent they will be able to do so. But kill them – I don’t think so. When a technology can deliver a service that is exponentially faster and significantly less expensive than previously available, it is likely to survive and prosper. Make that service something that big financial institutions want to use, and you have a situation that will make it hard for the government to stop. They will have to be content to try  regulate.

Don’t let the market volatility fool you. Bitcoin and several of its younger siblings are likely here to stay a while and very likely will increase in value – perhaps to levels what seem ridiculously high now.

Blockchain software will revolutionize the financial industries of the whole world – and that is a market of substantial proportions.

Even a 50% drop for Bitcoin must be considered a minor correction because Bitcoin is still up more than 1000% for the year – after the 50% correction. And don’t overlook the fact that each January for the last several years cryptos corrected, only to move much higher during the coming 11 months.

The crypto-currency markets are unlike any other market in history – and we must keep that in mind in attempting to analyze them. Conventional wisdom can be a handicap when analyzing unconventional situations.

 

 

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