“CRYPTO” THE NEW GOLD? Gold is familiar and easy to picture but crypto currencies are less tangible, being a computer code embedded on a “blockchain”, which is a secure, universal ledger supporting a growing number of valuable applications, aside from supporting crypto currencies.
Bitcoin’s gains over the past 6 months have been phenomenal, but this price performance and volatility make it difficult to market as a durable store of wealth or reliable token of exchange. Past performance doesn’t give much comfort either. From a price below $1k until Feb 2017, Bitcoin approached $20k in Dec 2017 before collapsing towards $3k by Dec 2018.
Whilst Bitcoin is the most famous crypto, there are alternatives: (Table shows some alternative cryptos. Approximate values, March 2021. Source: ADMISI / Various):
Not all coins are similar payment tokens, e.g:
Stellar makes large transactions between financial institutions faster and more efficient.
Tether is pegged to the US$, a type of “stable-coin” valued against an underlying currency or asset.
Table 1 Name
Bitcoin
Ethereum Litecoin Cardano Polkadot
BitCoin Cash Stellar
Nbinance Coin Tether
Monero Source: ADMIS / Various Symbol
BTC ETH LTC
ADA DOT BCH XLM BNB
USDT XMR
FAIR EXCHANGE, RELATIVE VALUE
AND SUBSTITUTION Over a couple of thousand years, gold and silver maintained a relatively close price ratio, which raises questions about substitution and arbitrage in crypto currencies.
The prices of goods and assets are affected by substitution so that, if a particular price is perceived excessive, demand moves to a substitute. This works in commodities and the financial world too, where relative value plays attempt to exploit perceived pricing discrepancies by selling the expensive asset and buying the cheaper one.
For cryptos representing secure electronic tokens of exchange, it’s difficult for the layman to understand why their prices are so different if their roles are similar? If similar, then it should be possible to substitute and arbitrage between them?
Bitcoin took a significant step to wider acceptance in 2017, when a London bullion trader began accepting Bitcoin for physical gold. Potential crypto investors might get more comfort if their crypto was readily exchangeable against a wider variety of goods and other crypto currencies.
Price US$ approx 15/03/21
Market Cap US$ approx. 15/03/21
55,305.00 1,031,535,033,750 1,772.69 205.31 1.02
34.96
525.25 0.38
255.47 1.00
218.93
203,964,805,555 13,685,582,723 32,587,275,630 32,176,891,769 9,811,781,878 8,634,386,944 39,478,490,584 38,515,573,409 3,910,762,353
#Coins approx. 15/03/21
18,651,750 115,059,489 66,658,140
31,948,309,441 920,391,641 18,680,213
22,609,025,777 154,532,785
38,515,573,409 17,863,072
18 | ADMISI - The Ghost In The Machine | Q1 Edition 2021
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