Following the spectacular rise and sharp fall of bitcoin prices these days, it goes without saying that cryptocurrencies are Top of Mind. While we maintain that the underlying blockchain technology holds promise, here we dig into the key question facing investors today: What is the value of cryptocurrencies themselves? are they transformative enough to take market share from banks, credit card companies, currencies, and gold? To make a long story short , we think cryptocurrencies appear to solve economic problems only in a limited set of cases (e.g., in the absence of a well-functioning banking system). We notice the bubble-like characteristics of recent crypto price action and regard the bubble as it will burst under way. We question whether evolving technology could make today’s generation of cryptocurrencies obsolete, even if blockchain eventually plays a larger role in the economy.
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