If you have noticed, my stand on investing in cryptocurrencies has been really shaky because it is something I don’t understand too well and cannot comprehend how cryptocurrencies can become the future currency. People who call me for advice on this didn’t get anything solid but skepticsm and doubt of the prospects of these cryptos.
The buzz has caught many people in believing that but I have always had some reservations.
This feeling was put into the right perspective and expertly analyzed by my good professor, Aswath Damodaran in his latest post on his blog entitilted The Crypto Currency Debate: Future of Money or Speculative Hype?
Crypto currency is being priced and not valued. Looking at the charts on Bitcoin performance and what moves a lot of people into thinking it is the way forward, it is only the pricing that is being focused on. The actual value of it, I cant tell. The sad and scary thing is, there is no Centralised Authority for all these cypto-currencies like all other securities.
Unless the technology behind crypto-currencies advance beyond what I am thinking now, it’s just going to keep trading as a derivative and not become a true currency or a replacement of our currencies. You can’t value a currency, you can only price them against other currencies – exchange rates. It is quite sad that most young people are beginning to see crypto currency as the gold.
No body can tell you better. Get the full explanation and intellectual analysis of the future of Crypto currencies and how they can never be accepted as currencies from my coach , valuation expert, Aswath Damodaran – Professor of Finance at the Stern School of Business.