With bitcoin smashing all-time highs, and altcoins making a huge rise, the big buzz started around the price of these so-called cryptocoins. The market capitalisation grows and some say the prices of the cryptocurrencies are too high, they are simply overvalued. Have crypto cash become too expensive or is there a different view?
What strikes me odd is that many people still believe that fiat money like the Euro and the Dollar is still covered by gold reserves, while this was de-linked in the 70’s. By now only a very small percentage of these fiat currencies is backed by precious metal. The vast amount of valuation is not backed by real assets, it is backed by trust in the system. Trust in bank, trust in the economy and trust in its common value papers. Trust is good, great even, but is it real value we trust? In an economic sense?
Back in the days when I was studying, our local currency translated almost directly into a specific amount of beers. For higher values books and even jeans. The value of part-time jobs was even measured in this classic trade value of drinks, books and clothes. Real life value. Trustworthy convertible into local assets at a somewhat fixed conversion rate. Real value. Economic value.
Brings us to a commonly asked question: What is the real value of cryptocoins and what is the real value of fiat money? Is cryptocurrency overvalued or is it represented in a fiat currency that is overvalued? What is the value of trust in a real-world, versus the value of trust in a digital world within a system that is trust native? Is the fast rise of cryptocurrency stating that it is becoming more valuable, or is there another edge? Another perspective…
Recently I heard the thumb rule that your investment in cryptocoins should reflect your knowledge of the blockchain and the cryptocurrencies. Two years ago, I heard another one: ‘How much are you able to lose on crypto coins’. What if the rise of cryptocurrency in relation to fiat money is not a sign of valuing the cryptocurrencies higher. What if it is a sign of the inflation of fiat money, not an actual rise of the cryptocurrencies? Brings me to the quote of last year: ‘How much are you able to lose on fiat money’. What would that mean for you and your organisation?
The impact of the cryptocoins is not just impacting economy, banks and other financial institutions. The coins, currencies and the blockchain trust system behind it, has impacted on a much broader scale. Do you know the impact on you and your organisation? Are you on it? Share your views and story in the comments below. We would love to hear your side of the story.
About Arnd Brugman
Creative business technology management consultant with a major drive and passion for people value. Innovator with broad business and technology knowledge based on twenty years of experience in IT and fourteen years of management.
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