What to Explain When Your Friends Ask About Cryptocurrency

So, here we are.
Embracing the future of payment and technology with blockchain and cryptocurrency. I am very sure that these two will be fully adopted in less than 20 years.

However, you may come across your friends, families, colleagues that are skeptical about cryptocurrency. Many will say it's a scam, ponzi, monkey business, etc.

Be patient, my friend. For patience is a virtue. They just don't know.

But if someone asks you about should they invest in cryptocurrency or not, maybe you can show them this article

Disclaimer: Before reading, please note that this is not a financial advice. I hold no legal or formal qualification to give you financial advice. I am writing this based on my experience after spending a lot of time in both stock and cryptocurrency market...

From around November 2017 until early February 2018, almost every social circle had that one person who claimed to made huge profit or suddenly became rich from bitcoin. The astronomical rise in bitcoin price clearly made people left in awe. More and more people heard the good news and bought bitcoin, the price kept skyrocketing from less than 5000 USD in September, to almost 20000 USD in mid- January. The euphoria seemed unending. Many people actually used their life savings, borrowed money from here and there in a hope to get rich overnight.

And then the price crashed spectacularly. Bitcoin's price plummeted from its all-time high around 20000 USD to a mere 6000 USD in less than 6 weeks, followed by other cryptocurrencies. People panicked. Their life-savings just evaporate into thin air in almost an instant. Shortly after I heard a lot of people becoming anti-bitcoin (or cryptocurrency if that matters). Saying bitcoin is a scam, a classic bubble theory, illegal and so on.

On the other side of the spectrum, we saw news about new millionaires being made thanks to bitcoin (and cryptocurrency in general). Erik Finman (19 years old) and Kingsley Advani (24 years old) are among the younger generation who made it to seven figures net worth.

The two end of the spectrum taught us the dynamic of the market. Some people get money, some people lose money. Almost all investments are the same, being only different in the degree of volatility. Regarding the spectacular event in early 2018, any new trader of investors should have read and gain knowledge before investing, instead of being tempted to get rich overnight and throwing away their money.

Before going further, I need to share with you the "pros" and "cons" of investing in cryptocurrency. The caveat is that the major crash in early 2018 was just the tip of the iceberg. There's more in cryptocurrency than just being volatile.

Blockchain, the technology behind cryptocurrency has many potentials
Said to be "internet 2.0". Despite being still young, blockchain technology already has many applications and many companies testing it. Blockchain technology already used for presidential election in Sierra Leone. People such as Bill Gates said that digital currency will be the future of payment. The interesting thing about blockchain is that it kinda answers our uneasiness regarding robot and AI revolution about replacing job. Vitalik Buterin, co-founder of Ethereum, second biggest cryptocurrency by market cap says:

"Whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly"

These kind of potentials are what make people believe in blockchain technology. That believe plus the association of blockchain with cryptocurrency, make more and more people invested in cryptocurrency. With that in mind, I conclude that the investment market of cryptocurrency is actually still pretty young and has the potential to grow even more.

Regarding the "bitcoin is a classic bubble theory" statements from the people who witnessed the early 2018 market crash, actually the world of cryptocurrency already experienced that many times over. The following is the list of bitcoin crashes throughout history:

94% June-November 2011 from $32 to $2 because of MtGox hack
36% June 2012 from $7 to $4 Linod hack
79% April 2013 from $266 to $54. MTGox stopped trading
49% Feb 2014 MTGox is gone
40% September 2017 from $5000 to $2972 China ban
55% January 2018 Korea FUD. from $19700 to $14500
Feb 2018 india FUD. from $14500 to $8500 followed by extremely bearsih market until 6000 USD

Despite of those crashes, the price actually bounced back even higher. This shows that the cryptocurrency market is actually pretty robust. Even now, by the time this article is being written, the price of bitcoin has risen to around 10000 USD, and is expected to rise even further. Overall, I would say investing in cryptocurrency is actually a good idea with quite large financial potential, albeit being extremely volatile.

In the next part, I will continue with what lies beneath the surface of the cryptocurrency market. While it's true that the market is pretty robust, there is a darker side behind it and many factors the investor has to endure in order to reap profit in this investment node.

Other than being a robust market, cryptocurrency has potential to be the next disruption. We have seen many similar cases before: taxi company without vehicles (such as Uber), accomodation provider without no actual hotels (such as AirBnB) andbig retailer without inventories (such as Alibaba). Cryptocurrency is a case of money without actual bank, financial service as in money transfer without the middle man.

In short, I actually believe that investing in cryptocurrency is actually a great idea. Despite all those crashes, for example, Bitcoin’s value has increased in an astronomical magnitude. From less than a dollar in 2011 to around 10000 USD this week (data per 13th March 2018). We see surges as well in many other cryptocurrencies such as Ripple and Ethereum. However, the investor has to be very wary of factors being played behind the screen.

Extreme Volatility, Not for the Weak of Heart
In stocks, we see price fluctuates only a little daily. For example, usually a stock worth 10 USD would fluctuates around 9.7 to 10.5 USD in a day. The growth rarely exceeds 10% in a year. In cryptocurrency, the price can halve or double within a week. So any impatient investors will instinctively panic sell their assets in hope to cut further loss, only to find that the price rises again the next week.

The price of Bitcoin from late 2017 until recently. The last price candle was last weekend.

Associated with the Dark Side of the Internet
The main thing about cryptocurrency is to send money anonymously anytime anywhere instantly. It is no secret that drug lords, human trafficker and terrorists are using cryptocurrency for their transaction, which is said to be one factor that makes their prices grow high so quickly due to the very high demand.

There is a High Chance that the Global Elites are Manipulating the Price
Regarding the major crash in early 2018, if you look carefully, you can see a pattern. Somewhere in 20s January, there was a news stated that South Korea wanted to ban cryptocurrency trading. Price dropped shortly after. Early February, there was another news saying that South Korea would not ban cryptocurrency, then the price surged a little.

There was also similar news not to long apart saying that India’s PM planed to ban cryptocurrency, but then 1-2 weeks later the news stated that the journalist was wrong in interpreted the PM’s word and India was not planning to ban cryptocurrency.

The thing is, despite many news and media claim that cryptocurrency is illegal, will be banned etc, if we look closely, the news are usually misleading. Take Indonesia for example. Any average Joe in Indonesia would believe that cryptocurrency is illegal after the news about police arrested a store in Bali due to using bitcoin. But the truth is that cryptocurrency is legal in Indonesia...as an investment instrument, not as a payment instrument.

Other than being a robust market, cryptocurrency has potential to be the next disruption. We have seen many similar cases before: taxi company without vehicles (such as Uber), accomodation provider without no actual hotels (such as AirBnB) andbig retailer without inventories (such as Alibaba). Cryptocurrency is a case of money without actual bank, financial service as in money transfer without the middle man.

In short, I actually believe that investing in cryptocurrency is actually a great idea. Despite all those crashes, for example, Bitcoin’s value has increased in an astronomical magnitude. From less than a dollar in 2011 to around 10000 USD this week (data per 13th March 2018). We see surges as well in many other cryptocurrencies such as Ripple and Ethereum. However, the investor has to be very wary of factors being played behind the screen.

Extreme Volatility, Not for the Weak of Heart

In stocks, we see price fluctuates only a little daily. For example, usually a stock worth 10 USD would fluctuates around 9.7 to 10.5 USD in a day. The growth rarely exceeds 10% in a year. In cryptocurrency, the price can halve or double within a week. So any impatient investors will instinctively panic sell their assets in hope to cut further loss, only to find that the price rises again the next week.

The price of Bitcoin from late 2017 until recently. The last price candle was somewhere in late March.

Associated with the Dark Side of the Internet

The main thing about cryptocurrency is to send money anonymously anytime anywhere instantly. It is no secret that drug lords, human trafficker and terrorists are using cryptocurrency for their transaction, which is said to be one factor that makes their prices grow high so quickly due to the very high demand.

There is a High Chance that the Global Elites are Manipulating the Price

Regarding the major crash in early 2018, if you look carefully, you can see a pattern. Somewhere in 20s January, there was a news stated that South Korea wanted to ban cryptocurrency trading. Price dropped shortly after. Early February, there was another news saying that South Korea would not ban cryptocurrency, then the price surged a little.

There was also similar news not to long apart saying that India’s PM planed to ban cryptocurrency, but then 1-2 weeks later the news stated that the journalist was wrong in interpreted the PM’s word and India was not planning to ban cryptocurrency.

The thing is, despite many news and media claim that cryptocurrency is illegal, will be banned etc, if we look closely, the news are usually misleading. Take Indonesia for example. Any average Joe in Indonesia would believe that cryptocurrency is illegal after the news about police arrested a store in Bali due to using bitcoin. But the truth is that cryptocurrency is legal in Indonesia...as an investment instrument, not as a payment instrument, you can see more here (it’s in Indonesian): Other than being a robust market, cryptocurrency has potential to be the next disruption. We have seen many similar cases before: taxi company without vehicles (such as Uber), accomodation provider without no actual hotels (such as AirBnB) andbig retailer without inventories (such as Alibaba). Cryptocurrency is a case of money without actual bank, financial service as in money transfer without the middle man.

In short, I actually believe that investing in cryptocurrency is actually a great idea. Despite all those crashes, for example, Bitcoin’s value has increased in an astronomical magnitude. From less than a dollar in 2011 to around 10000 USD this week (data per 13th March 2018). We see surges as well in many other cryptocurrencies such as Ripple and Ethereum. However, the investor has to be very wary of factors being played behind the screen.

Personally, I happily invest on cryptocurrency since I see the potential in the blockchain technology. But if you want to invest in cryptocurrency, as Warren Buffet says, invest the amount that you are prepared to lose.
Lastly, I cannot stress this enough, that this is not a financial advice, I am only expressing my view based on my experience. Do not blame me if you decided to invest in cryptocurrency and you lose money (or get rich quickly)