Why CryptoCurrencies are Falling

What's up everyone, today I want to weigh in on why cryptocurrencies are dropping. So recently over the past few days, cryptocurrencies seems to be on a total freefall, a carnage, in where every single cryptocurrency was dropping kind of non-stop for a while. For example, Ethereum dropped from almost 300 to below 200, and Bitcoin is also dropping to around 2300 to 2200 region. So there's a lot of kind of speculation here because there's no real news or real announcements in the cryptocurrency world that can cause such a huge drop. So there's a lot of speculation going on and there's a lot of comments on the channel about why it's dropping. For example, some people are talking about ICOs catching out, catching out rather. So recently we have this huge hype of various ICOs initial coin offerings where a lot of people were giving these new projects a lot of funds. And these funds can eventually be cashed out for fiat currency when they have to pay their employees or whatnot. So with catching out, that means there's going to be a lot of cryptocurrencies on sale and that might cause the market to go down. There's also talk about big banks getting involved or putting in their currencies or cashing out. And there's also talk about various conspiracies about what's happening on the dark net or whatnot. And I think all these have valid points. And I want to add an additional point onto that from my personal experience. This is of course my viewpoint on why the current market is falling and this does not constitute to professional investment advice. I think currently there's a lot of disillusion in the market and cryptocurrencies just aren't kind of updating itself fast enough and improving itself fast enough to catch up with how much money is being thrown into this market. So what does that mean? So I wrote a few articles recently about how adding money to a project, for example, an ICO, doesn't improve the speed at which the project develops. A lot of cryptocurrency development actually relies on small teams of very highly skilled engineers and they operate on a very decentralized manner. And there's lots of kind of these debates which are very important going on. The issue is, of course, that development does take a lot of time if they're talking and debating and kind of sorting out issues between themselves. That also means that development won't be bam, bam, bam, bam, bam, bam, bam. It won't be like a shotgun and a machine gun. In fact, it's very, very difficult. Even if a project receives a hundred million dollars, it's difficult to expand to a hundred employees or 500 employees. In fact, that won't really be necessary because a lot of times those employees will be kind of like customer support, which is not really needed here. So even though a project can be funded with a hundred million, the amount of kind of development work will be the same. And I think this is where the kind of disillusionment comes through. So if you look at the past few months in the cryptocurrency, there's a lot of, a lot of money being thrown at cryptocurrencies. For example, even if you look at down in March or February, Ethereum was at $20 and it shot up skyrocketed to almost 15 times this original value. So not just like a 1.5 times increase, but a 15 time increase. So much money is being thrown at it. But at the same time, there's a lot of people putting in money and they're expecting a lot on lot of change, expecting, you know, updates coming, expecting new announcements. And expecting everything to work very well. But honestly, right now cryptocurrency is still at a very beta stage. It's at still quite undeveloped. There's still a lot of core issues. And I'm going to relate this to something that I've done because I've been working in the gaming industry for a while and I've learned the hard way about many various topics. For example, we launched a game in China. So we launched a free to play mobile game, not mobile, free to play social game in China. And when we first launched, players came in and they were happy and they were spending money. But once they started spending money, they expected new things to play. They're thinking, all right, where I'm spending money in this game. I want new items. I want new battles. I want new challenges. And I want new things to do. And the more they spent, the more demanding they became. Well, honestly, we had the money. Sure. But then at the same time, we don't have the development capacity to pump up new features, new quests, new challenges, new rewards, new skins fast enough. And as a result, a lot of player base left. There came this disillusion about the rate of development. And they were kind of a little bit tired with the current gameplay. And I do see something like that happening. If you look at how fast that, how much people were spinning in cryptocurrency, they might have this kind of mentality where they expect, you know, new things coming up, new technologies and new real world uses of cryptocurrencies coming to back that up. Right now, there's still a lot of talk about these theoretical uses of cryptocurrencies. You know, what's potentially going to happen. Well, right now, in terms of real uses, we're still maybe a year or two years away from good projects coming on and actually utilizing cryptocurrencies or decentralized apps. For example, even the Ethereum name service, that's a doubt. But honestly, it's still kind of primitive and it's still kind of a test base for new decentralized apps to come. So with so much money thrown into the system and with so much expectations of the system, I do see a concern and I do see there's a little bit of disillusionment going on. And another example is if you look at Japan, I've been seeing photos of Japan where there's cryptocurrency Bitcoin use in major markets and major supermarkets and supporting, you know, actual cryptocurrency use. But honestly, right now, are we really ready for something like that? Are we really ready for main scale cryptocurrency use? Right now, cryptocurrency transaction fees are still quite high, especially with Bitcoin. And because Bitcoin is the most well known, and if people markets are pushing that, people want to use it. But they'll start to realize it might cost quite a lot for a transaction, especially if you have, you know, multiple sources of income going to your wallet, many inputs. You're it might cost you quite a lot to send out cryptocurrency. For example, yesterday I said a Bitcoin transaction and I spent nearly $10 equivalent in fees. And honestly, if you're competing against trying to compete against Visa or MasterCard or any other sort of payments in these markets, then you're going to lose out because Visa MasterCard is free for the consumer. It costs the retailer something, which is what Bitcoin doesn't cost, but it costs consumers something. But Bitcoin costs the consumer something and Visa card doesn't. In fact, Visa and MasterCard or even American Express, they give rebates to the consumer. And that's why the consumer is happy for it. But that's not the case with cryptocurrency. So with this over adoption, there's going to be quite a bit of disillusionment going on and people would have kind of this fuel to fuel a fear or a FUD campaign, you know, fear, uncertainty and doubt campaign against cryptocurrencies. And with that result, I think it's it's it's something that I think is bound to happen with so much interest in cryptocurrencies last month. I think that's always a good thing because we're going to have new projects going on, but there's definitely going to be bound to have people who are disillusioned and they might start cashing out or might they might start staying away from cryptocurrency in general after they found out it costs so much money to send Bitcoin. Well, this can be remedied in the future. Of course, you know, I've been talking to a lot of different Bitcoin enthusiasts and cryptocurrency developers, and, you know, there's always lightning network that's going to come into play once Segwit is actually a lot of Bitcoin. once Segwit is activated. And of course, I'm going to do a topic on Segwit very soon, but these will still take months to develop and still months to have a good usable wallet. In fact, I was watching the Charlie Lee talk and he was talking about, you know, potentially paper wallets or multi-signature wallets that can kind of recover funds if you lose your paper wallet. And these are all technologies and solutions that are being developed in the cryptocurrency realm that will fix a lot of the core problems we have in cryptocurrency, which is one right now keeping accounts safe is relatively difficult for new users. So it's very unfriendly to use wallets for new users and overall sending cryptocurrencies. It's not as convenient as it can be. So with this user experience in mind, cryptocurrency definitely isn't ready for the main scale masses yet, but eventually it will be. And these problems can be fixed, but it will probably take one or two years time to actually do it. And no amount of development costs can actually increase this process. So my general argument right now is that there might be quite a few disillusioned new Bitcoin either users or Bitcoin investors that think, right, there's so much money going in. I expect, you know, real cases and real development coming soon. There's disillusionment about how ready this technology is. In fact, a lot of technology isn't ready, especially on Ethereum as well. Ethereum is still at its many testbed and there's so many cool new updates that I can implement. So overall, I think right now this pullback might be a good thing. It might reduce a lot of kind of this hype investment and it might bring for investors who are level minded and really looking at the technology behind everything and kind of making an educated investment. So I do think that this is something of an issue, especially with the Asian markets where there's a lot of hype and there's a lot of talk about, you know, this kind of changing the future, changing the world. But maybe right now this ready technology isn't yet ready to change the world. I do think, of course, there are countries such as Venezuela where the kind of economy is going into some sort of hyperinflation where cryptocurrencies are extremely useful. But in major developed countries, it's still really not yet ready for the masses. And with that, I think in two or three years, cryptocurrency is going to be something crazily good. What other reasons do you guys think is causing this current cryptocurrency drop, this kind of market crash, so to speak? Do you agree with my comments? I would love to hear your views below. Thank you guys so much for watching this video. See you next time.