Daniel Mark Harrison is a Chairman & Chief Executive Officer of global investment company Daniel Mark Harrison & Co. (DMH&CO), a Family Office with offices and active operations in Singapore, Bangkok and Hong Kong. He is also Managing Partner of FinTech and blockchain venture capital firm Monkey Capital as well as the author of The Millennial Reincarnations, a novel published in 2015.
A sudden burst to the upside the likes of what happened last year for any of the big altcoins could reap windfall gains all over again for investors.
It’s easy to forget that almost a year ago, give or take a few weeks, bitcoin was sitting pretty at $1000 while the world was eagerly awaiting the next potential copycat.
Now, while many altcoin investors are still trying to identify the next fell swoop to the top of the value chain, the possibility that holders of altocins are likely to witness their unit holdings climb to own century-highs – or even millennial-highs – seems more remote however. In a nutshell, everything – apart from dogecoin – seems to have gone pretty sour very quickly.
But the mega-drops in value of bitcoin and its peers may well turn out to be even more of an opportunity one day than it is a disappointment today.
Almost a year to day, bitcoin was at $995-ish, but that is nothing compared to upstart rivals litecoin and – don’t look down – peercoin, which were trading at $35.26 and $5.3, respectively.
Both of those currencies appear to have done equally disastrously over the past 12 months, with the virtual coins more than 85% lower today.
That’s literally cents on the dollar.
Broader Value Considerations
It’s worth keeping in mind the old adage that if you liked something at twice the price (okay, so maybe ten times the price then) last year, you should love it for what amounts to pocket change by comparison.
While at first it may not feel that way, a closer look at the details reveals that a good deal of this value erosion was merely the virtual currencies inflating in terms of their available units.
Bitcoin has grown in terms of its market distribution size by 10% – that’s a pretty big inflationary curve the asset is climbing! From that point of view, it’s not surprising there has been a curve downwards in value in the latter part of this year,
Still, that’s nothing on litecoin, which has ballooned in terms of available supply, by roughly 40%!
The reason this is interesting is that in the case of both currencies, the inflation is effectively a one-time hit (at least in these sorts of sizes): it was a long ago the challenge of mining both the top two digital coins was manageable from the living room, or even a home office. Today, you need a fully-fledged mine with hundreds of thousands of dollars of hardware.
In peercoin’s case however, the same claim can hardly be made: the aset’s unit inflation amounts to less than 5%. That’s still less than a quarter of China’s inflation growth this year. Because peercoin’s new units are automatically distributed right back to the assets’ holders, this means that if you had been holding it throughout the last year you will have felt none of that inflation, since you’d have extra coins to show for yourself.
With such different growth stories present here, and the simultaneously inexplicable mauling of value that has hence vanished into the ether this could for the right speculator equal the best possible opportunity to go large on some of these picks, especially as they are all trading near 12-month lows now.
For the fact is that litecoin and peercoin still have strong, identifiable communities in place to support the value erosion over time so that it reverses. And a sudden burst to the upside the likes of what happened last year for any of the big altcoins … well, that’s, after all, another bitcoin tale, pretty much!