Regardless of whether these predictions turn out to be partially right, spot on, or out in left field, what can’t be denied are the risks involved with cryptocurrency investing.
For starters, cryptocurrencies lack the traditional fundamental metrics that aid investors in determining an appropriate valuation for an asset. With a publicly traded stock, we can look at balance sheets,income statements, earnings reports, and listen to the commentary of management when determining whether a stock is worth buying or not. Cryptocurrencies have virtually no metrics that can be examined, save for processing speed and daily average transactions, neither of which tells us much about the long-term value of digital currencies.
Just as worrisome is the fact that blockchain technology is stuck in a vicious Catch-22. The digital, distributed, and decentralized ledger that underlies most cryptocurrencies has worked splendidly when kept within the confines of small-scale projects. However, no businesses have been willing to take the training wheels completely off of blockchain yet, primarily because it’s untested in the real-world — and gaining this real-world experience is only possible if big businesses give this technology a chance.
In sum, while cryptocurrencies are still liable to bring a lot of excitement to the table for the remainder of 2018, I’d suggest keeping your money safely on the sidelines and out of virtual tokens.
Sean Williams has no position in any of the stocks or cryptocurrencies mentioned. The Motley Fool owns shares of and recommends CME Group. The Motley Fool recommends Cboe Global Markets and has no position in any cryptocurrencies mentioned. The Motley Fool has a disclosure policy.