Understanding the terrain when considering crypto investment

While considering crypto tokens as a potential investment opportunity, it is essential to understand whether they possess any asset characteristic, e.g. do they hold any intrinsic value. When stock valuation are primary based on the discounted future cash flows generated by the company, what determines the price of crypto? One of the central reasons of why crypto currencies bring in so much attention from the mass media and financial institutions is its sky-rocket returns. However, at least partially it is caused by the speculation attractiveness of the market.

Common schemes of pump and dump make the price fluctuate and overvalue
crypto currency substantially. Majority of the investors are interested in the short or medium-terms gains, while not trying to enjoy the long-term utility of that technology. That is an indicator of the bubble market, which makes an investment in cryptocurrency risky enough.
The fundamental value of the complete crypto market lies within its technology
characteristic to be a ledger and further important implications for the worldwide economy. Despite sceptics being sure about no fundamental value of crypto tokens.

If a transaction is provided by fiat money, participants face the problem of the asymmetric information and adverse selection. It calls the necessity to have a credible third party to mitigate the fraud risk. Due to the safe blockchain technology, where it is almost impossible to make a fake transaction, cryptocurrency are in some sense in front of the traditional payment system. Additionally, they require less transaction costs and much faster comparing to such monopolists on the financial payment systems like other forms of payment.

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