Cryptocurrencies are the internet of today
According to Matthew Goetz, who used to be a VP at Goldman Sachs, Cryptocurrencies today are like the internet was back in the 90’s.
In statements concerning the nature of the markets the general idea that Goetz communicated was that investments in cryptographic markets are risky right now but could lead to great success, much like investing on the internet back in the 90’s was potentially lucrative but also risky.
When asked to explain the similarities he said: “You could be right on the thesis that cryptocurrencies are transformative and you could make what you think is the right bet at the time, but remember one time you had Yahoo and then this thing called Google came along.”
Bitcoin has been the most popular cryptocurrency in the world for some time and has seen a 350% increase in price just this year, however Goetz’s advice will resonate with many who have grown used to increasingly slower and slower transfer times with Bitcoin. Bitcoin like any other cryptographic coin is only as good as the technology upon which it is founded and the developer base that is developing it. So what would it take for a coin to come along and disrupt Bitcoin from the number one spot?
Goetz believes something ‘an order of magnitude better’ would be required: “Bitcoin is the most entrenched, it has very stable protocol, it doesn’t change a lot, and it has a very strong developer base, but at the end of the day, it is still software. There is some chance that something an order of magnitude better than Bitcoin, technologically, could come along.”
The reason the coin that topples Bitcoin would have to be much better is not that hard to understand, there is effort involved in switching from one currency to another. Right now if you trade with Bitcoin you can be fairly confident that anyone in the world that also utilities cryptographic currencies will be happy to accept your coins and trade with you, this isn’t the case for each of the over 1,000 other cryptographic currencies now available.
As Goetz articulated: “It’s something like Facebook. If someone creates a new Facebook that has slightly better features, say 10 percent better. That’s great, but network effects are strong. So, that new thing isn’t going to kill Facebook.”