The first time I heard about Bitcoin as an alternative to fiat money (USD,EUR,GBP etc), I thought it did not stand a chance. Like many 'savvy investors' I thought the financial sector was too dominated by big banks and financial institutions for any cryptocurrency to make a move. These financial stakeholders have consolidated their power and hold for decades by venturing into anything from insurance to real estate. To think of a cryptocurrency to even try to disrupt their operations and change the system made little sense at that time. This was the year 2010. Yet some of my fintech aficionado friends kept convincing me to make an investment. I thought it made no sense.
Time went by and I started to see potential. Bitcoin had an explosive growth and I realized it was time to get involved. So, I invested $500 to see how things turn out. I received a tremendous ROI (return on investment), so I increased the amount to $5000. Again, the profits were insane! I'm a forex trader but I had never seen 400%-500% profits in such a short time even with leverage and it was not for lack of trying.
Then came a time when Bitcoin's growth rate slowed down. Luckily for us, we jumped on the Ethereum bandwagon. As expected, Ethereum followed Bitcoin's suit and the price increased rapidly. We were all too happy about it. Some of my friends were talking about selling their cars and mortgaging their properties to invest in Ethereum and it made all the sense in the world this time! It was a wonderful time. Traders and investors who had a bad year were able to cover their losses with the profits they made by investing in Ethereum.
During the same time, the concept of ICOs came into being. ICOs are the crypto version of IPOs, without the hassle and sadly also without the regulations. Some of my friends invested in startups like Stratis and Antshares via ICOs. Ethereum was not so smoking hot anymore and people were too addicted to insane returns on investments.
So, people who got bored with Bitcoin and Ethereum put their money in ICOs. Luckily for them, companies like Stratis, Antshares and Golem turned out to be a huge success for early investors. Stratis had a whooping 75970% increase in price after its ICO which means if you had invested $1500 back then, you'd be a millionaire by now!
With the popularity of Stratis and its peers, new startups and coins came into existence. However, it also necessitated the need for more effort to separate the wheat from the chaff. Blinded by greed and addicted to astronomical returns, many investors did not realize that most of these new startups (and their coins) were either overpriced investments (much like sub-prime mortgages) or complete scams. This resulted in companies like Nodio, Ascendancy and Ebitz ripping investors off their money as complete scams. Yet overpriced investments in companies like TenX made investors lose more than 90% of their money when the price dropped from $71.14 to $1.11 in one day!
So is the cryptocurrency rush the new gold rush or not?
If you ask Erik Finman, the guy who bought Bitcoin at a price of $12(and is now a millionaire), you will get a yes. If you ask Laszlo Hanyecz, the developer who bought two pizzas for 10,000 Bitcoins, you will get a different answer! People believe what they want to believe based on their own experiences and personal likes and dislikes but in the end it all comes down to the amount of risk they are willing to take and the level of their research about their investment. In the cryptoworld, high risk may result in extremely high rewards as we have witnessed.
It may also result in high losses if you're not careful. It is a nascent market and the volatility is too high but it is a wonderful opportunity for people who have the foresight to see a good thing coming and are not afraid to take risks. This is the first time we have had such an opportunity after the dot-com boom and we know from cryptohistory that it is possible to get seriously rich if you play your cards right!