Long-time readers of this site know I have not been a fan of cryptocurrency.
This might be a bit of sour grapes on my part since I’ve been writing about Bitcoin since 2011 (yes, when it was still US$10/coin) and wasn’t a fan back then, and still am not today other than strictly the amusement factor of seeing people attempt to trade it.
Back in 2011 when Bitcoin was the only game in town, I wrote the following:
There is also the issue of “counterfeiting”, even if the bitcoin system is technically secure. One problem is that you can create an identical digital currency and call it something different. So in this essence, counterfeiting is a very relevant concern – not direct counterfeiting, but copy-catting. Bitcoin does have a “first mover advantage” which may mitigate against this.
I try not to pay much attention to the sector, but I have been amused to know that many asset managers out there consider cryptocurrency to actually be an asset class that one should keep in their portfolio at some low fraction of assets, like the arguments one would make for holding precious metals. There have also been other developments such as the concept of “stablecoins”, and crypto algorithms that apparently guarantee payouts, etc. I have not kept up to speed on the specifics of the developments and have generally tried to quarantine my brain from it, similar to how I would regarding the trading of Gamestop equity.
But this one really caught my attention – the demise of this cryptocurrency called Luna.
It is my understanding that Luna was tied to another cryptocurrency called Tether, which itself is apparently backed by actual US Dollars in some bank somewhere (audit confirmation pending!). The difference is that Luna apparently pledged that you can get a 20% return by investing it in. Please be warned I could have gotten this completely incorrect, but if it is the case, wow.
So I dredged up a chart of Luna and saw the following:
At one point in the history of Luna, they had a market capitalization of US$775 trillion. Wow. Just wow! Am I reading this correctly? Somebody please educate me in the comments!
What the heck am I doing investing in stocks? Time to go fully into crypto for the next Luna – whether this will be long or short, who knows!
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Author: Sacha Peter
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