Interesting hypothesis by the Economist on “altcoins” like Bitcoin. Their take, which I agree with and have written about before, is that this is only the tip of the alternative currency iceberg.

Chart Source: The Economist

Chart Source: The Economist

An excerpt:

Bitcoin, then, is merely the first and, for the time being, the best-known example in a new category. In many ways it is akin to Napster, the pioneering file-sharing service that upended the music industry in 1999 by allowing internet users to call up almost any song at will. Though Napster, unlike Bitcoin, was illegal, it demonstrated that there was enormous demand for what it provided, prompting many other services to spring up in its wake. Just as Napster paved the way for BitTorrent, iTunes and Spotify, Bitcoin has triggered a surge of innovation in digital money.

So let a thousand altcoins bloom. In the meantime, if you are lucky or clever enough to have owned an asset whose price has risen 60-fold in a year, it might be time to sell.

Read more:

http://www.economist.com/news/leaders/21590901-it-looks-overvalued-even-if-digital-currency-crashes-others-will-follow-bitcoin

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Posted by Carlos Alvarenga

Carlos Alvarenga is the Executive Director of World 50 ThinkLabs and an Adjunct Professor at the University of Maryland's Smith School of Business.

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