Cryptocurrency – The Whales’ Game

Cryptocurrencies have captured the public  imagination as the price of bitcoin et al skyrocketed and made lakhiers and crorepatis of both famous and obscure people. Never mind that many lost their fortunes even before they could start celebrating ! The adrenalin rush is a siren song to certain personality types……..

And I daily get calls, messages and e-mails asking what I think of cryptocurrency investments. The querants range from Sotheby’s-Gulf to small businesspeople from Russia. So here’s my answer : Are you a whale? Do you want to be one? Can you be one ?Do you fancy your chances playing against whales ?

Think:

Bitcoin was built by a tight-knit community of technology buffs and entrepreneurs, and a relatively small number of them own an outsized share of the cryptocurrency. As few as 1,000 people may own around 40% of all existing bitcoin.

As smaller investors enter the market drawn by the price action, the question to ask is whether those “whales” are in a position to take advantage of the newcomers?

Can whales actually coordinate among themselves to move the market?

Cryptocurrency collusion absolutely does take place, though primarily in the manipulation of smaller cryptocurrencies, which have even more concentrated ownership than bitcoin. Pump and dumps of those smaller altcoins are often coordinated through obscure chat forums linked to cryptocurrency exchanges, called trollboxes.

Best of all : The anonymity offered by cryptocurrencies make it near impossible for any but the deepest insiders to guess much less know the real identity of the whales. So they could be promoters of these currencies, a friendly or less than friendly hacker, the billionaire next door, and hell even intelligence operatives. If the CIA deals only in GOD=Gold, Oil and Drugs ,why believe they or the operatives of other states are not dabbling in cryptocurrencies? Cryptocurrencies can after all be created from nothing or next to nothing, with few of the hassles of the traditional alternatives. Watch closely where the majority of crypto mining takes place and where the exchanges are located, and they offer little mental comfort.

Cryptocurrencies thus offer an asymmetric risk-reward scenario. If you are a fairly ordinary Jack or Jill, simply lay off them unless you see playing these markets as no different than trying your luck in a casino. Only advice: Decide what you can lose and walk away as soon as you have reached that limit of commitment.

If you are tech-savvy, by all means try to find a billionaire to team up with to release your own altcoin. The likes of Mukesh Ambani make no secret of their interest in launching their own cryptocurrencies: Link

True blue billionaire ? I suppose you can’t do worse than the Dubai Sheikhs and make money off of those who will buy cryptocurrencies :Link

Simply know your position.