Get Ready For Most Cryptocurrencies to Hit Zero, Goldman Says (bloomberg.com)

An anonymous reader shares a report: The tumble in cryptocurrencies that erased nearly $500 billion of market value over the past month could get a lot worse, according to Goldman Sachs Group's global head of investment research. Most digital currencies are unlikely to survive in their current form, and investors should prepare for coins to lose all their value as they're replaced by a small set of future competitors, Goldman's Steve Strongin said in a report dated Feb. 5. While he didn't posit a timeframe for losses in existing coins, he said recent price swings indicated a bubble and that the tendency for different tokens to move in lockstep wasn't rational for a "few-winners-take-most" market. "The high correlation between the different cryptocurrencies worries me," Strongin said. "Because of the lack of intrinsic value, the currencies that don't survive will most likely trade to zero."

Comments

Good. I could finally buy a new graphics card

[MrNJ]

Once the miners stop buying, the prices should normalize

Re:Good. I could finally buy a new graphics card

[InvalidsYnc]

I also would like a reasonably priced GPU, but I am seriously more concerned about the power requirements of all of this mining. Globally the power consumption must be huge, and as I understand how BC is designed, it will only get larger, that cannot be good on the whole global warming front as it increases the demand for non-renewable energy sources along side the renewables just to keep up.

I really think that cryptocurrencies like the current ilk were created by power companies just trying to sell more power. ;-P

Re:Good. I could finally buy a new graphics card

[ewibble]

Of course they can hit 0, if no one is willing to buy them. You can say your trash is worth 1 million dollars and not give it away for any less but if no one will pay you anything for it, it is worth 0. If all the miners stop mining you won't even be able to sell them.

I see no reason why it wouldn't hit 0, since it is actually useless as a currency, it is just taking up space on your computer.

Re:How is this any surprise?

[El Cubano]

The technology is interesting and useful, but cryptocurrency value is just due to the Beanie Baby effect.

I think it more likely that Goldman and/or their buddies went short on cryptocurrencies.

It is strange that the markets can be moved by the analyses/opinions of those who stand to benefit from making the markets move in a particular direction, no?

Re:How is this any surprise?

[mark_reh]

That analogy would be perfect, if you could move a couple million dollars worth of Beanie Babies across borders without risk of detection or confiscation.

A couple million dollar's worth of beanie babies has never existed. 2 dollar's worth of beanie babies has never existed. You're making the common mistake, made by bitcoin and beanie baby "investors" alike, that price = worth. The truth is, price and worth are two different things, and large differences between the two are not sustainable. Either the worth has to rise to meet the price, or the price has to fall to match the worth. I don't see bitcoin's worth rising.

The only people who want to move a couple million dollars across borders without detection are, by definition, criminals.

Re:Don't conflate value with utility

[Jeremi]

Goldman is wrong. Blockchain-based cryptocurrencies are here to stay.

I don't know whose argument you are trying to rebut, but it isn't the one presented in the article.

In the article, the argument was that most block-chain based currencies will eventually become worthless, because everyone will eventually standardize on a small number of successful currencies and the market will lose interest in the also-rans. (Think VHS vs BetaMax)

That's completely different from the idea that all blockchain currencies will go away, which is the straw man argument that you seem to be trying to refute.