There are over 900 cryptos in the world already. So we don’t need another one. We need perhaps 3, maybe 5. The rest will die.

There are still technological problems to be solved with cryptocurrencies and scaling. At least two of the 3 to 5 crypto-currencies that finally emerge as the big winners will need to process as many transactions as the US dollar is part of every day. I’m not kidding.

We are talking something like a billion, not million, but billion transactions per day. And at present crypto-currencies are not designed to scale to anything like that level.

Why?

Because one of the big needs for a crypto-currency is so that all the online click payment software can process micro-transactions without going through formal currency conversions every time. So a Canadian accountant can pay for his use of Xero accounting software on a per click basis without convertions between Canadian dollars and US dollars on every click.

Big businesses like Microsoft, IBM, SAP, Apple, Google, Facebook etc. would love to be able to use a crypto for all these transactions and cut the banks out of the loop.

So whichever cryptos gain favour for these big corporation micro-transactions, and some shadier dark web transactions etc., will be the big time winners. But they are still struggling to find a structure that can handle this and be unhackable.

But the big issue for a crypto is getting exchange recognition. A currency depends on credibility and ‘the bigger fool’ issue. I’m prepared to accept your crypto-currency worthless-bits, just as long as I am sure there’s an even bigger fool around the corner who will also accept those worthless-bits from me.

Once I doubt that, I won’t accept your worthless-bits and the currency collapses.

A centrally banked currency is backed by a national economy. Even then - currencies collapse. Rhodesia / Zimbabwe had a currency once. Then it got a dictator called Robert Magabe and the economy was destroyed, and the currency went with it.

But crypto-currencies aren’t even backed by an economy.

So their problem is how to convince everyone that there’s a bigger fool around the corner who will always take the worthless-bits.

If a consortium of major companies like Microsoft, IBM, Facebook, Apple, Google, SAP, etc. etc. were all willing to say - yes, we will back it, then that problem could be overcome.

Leaving the hurdle of government recognition, tax issues, and the fact that the banks will fight back, still to be surmounted.

The US may not want a crypto-currency outside of US banking regulations doing all the micro-transactions. And the banks will certainly object.

So - when looking for the next big crypto, these are the things to which you need to pay attention.

Or you can just track who’s ramping a crypto-currency for the next big Ponzi scheme. Those who get in early on a Ponzi scheme make money.

Just CK’s thoughts - all free and for nothing.

Hope they help.