At the end of all this, once true markets develop that offer products with utility, I don't see how we have more than 3 - 4 functioning cryptos with appreciable use. We have 3 - 4 main credit card companies (Visa, MC, Discover, Amex), 1 main payment system (Paypal), and I'm sure I could think of other industries that have settled on 1 - 4 main players. I just don't see room for more than 3-4 cryptos maintaining today's elevated market caps, and the ones that do would likely go through a crash before reestablishing themselves.
The bottom line is that neither little old grandmothers nor I want to convert our cryptos into one of the 1'000's of cryptos out there used by any particular company. We want something like Paypal, with a single system that is universally adopted. This is not just for ease of use, but also to maintain the value of crypto's (remember, one large impetus for their creation was all the QA being done by central banks).
There is one way I could see having more than single digit cryptos in the long run ... if each country or region has their own crypto unit, pegged to their local currency. But if this occurs, they are weaker as a store of value impervious to central bank manipulation.
Ultimately, I'm hoping that 3 - 4 cryptos rise to the top over the next half decade, and I am lucky, insightful enough to have purchased one of those four.
This is a good point, but it's still confined to the old financial paradigm. It isn't a sure thing that just because the credit markets today ended up consolidating to 3-4 choices(Visa, MC, Discover, etc), that we would use that evidence to judge what the financial structures of tomorrow will most likely be. It's a little too "zero sum" thinking. Remember, one of the goals of crypto is to bank the unbanked. Today, even with the juggernaut financial institutions that Visa, MC, Discover have, there remains millions of people on this earth that are not their clients. My guess is that the competitive pool will increase to a much bigger size than what we are used to. That's what decentralization always does. Increase market competitors and offer more choices to the consumer. It doesn't have to follow the 3-4 winners on top and everyone else dissolves prediction, just because this is the way "it's always been". In the original post, Crypto Investor writes:
"These four catalysts drive astronomical returns even when it doesn't make sense. However, all good things come to an end and I suspect that soon, altcoins will flee to Bitcoin. Note that almost all altcoins must be bought with Bitcoin - the opposite is true too (altcoins are sold for Bitcoin)."
On what basis does it "not make sense", and how can we possibly know with certainly that those 4 catalysts are the primary drivers of all the growth in that space. It may be that those things spark those runs, but there are plenty of investors that are now coming into the space that don't care about Reddit posts or even look at the internet community following these things.
The big assumption here is that this will remain the same going forward. It might have been that altcoins and Bitcoin always had an inverse relationship with each other, but if you look at the trends going forward, you can clearly see that the relationship between the two are starting to slowly decouple from one another. This can be difficult to admit if you've spent a great deal of your crypto life evangelizing Bitcoin as "king". Again, it's this trap of zero sum thinking. We cannot foresee a major game changer coming down the road that will throw all of this analysis out the window. The past is great tool to speculate on the future, but it should be recognized that variables change constantly that make those old models obsolete. and a reassessment based on new information not known before must occur internally. One other thing that crypto investor may not realize here as well. Fiat is ALSO a position.. and it may be the case that fiat will be paired to more alts in the future, with exchanges dealing with a variety of positions that you can go in an out of. I can see all of this floating against each other in a much bigger and open market. Fiat to BTC, BTC to ADA, Stellar to fiat, Crypto to gold, Ripple to USD, to Yen, whatever. I can see the old credit monopolies being replaced by a much bigger list of lenders, all offering multiple tiers of financial services to meet very specific needs. Decentralization opens up markets, it doesn't limit them to a few.
"The bottom line is that neither little old grandmothers nor I want to convert our cryptos into one of the 1'000's of cryptos out there used by any particular company. We want something like Paypal, with a single system that is universally adopted."
^Grandma might not necessarily be expected to even know this. There are lots of projects working on under the hood universal wallets. Think about Bread(BRD) for example. I can see this type of project evolving into a one click payment solution that converts to anything. Atomic swaps under the hood. Today, apps like RobinHood made it so easy to invest. Any kid can buy and sell a position in a stock now. This was unheard of in the 90s.
Basically, my outlook for the future is more optimistic here. Sure, there WILL be losers in this competitive space, but I personally feel that there will be a lot more winners that we realize, and I hope we all come out on top. Cheers! :)
I am definitely guilty of focusing in on one of the original applications when I bought Bitcoin over 4 years ago, that of a currency not able to be manipulated by the central banks. Your point about grandmothers is excellent, companies will have to build a LOT of front end architecture that makes exchanging coins user-friendly for mass audiences. Cheers to you too !
I could see there being a few just based on the fact that the infrastructure is just starting to be built. The only way to get a monopoly in cryptos is a coin that works for everyone. Not going to happen.
I don't think it will be that few, just because there are use cases beyond "currency." But in terms of currency, yes there is limited room for success. Part of what I like about crypto is that it is so much simpler than having to deal with USD, EUR, JPY, GBP, etc. But if you got 50 different spending currencies, then I guess that's not really the case. Probably will be a mainstream currency and a privacy currency that will operate side-by-side and become adopted as a side option to existing centralized solutions.