In an earlier paradigm, I would never have given Floki Inu (CCC:FLOKI-USD) the time of day. A coin beloved by legions of “degenerates” as social media traders are often called, FLOKI-USD apparently takes its inspiration from another junk coin, Shiba inu (CCC:SHIB-USD). But if you’ve been following my work lately, you’ll notice that I’m starting to take an interest in these ridiculous cryptocurrencies.
How is this possible, you may be wondering? With Bitcoin (CCC:BTC-USD) rising to incredible heights – just below its all-time high as I write this – it looks like BTC is the safest bet. Certainly, the news of its integration into the general public, in particular the forthcoming introduction of the first BTC futures exchange-traded fund, excited previous secular observers. In contrast, Floki Inu seems wildly speculative.
But I think it’s fair to ask, what is it really makes Bitcoin better than any other crypto? BTC and Floki Inu are linked to decentralized blockchain networks that operate on the principle of public consensus. Both digital assets operate outside the jurisdiction of the global banking system. Additionally, both legitimately claim frictionless, borderless transactions (at least on a technical basis).
So what is the difference between Bitcoin and Floki Inu? If you said price, I would agree with you. BTC simply commands a higher market valuation based on the idea that someone else will value that unit of asset higher than the original purchase price.
Folks, there is a name for this phenomenon. it’s called biggest fool theory. During a stock market bubble, people buy assets regardless of their fundamental value thinking they could sell them to someone willing to buy them at a relative premium.
Otherwise, nothing fundamentally distinct about Bitcoin exists. Indeed, many experts claim that Bitcoin represents obsolete technology.
Math seems more attractive to Floki Inu
If that wasn’t compelling enough for you to question the extreme value gap between BTC and Floki Inu, consider what Harvard Business School academics Marco Iansiti and Karim R. Lakhanihad had to say about the underlying technology:
Blockchain is a fundamental technology: it has the potential to create new foundations for our economic and social systems. But while the impact will be enormous, it will take decades for blockchain to infiltrate our economic and social infrastructure.
Their article in Harvard Business Review further stated that “the adoption process will be gradual and steady, not sudden, as waves of technological and institutional change gain momentum.” During this adoption process, many proposals will be made, and many will be rejected. Therefore, the first generation of breakthrough technology is unlikely to be the permanent Nordic star in its industry.
This is the scientific concern about Bitcoin. On the valuation side, math is starting to look a lot more appealing for Floki Inu.
Consider that between September 9 and 16, FLOKI appreciated almost five times. At present, Bitcoin is a hair of less than $ 61,000. Many analysts see $ 100,000 as a natural upside target towards the end of 2021. Nominally, we’re talking about risking $ 61,000 to earn $ 39,000 in gross profits.
It’s the kind of math that makes my hands sweat, even though we’re just talking about assumptions! On the other hand, if you think Floki Inu has it for another 5x return, you just need to put $ 7,800 in jeopardy to gain the same gross profit above.
Of course, the counter-argument is that Bitcoin is much more likely to hit $ 100,000 based on its momentum and massive user base than it is for Floki Inu to quintuple.
But is it really? Thanks to the Law of Extremely Small Numbers, you only need a modest catalyst to really see big fluctuations.
Huge risks for both
It must be said that cryptocurrencies in general, whether you are talking about Bitcoin, Floki Inu, or any of the 12,000 or so other digital assets, are extremely speculative. So don’t think I approve of FLOKI-USD, because I don’t.
At the same time, if you are determined to invest in cryptos despite the myriad of risks, then it makes sense to spread your risk across established assets and more speculative coins. And frankly, I’m not quite sure it’s worth investing that much in BTC compared to where people believe it will go Short term.
With the way risk-reward profiles have changed, it’s much more acceptable to buy into a high-risk, higher-reward company than a higher-risk, low-reward bet. Therefore, Floki Inu isn’t that crazy if you’ve ever thrown caution to the wind.
As of the date of publication, Josh Enomoto held a LONG position in BTC. The opinions expressed in this article are those of the author, submitted to InvestorPlace.com Publication guidelines.
Former senior business analyst for Sony Electronics, Josh Enomoto has helped negotiate major contracts with Fortune Global 500 companies. Over the past several years, he has provided unique and essential information for the investment markets, as well as for various other sectors, including law, construction management and health.
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