By Lucinda Shen
February 7, 2018

Most, if not all cryptocurrencies on the market today will have further to fall, says Goldman Sachs. But on the bright side, the Amazons and Googles of digital assets could spring up in their wake.

That’s according to a Feb. 5 note featuring a Q&A with Goldman Sachs head of Global Investment Research Steve Strongin. Strongin says that he believes most cryptocurrencies will ultimately fall to zero as current iterations are “too primitive” to be viable in the long term. Transactions are costly and lengthy, and cybersecurity issues plague the current cryptocurrency infrastructure.

“Whether any of today’s cryptocurrencies will survive over the long run seems unlikely to me, although parts of them may evolve and survive,” Strongin said. “Because of the lack of intrinsic value, the currencies that don’t survive will most likely trade to zero.”

Strongin also pointed to the dotcom bubble of the late 90s as an example of what may be in store for investors. Many of the early winners then such as Pets.com and eToys.com have fallen—making way for today’s titans like Amazon and Google. A similar scenario could play out in the cryptocurrency space.

“In hindsight, this period will probably end up looking like the internet bubble of the late 1990s. Very few companies that existed then went on to become even more valuable. Amazon did—but in a completely different form. Google—a big winner today—had only just been formed at the time,” he said.

Perhaps the future big winner in cryptocurrency hasn’t even been created at all, with Strongin noting that even if the current generation dies out, new ones may still pop up in its place—though likely in a different form.

“Ultimately, I think new cryptocurrencies will emerge but of course time will tell,” he said.

But even if the specter of an Amazon or Google of Bitcoin may seem like a rosy long-term picture for cryptocurrency enthusiasts, the bottom line still stands. Most, if not all cryptocurrency investors today are in for a world of pain if Strongin’s prediction proves to be accurate. And with Strongin noting the lack of a clear winner in today’s cryptocurrency space, it also makes it extremely risky and difficult to predict the ultimate winner of a cryptocurrency showdown.

“So, are any of today’s cryptocurrencies going to be an Amazon or a Google, or will they end up like many of the now-defunct search engines? Just because we are in a speculative bubble does not mean current prices can’t increase for a handful of survivors,” he said. “At the same time, it probably does mean that most, if not all, will never see their recent peaks again.”

His comments come as Bitcoin prices are up to $8,300 after a dip to under $6,000 in the past week.

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