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Cryptocurrencies get compared to lots of things. Proponents declare them the next gold or global currency. At the other end of the spectrum, critics dismiss them as just another outlet for day traders to make a quick buck.
However, you probably haven’t heard this one: Cryptocurrencies are just like Candy Crush, the popular online game in which players move and match pieces of candy.
That’s how Richard Bernstein, chief executive at Richard Bernstein Advisors views the mania for cryptocurrencies and tokens.
“As any player of online games can attest, the goal of most games is to win coins, tokens, jewels, or the like that are helpful in reaching new levels in the game,” Bernstein said in a Wednesday note. “Winning game coins or tokens is remarkably similar to ‘mining’ of cryptocurrency coins,” Bernstein continued.
‘If only the founders of Candy Crush had realized that selling the coin could be more profitable than selling the entertainment’
Bernstein said the only difference between mining bitcoin and playing Candy Crush is that the accumulated coins you receive from mining are tradable.
“If only the founders of Candy Crush had realized that selling the coin could be more profitable than selling the entertainment,” he said.
It’s this subtle difference that’s fueling a bubble, according to the Wall Street analyst, who said the digital currency craze fits the five characteristics of a bubble as outlined by author Edward Chancellor: increased liquidity, growing leverage, a democratization of the market, more turnover and rising new issues.
The bubble comparison is nothing new. After rising more than 1,000% in 2017, the comparisons began with the tech bubble, and then as the price went parabolic, it was compared to the Dutch tulip mania of the 17th century.
With more than 1,500 different kinds of coins and a market cap of nearly $350 billion, the digital currency craze, for now, is still in place; something Bernstein doesn’t expect to last.
“However, change the words ‘playing Candy Crush’ to ‘solving a sophisticated mathematical formula,’ and suddenly global currencies have been revolutionized,” he said.