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Lastly, the Game Theory. The economic Game Theory embodies the typical investor’s mindset in the cryptocurrency market. While this market is unique and does not rely on Game Theory in adjusting its costs, the market movement, on the other hand, can be determined accurately via means such as Technical Analysis, which represents the mathematical aspect of the Game Theory, and the reliance on old investing sayings such as “buy the rumour, sell the news”, (http://www.investopedia.com/terms/n/news-trader.asp?lgl=rira-baseline-vertical)

which represents the psychological aspect of the Game Theory.

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Price leadership is an informal collusion where most of the industry follows the price of a leader, this is apparent in the cryptocurrency market.
Price leadership is an element that becomes more significant with the lack of product differentiation, this certainly explains the strong presence of price leadership, with the leader being Bitcoin, in the cryptocurrency market. While many firms claim to be different and offer unique services, to the typical layperson, they are almost identical and offer the same services.
This point is clearly illustrated in just about every corner of the cryptocurrency universe, ranging from fin-tech articles to online brokerages that use the small unit of Bitcoin, Satoshi, as a yardstick. (https://en.bitcoin.it/wiki/Satoshi_(unit))

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Why the Cryptocurrency market is an Oligopoly

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Why the Cryptocurrency market is an Oligopoly

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According to the Herfindahl-Hirschman Index (HHI),
the formula of squaring the percentage market share of the 50 largest firms yields
a value that, if it exceeds 1000, the firm is likely an oligopoly.
In the cryptocurrency market, the firm (coin) with the highest market share value alone yields a square value of over 2,000 as of 24 June 2017 (CoinmarketCap.com, 2017)
and the concentration of market shares in the biggest 4 firms is upwards of 75%.
Thus, we conclude that the Cryptocurrency market is an Oligopoly.

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http://insidebitcoins.com/news/holding-bitcoin-as-gold-and-spending-gold-as-bitcoin/26947
http://www.okclipart.com/Food-Tasting-Clip-Art30qijdwhoy/
http://www.softdrinkfaceoff.com/pepsi-vs-coke/
http://www.coupons.com/thegoodstuff/brown-baggin-it-2/
https://www.123rf.com/photo_6374314_the-photo-shows-the-elements-combined-to-create-h2o-water-scientific-numbers-also-shown.html
http://www.itpro.co.uk/613219/ericsson-wins-bid-for-nortels-wireless-assets

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Bitcoin mining has massive entry costs, and will only grow as Bitcoin grows larger. As of right now you may be able to purchase an ASIC, but if Bitcoin grew larger manufacturers they would likely withhold them for themselves. They already do somewhat, as they "extensively test" their devices for several months before actually shipping them. The only people profiting from ASICs are the producers of them.

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Market situation between, and much more common than, perfect competition (having many suppliers) and monopoly (having only one supplier). In oligopolistic markets, independent suppliers (few in numbers and not necessarily acting in collusion) can effectively control the supply, and thus the price, thereby creating a seller's market. They offer largely similar products, differentiated mainly by heavy advertising and promotional expenditure, and can anticipate the effect of one another's marketing strategies. Examples include airline, automotive, banking, and petroleum markets. Mirror image of oligopsony.

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Demand refers to how much (quantity) of a product or service is desired by buyers. The quantity demanded is the amount of a product people are willing to buy at a certain price; the relationship between price and quantity demanded is known as the demand relationship. Supply represents how much the market can offer.  Cryptocurrencies are backed up by consumers who are investing in them. Thus the demand in cryptocurrencies would affect the amount of cryptos supplied to the market

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People are prone to believing the contents available on the media and because of the accessibility, it influences people to buy regardless of the price tag. Cyrptocurrencies can be used in many communities. For example, one cyrptocurrency is bitcoin. It is popular mainly in the gaming community. Gaming addicts purchase bitcoins to gain beneficiaries in games. It could also be used in gambling. These addictions causes these group of people to buy these type of cryptocurrencies even when the price increases.

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Price elasticity shows how responsive consumers are to changes in price of a good.
A difference between a good and a currency is that a good is any nearly-perfectly fungible good whereas a currency is a medium of exchange and a store of value.
Almost all currencies today are backed by a government fiat and their countries' reserves, e.g. USD, JPY, SGD.
However, the digital currency, cryptocurrency, is not backed by any government fiat, which is its defining feature. Cryptos are backed only by their consumers and the people who are investing in them, this leads to Cryptocurrencies having a more complicated price elasticity of demand since it is not driven by the conventional forces of the market.

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PROPORTION OF INCOME SPENT ON GOOD (ELASTICITY)

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PROPORTION OF INCOME SPENT ON GOOD (ELASTICITY)

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Investors made bets using their brokerage accounts and when investors put in a larger sum of money to invest, they can purchase a percentage of the coin supply then attempt to promote good stuff about the coin to 'pump' the price which also means that the more they invest, the more inadvertent price increase and falls. Thus, by supplying more proportion of their income on cryptocurrency, it actually helps to boost the value of the coin as the demand for a currency will naturally increase as well.

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Cryptocurrencies continued their recovery from last week's massive price fallout, resuming the upward trend that has characterized 2017. All but 12 of the top 100 cryptocurrenices posted gains in the last 24-hour period.

Get exclusive analysis of bitcoin and learn from our trading tutorials. Join Hacked.com for just $39 now.

Market leaders bitcoin and Ethereum had the smallest gains the last 24-hour period, with the former adding 0.88 points and the latter 1.15 points and market caps of $45 billion and 31.7 billion, respectively.

Bitcoin's price reached $2,760.61, attempting to reclaim the record $2,864.85 it set on June 9. The price has hovered in the high 2,700 range after falling to a monthly low near $2,100 last week.

Ethereum Recovers From Bottleneck

Ethereum, at $342.27, continued the recovery it began two days ago following two days of losses. Ethereum has been fighting a correction that came from a sudden increase in demand which caused a bottleneck that delayed its transactions.

Despite showing a correction since it peaked at $402 two weeks ago, Ethereum is still showing impressive overall gains this month.

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Ethereum has suffered from scaling problems as more new digital currencies opt for the Ethereum platform when holding their initial coin offering (ICO). Status ICO, which raised more than $100 million in Ethereum, caused a demand spike that some exchanges couldn't handle, causing Ether prices to drop 15% momentarily. This sudden drop also affected other currencies, as nine out of the top 10 registered losses.

Third place Ripple rose 9.19 points to $0.294288 in the last 24-hour period, reaching a $12.7 billion market cap, but still below the $0.348079 it hit on May 16.

Litecoin Hits A Road Bump

Litecoin, the fourth highest market cap at $2.408 billion, was the only currency with more than $1 billion in market capitalization to show a loss in the recent 24-hour period, losing 2.36 points. Litecoin nevertheless has managed to hold the number four spot, following the activation of the Bitcoin Core development team's transaction malleability fix Segregated Witness (SegWit), which led to an increase in the demand for Litecoin and a significant surge in development. Within months after the activation of SegWit, Litecoin creator Charlie Lee announced his resignation and his intent to focus on the development of Litecoin full time, which further increased the expectation of the cryptocurrency community and market toward Litecoin.

Within three months, Litecoin's market cap increased from $200 million to a staggering $2.5 billion, recording a 1,150 three-month increase. In that short period of time, Litecoin surpassed Ethereum Classic, Dash and NEM in market capitalization.

More importantly, the mid-term increase in the market cap of Litecoin, the activation of SegWit, successful testing of Lightning Network on Litecoin, issuance of services by companies such as BitGo and the shift in focus from Litecoin creator Charlie Lee further triggered the currency's development community.

On June 19, Bitstamp, the eighth largest Litecoin trading platform within the U.S. Litecoin exchange market, announced the integration of BitGo's Litecoin multi-signature security service. Although the majority of Litecoin trades are processed within the Chinese Litecoin exchange market and Bitstamp only accounts for a fraction of global Litecoin trading, it marked the first case in which a major international digital currency trading platform has integrated BitGo's security services to secure Litecoin transactions.
Also read: Recovery begins: cryptocurrencies regain chunks from Thursday's bloodbath
IOTA Gained The Most

Among those with more than $1 billion in market capitalization, IOTA, number 7, posted the biggest gain as the price hit $0.525929 for a $1.461 billion market cap, a 26.48 point gain. IOTA has continued recovering since suffering one of the largest losses last week, when it dropped 36.5 points in a 24-hour period.
Featured image from Shutterstock.
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Cryptocurrencies Continue Recovery, Resume 2017's Growth Trend

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Cryptocurrencies continued their recovery from last week's massive price fallout, resuming the upward trend that has characterized 2017. All but 12 of the top 100 cryptocurrenices posted gains in the last 24-hour period. Get exclusive analysis of bitcoin and learn from our trading tutorials. Join Hacked.com for just $39 now.

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Most cryptocurrencies offer essentially the same function as Bitcoin, which make them all close substitutes of Bitcoin. Since cryptocurrency is a currency, the price of the currency is only measured by its growth potential. This renders the price factor moot.
Comparing foreign currencies with cryptocurrencies is on the other hand, vastly different.
Foreign currencies are known to be relatively stable and not fluctuate too dramatically since they are backed by an entire sovereign government, some cryptocurrencies have increased as much as 1000% in a mere 7 days while some have devalued by over 100% in just 24 hours.
In this case, there are no close substitutes to cryptocurrencies, which means if there is an increase in price, the demand will not change as much.

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Investing in cryptocurrency or using cryptocurrency services are an absolute luxury, just as using credit card services are. This means that cryptocurrency has a low price elasticity of demand. When the price increases/decreases dramatically and investors lose faith in the currency, the demand will begin to decrease dramatically.
However, opportunistic buyers may jump in and buy these currencies in bulk.

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The amount of time available to traders to adjust to large increase/decrease in prices may vary depending on the magnitude of the change.
This factor is completely dependent on the situation, hence, the demand is price elastic and other times, it is price inelastic.

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From the news, crypto-currencies may make central banks redundant since no central bank can ever be in charge of crypto-currencies.
As such, a scenario similar to the "tulip mania" may occur again, where buyers are enticed by a rising price, only for the price to come soaring back down due to an oversupply.
Since the market supply has increased, the supply curve will experience a rightward shift.

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With each successive batch of Bitcoin being mined, the price of Bitcoin will increase due to the fact that as time goes on, the codes getting increasingly complex and this makes the process more tedious and time-consuming.
This increase in price of resources leads to a decrease in supply and therefore an increase in price of Cryptocurrency.

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Crypto-currencies such as Ethereum and bitcoin are digital forms of money that live online and are embedded in complicated computer algorithms recording their movements.
Old banking system would be replaced with modern technology. A system would be implemented allowing people to conduct business directly without using bank to facilitate payments.
This would mean that lesser people would use banks and cut down the use of credit cards and debit cards.
With technological advancements, fewer resources would be needed to facilitate in business transactions. Thus, the supply curve would experience a rightward shift

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Taste and preferences refers to a person's likes or dislike as a consumer and are often influenced by advertising and news reports. According to the news, if one were to buy US$100 of bitcoin then, they will find the value now worth US$70 million. Also, crypto-currencies are digital forms of money which allows people to do business directly without third parties such a banks. For consumers who wish to do business privately, they would prefer to invest in crypto-currencies so that banks would not intervene them.
This would thus cause the demand curve to shift right as more people prefer to do business online.

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The number of people who know of and are trading cryptocurrency has experienced a dramatic increase since 2009. This increase in demand in the market leads to an increase in the price of Cryptocurrency

If the number of traders increase , the market demand increases and the demand curve will experience a rightward shift

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Much like gold, the amount of Bitcoin to be mined is finite. In addition to the fact that public exposure is exponentially increasing, this increase in demand and decrease in supply leads to an increased price of Cryptocurrency.

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Cryptocurrency is a digital currency with it's first currency, Bitcoin, being anonymously created in 2009. Since then, Bitcoin has exponentially grown in fame and has stormed global markets.
One of its unique features is that it operates independently organisations or governance, which has led to its being banned in several countries. However, capitalists firms and individuals alike see the potential of this currency and are investing in cryptocurrency which lead to sudden outburst in growth of these currencies.
*There are only 21 million codes of BTC to be mined. There are other cryptos with infinite supply
*Time for BTC to trade will take longer as codes longer and the blockchain becomes bigger (FP --> longer& more expensive coins)

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Guess what are the best- performing investments this year?

You may be surprised to learn that they are not the local lenders such as DBS Bank and OCBC Bank which are being snapped up like hot cakes by fund managers week after week on the local bourse.

And no, they are not the much-fancied e-commerce giants such as Facebook, Google, Tencent and Alibaba which have been grabbing headlines recently.

Instead, the honour goes to a handful of crypto-currencies - bitcoin and ethereum are the best-known examples - which are a mystery to many of us. As they say, reality can be stranger than fiction.

For instance, bitcoin has been skyrocketing for the better part of this year, topping US$2,000 (S$2,760) for the first time last month compared with US$967.60 at end-December.

If you think that this run-up by bitcoin is a quirk, you should consider what the crypto-currency has returned to investors since 2010.

ST ILLUSTRATION: MIEL

If you had bought US$100 of bitcoin then, you will find your stash now worth a staggering US$70 million.

Talk about growing fabulously rich beyond your wildest dreams.

Ethereum, which started life only two years ago, has done even better within a much shorter time frame. If you had put US$1 into Ethereum last December, you would find yourself richer by an astounding US$45 just five months later.

The sizzling run by these two crypto-currencies leaves other more conventional forms of investments in the dust.

Since January, the benchmark Straits Times Index has risen "only" 10 per cent, while the S&P 500 Index on Wall Street is up 7.2 per cent.

While crypto-currencies may seem alien now, it is worth remembering that when personal computers built by Apple and other IT manufacturers were gaining in popularity 30 years ago, many people were sceptical that these gadgets would ever amount to anything significant. But those who kept faith with Apple and held their shares long-term would have become multimillionaires. One worry I have about crypto-currencies is - ironically - their heavy reliance on computer technology. This leaves investors prone to hackers exploiting flaws in a crypto-currency platform to gain access to a person's digital wallet. And unlike a real currency, it does not enjoy the backing of a government.

Of course, with 20/20 hindsight, it is easy to kick ourselves for having missed out on what now seems like a sure-fire investment opportunity enjoying a rocket-like ascent.

Before we try to pin down the reasons for their phenomenal gains, let's find out more about them.

For the uninitiated, crypto-currencies such as ethereum and bitcoin are digital forms of money that live online and are embedded in complicated computer algorithms recording their movements.

An anonymous computer hacker known as Satoshi Nakamoto purportedly invented bitcoin in 2008.

He envisioned a "peer-to-peer cash system" allowing people to conduct business directly without using an outside institution such as a bank to facilitate payments.

It is quite a revolutionary idea: Cutting out the banks would mean an end to the billions of dollars in fees these institutions earn in their middleman role.

It would also spell the end of credit cards and debit cards.

If they ever become a fact of life, they may also make central banks redundant since no central bank can ever be in charge of crypto-currencies.

This makes such currencies very attractive, especially to investors who are distrustful of governments which direct central banks to print money in a profligate manner to finance their spendthrift habits.

Still, I wonder if this motivation has helped to create a huge bubble in crypto-currencies on a scale similar to the "tulip mania" in the 17th century, where a rising price sucks in ever more buyers who do not have the faintest idea what they are getting into. Back then, Dutch investors poured large sums into newly introduced tulips - sending the price of the flowers soaring, before crashing amid an oversupply.

One worry I have about crypto-currencies is - ironically - their heavy reliance on computer technology. This leaves investors prone to hackers exploiting flaws in a crypto-currency platform to gain access to a person's digital wallet. And unlike a real currency, it does not enjoy the backing of a government.

I felt that my misgivings were vindicated when Mt Gox, one of the biggest bitcoin exchanges, abruptly halted bitcoin withdrawals in February 2014 and closed shop, after claiming that more than US$460 million worth of bitcoins belonging to its customers had gone missing.

That dealt bitcoin a serious blow, which caused its price to plummet from over US$1,000 a coin to below US$200, before starting a fresh run-up from late February 2015.

Still, more and more people are getting into crypto-currencies. By some estimates, about US$80 billion worth of such currencies is floating around in global financial markets - a sum significant enough to warrant attention.

My most recent encounter with crypto-currencies came in a chance meeting with an old analyst friend, Carey, who works at a bank.

While we were chatting, I noticed that he kept stealing furtive looks at his mobile phone. It turned out that he had a small trading position in ethereum and he just could not take his eyes off the screen because the price kept going up even as we were talking.

Carey is not some wild-eyed speculator out to take risky bets in order to make a fast buck. Rather, he feels there is a chance that crypto-currencies may one day become mainstream so it would be smart to get exposure to them sooner rather than later.

While crypto-currencies may seem alien now, it is worth remembering that when personal computers built by Apple and other IT manufacturers were gaining in popularity 30 years ago, many people were sceptical that these gadgets would ever amount to anything significant.

But those who kept faith with Apple and held their shares long-term would have become multimillionaires.

Still, a word of caution is needed where investing in crypto-currencies is concerned. They are still in an early stage of development and their price swings can be a lot wilder than, say, stocks whose prices will usually move up and down with the business cycles.

Crypto-currencies have crashed in a big way in the past and there is every likelihood that this can happen again if, say, there is a recurrence of a calamity such as the 2014 Mt. Gox hack; those who lost their bitcoin hoard are still trying to get their money back even though the chance of success is slim.

So, if you want to invest in a crypto-currency, be sure not to dip into your emergency savings and use only your "play" money - the funds you can comfortably lose without threatening your overall financial health.

There are a few ways to get exposure to crypto-currencies. One way is to open an account with United States-headquartered Coinbase, a digital asset exchange which allows an investor to buy bitcoin, ethereum and a host of other crypto-currencies.

Carey, however, opted to invest in ethereum via a derivative product known as a contract for difference (CFD) using eToro, an online trading website.

This means that rather than owning ethereum directly, he buys a derivative product that tracks the price movements of the crypto-currency.

So, should I take the plunge like Carey did and plonk some "play" money into crypto-currencies? I haven't made up my mind yet. If all that is driving up their prices is just hype, I can afford to wait. What goes up must come down.

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Guess what are the best- performing investments this year? You may be surprised to learn that they are not the local lenders such as DBS Bank and OCBC Bank which are being snapped up like hot cakes by fund managers week after week on the local bourse.

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1. Demand & Supply
2. Elasticity
3. Market Structure - Oligopoly