Why Did I Sell Everything?
In order to understand this, we need to consider two reasons why people buy cryptocurrencies — as currencies and as investments.
Blockchain / Bitcoin was created as a new form of currency. Scalable, distributed and anonymous currency. Good currencies also need to be common, stable, and resilient (compared to other things). The currency doesn’t have to be a good investment, but a good currency has to be. True? Is it possible to scale Bitcoin (or any other major currency)? No.
Right now Bitcoin may hold from 3 to 7 transactions per second. VISA conducts 47 000 transactions during THE same time. As bitcoins become more and more popular, due to the problem of scaling the Commission for transactions soared (up to $50 per transaction!), which is why many sellers (for example, Steam) no longer accept bitcoins. Bitcoin is a distributed network? Yes. But maybe it’s not that good. While cryptocurrency developers and investors are talking about how horrible Central banks are, they in turn make a very large contribution to the economy in the form of stability that is provided by monetary policy.
If they do not print more money (to create inflation), economies will begin “deflationary periods”, when the currency itself will become more and more valuable. While this may sound great, many economists disagree with this idea and believe that deflation reduces spending and creates a vicious cycle of economic collapse. Is Bitcoin anonymous? Mostly. But governments are actively fighting cryptocurrency exchanges, which for obvious reasons is becoming more difficult to move cryptocurrencies anonymously.
It is unprofitable for the company to simplify the conduct of illegal activities (despite the fact that not all anonymous transactions are illegal, simplification of anonymous transactions also simplifies illegal transactions). In addition, for each individual, the use of anonymous cryptocurrency means a significant risk.
When identity data is hidden, there is plenty of room for fraud. Due to the behind-the-scenes atmosphere, users rarely realize how critical the availability of fraud protection is. Without it, users ‘ rights are unprotected when (or if) a fake online seller steals money or a thief picks up a bitcoin credit card and buys himself a new suit for $10,000. Thanks to the development, we can give cryptocurrencies a layer of protection against theft, reducing their anonymity. But then at what point do we find ourselves reinventing the wheel? Bitcoin is common? Ten years later, during which many smart people have done a lot of work, this is still not the case. Even if we put aside the issue of scaling, the situation is such that only some people and companies really believe that bitcoins are more valuable than existing currencies.
As the owner of my own business, I have tried to introduce bitcoin support… but this integration is very slow and brings only a headache. Imagine having to wait 10 minutes to get your Cup of coffee because the transaction is still “processed”. Even if bitcoin somehow carried out 10,000 times more transactions and increased the speed of their processing by 600 times (up to one second), It would have turned out that we already have. I think that many companies will not further complicate their lives by introducing support for the new currency.
Bitcoin is stable? HA. No one trusts a currency whose price fluctuates by 10% per day. Bitcoin is not regulated in any way (unlike the stock exchange, which has at least a Commission on securities and exchanges), rich players with bad intentions can cause serious economic harm through manipulation of the market. Due to the lack of a stable currency price, the confidence of companies is too small to set their prices in this currency. Bitcoin is reliable? Less than regular currencies.
All you have to do is follow the news of people hacking into wallets, stealing bitcoins, people forgetting passwords and losing millions of dollars. In the case of a Bank account, at least you can recover your password! (And the problem, when man loses/forgets information, NEVER disappear). The icing on the cake: Bitcoin not only 10,000 times slower than existing solutions, but also much less effective from the point of view of energy consumption. Each Bitcoin transaction consumes electricity at $35 (source).
Bitcoin mining is financially possible only because governments and citizens continue to promote price growth (at least now). While governments and citizens around the world are striving to reduce the emission of money, crypto-currencies do not bear any social responsibility. For some currencies, a new technology called proof of ownership is being developed that should help solve the problem, but it is still at the experimental stage. Therefore, I am not interested in supporting any cryptocurrency using proof-of-ownership systems, even taking into account the fact that some particularly ridiculous companies claim that they help the environment only because they waste solar energy (which could replace coal for reasonable reasons).
From this we can conclude that even if the cryptocurrency solves all these almost impossible technical problems, even if it becomes 10,000 times faster, 5,000 times more effective in terms of energy costs and will be protected from hackers, then this currency will still be by definition worse than the existing financial systems (according to the above points). Perhaps some new currencies on the blockchain will be able to get an improved code, and then I will be happy to use them every day. But no one knows if it will happen at all or what cryptocurrency will be successful. Most importantly, even if a blockchain-based currency becomes a valid currency in the future, it does not mean that it is a good investment now. What about investment? We came to the second reason why people buy cryptocurrencies as an investment. After all, 21 million bitcoins will be released! JUST! It can not rise in price.
But, as Mr claims. Money Mustache, one of the most savvy investors on the Internet, ” the same argument can be made in favor of nail bookmakers: they don’t have any intrinsic value, but their number is limited, so let’s use them as the new world currency!”The same argument can be made in favor of cash. In fact, they are valuable only because they are limited in quantity. But here’s the thing: no one invests in cash. People invest in something that has value. Companies may offer income or dividends, collateral or interest. Some invest in things like fine art, large dolls, lottery tickets, and vintage baseball cards. But, to be honest, it’s all speculation.
In order to score the last nail in the coffin, consider another great argument of all MMM: the main blockchain technology, the only thing that can be interesting bitcoin and cryptocurrencies, has an open source code. This means that bitcoins as one of the variants of blockchain technology application are not unique, and in fact are not limited. There are now more than 1,300 of the currencies that use almost the same blockchain technology. Every day there are more and more similar currencies.
While blockchain technology can bring benefits in specific areas (for example, Ripple speeds up international money transfers), cryptocurrencies as an investment are bubbles inflated by their creators and early investors who want to quickly get rich and get other people to buy these priceless tokens. In conclusion, society has a very bad memory. Many people were seriously rich during the dotcom bubble, and then all lost when their” companies for millions of dollars ” suddenly depreciated. I don’t know for certain when there is a crash, but I can say the following: to sell a miraculous cure-all, only until people realize that this is water.
If you have cryptocurrencies, then sell them. You’ve probably already made a small profit after the recent price hike, but if you don’t sell everything before the crash, you’ll lose all your money. P.S. information for experienced investors who are looking for something to invest in: at the time of this writing, the capitalization of the cryptocurrency market is more than three quarters of a trillion dollars. When these markets collapse and the value evaporates, there will be a recession. The recession is characterized by a decrease in the number of available liquid assets, which means lower costs, so Yes, $750 000 000 disappear.
When all the money will disappear, many will face not repayment of loans, spending cuts, leading to unemployment and the subsequent spending cuts. When this happens, exchanges (which are based on tangible assets) will start selling out, and you can win by investing already liquid cash into cheap stocks.