Bitcoin and the brutal truth article and permission to publish here provided by Jean Nichols.
Bitcoin was the original cryptocurrency, and it has been on a wild ride since the day it was created. In the initial stages of this year, bitcoin reached a price level of $60,000. However, within just a few months, it again reached half of its highest price.
Then again, towards November, it reached a price level of $69,000, the all-time highest price for this Crypto coin. Apart from this, the values of other crypto coins like DOGE have already experienced substantial fall and rise.
And it is because of the tweets of some influential people. Even though there has been a massive fall in the prices of bitcoins recently, the market capitalisation for the whole cryptocurrency space has exceeded $1.5 trillion. However, it is a situation of worry because the value of virtual assets which do not exist in the physical world and are just computer code is increasing at such a high speed.
Do you think that cryptocurrencies are in favour of the future and you should be investing your money in them? Also, you need to understand that the recent swing in their prices wiped away the $1 trillion market capitalisation of the total value in May 2021.
It could have been a severe threat to the finance mechanism. BTC came to allow people to conduct a transaction without involving any third party. The emergence of cryptocurrencies occurred when there was a global crisis in 2008. It led people to drive away their trust from banks and even governments controlling the financial system.
Bitcoin enables people to use the digital financial medium of making transactions and making their identity digital. It allowed people to use cryptocurrencies with a high degree of anonymity. Therefore, there are some downsides also to the highly emerging cryptocurrency space. Hackers prefer stealing bitcoins from digital wallets because it is more valuable than any other asset today. Also, these digital coins are used for illicit activities worldwide.
As bitcoin does more and more in popularity, it becomes cumbersome, expensive, and slow to use. Earlier, it took about just a few minutes to validate a cryptocurrency transaction but now, the time has increased. More and more time is being consumed in mining blocks for bitcoin, and the transaction fee is about $20 in 2021 for mining one block in bitcoin.
On the other hand, bitcoin’s volatile value has made it a viable medium of exchange for most people. You can consider the example that you can buy beer with $10 worth of bitcoins one day, but the other day, you can buy wine with the same bitcoin.
Moreover, it has been evident that transactions are not entirely anonymous over the years. Different governments have successfully traced back the bitcoin transaction and retrieved a few parts of bitcoin for the portals like FBC 14 Algorithm . The BTC, which was being used on the dark web, is now recovered, and hence, you are also not completely anonymous on the global platform of making a transaction with crypto coins.
There have also been many questions regarding the security and non-traceability of bitcoin transactions worldwide. Even though it is not hundred per cent safe and secure, people are still crazy about it and investing a large sum of money in this digital venture.
Bitcoin has failed to meet the expectations of the stated objective, and it has also become a speculative investment over the years. The valuation of bitcoin is very puzzling. There has not been any intrinsic value which is backing the bitcoin. However, still, people are crazy about it and invest it just like good.
The cryptocurrency enthusiast says that these digital coins value from the scarcity itself. The bitcoin computer algorithm only maintains a market capitalisation of 21 million digital coins. However, scarcity itself is not the ultimate medium of valuing something. The basis of relying on cryptocurrency investors is a more excellent fool theory which states that you can profit from investing by finding someone else to purchase it at a higher price.
Even though bitcoin has a very high value in the market, the collapse of the whole cryptocurrency space will not affect the financial system. Banks, being the Central financial assistance from different nations, has been staying away from the effect of Crypto coins.
However, as these digital assets are a speculative bubble, the investors who reach them have a significant risk of losing a lot of money. Also, the government should be cautious of the retail investors who are much more likely to lead their peril. The government already regulates the securities that help speculate the bitcoins, but this is the only thing it can do.
We can consider bitcoins to be innocuous as the transactions are validated and approved by the miners. But, also require an advanced computer system that consumes a lot of energy. The energy consumption for the bitcoin network itself is equal to the energy consumed by a whole nation like Argentina and Norway.