The SEVEN major problems with Cryptocurrencies
The market is completely unregulated. Exchanges could be nothing more than financial traps, or better yet, the work of intelligence agencies. CoinBase demonstrated a notorious event just a short while ago by usurping crypto-wallets. If the funds disappear they could be lost forever.
Cryptocurrencies have “NO INTRINSIC” value.
Generating a crypto-unit is the function of very expensive computer servers and hydro. You need the latter to generate the enormous amount of electricity to mine a crypto unit. Once mined the the crypto unit is essentially valueless as the two major input costs have no transferable value. Crudely, I have determined that it costs approximately $500-600 in equipment and hydro to mine a crypto-unit. That is a “sunk cost”.
There is no commodity backed cryptocurrency. The addition of gold, silver or platinum to secure the value of a crypto-unit is not a consideration at the present time. While it has no better standing than FIAT money, FIAT currencies continue to have the confidence of the general public. Confidence is the only factor which could provide legitimacy to cryptocurrencies.
While it has been stated that many cryptos have finite mathematical generation protocols, this is not the case anymore. The creation of “forks” have lead to hybrid forms of the base cryptocurrency. These forks are infinite in possibilities and only require specific “code” modifications.
An internet shutdown would make cryptocurrencies valueless. The only viable medium of exchange would collapse the cryptos’ functionality and completely destroy any remaining confidence in this new money medium.
Acquiring cryptocurrencies with FIAT currency is relatively simple with basic computer skills, but try selling the crypto’s is the market begins to collapse - it would be simply impossible.
Pretending that cryptos can evade taxation, government reporting and any financial accountability is a pipe-dream. Cryptos are a utopian currency which are only viable in a completely decentralized world. To conclude that “Blockchain” technology is an impenetrable wall is ridiculous. We are in the age of “quantum computing” and “CAT5”. Blockchain is already obsolete.
Thank you,
Joseph Pede
All currency is just a statement of trust. Gold and the like are trust that other people will want gold and gold will remain hard to come by (note that gold could be devalued massively if it could be efficiently extracted from asteroids/seawater/Earths core with future technology). Fiat currencies are a statement of trust in a government, which is made of a fairly small largely self selecting group of people therefore pretty corruptable so this trust should not be absolute. Crypto-currencies are are statement of trust in an algorithm and (for proof of work systems at least) the idea that with a large enough number of users each user will be 'forced' to act honestly (everyone else loses if one person cheats so everone is out to stop anyone else cheating, it's game theory in practice), of course you point out there are flaws with these assumptions-and there certainly are. The crypto world knows this- it's the search of better solutions that is the truely exciting element of crypto currencies at the moment, they're still in alpha testing.
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Tell you what joseph, keep all your money in dollars and in the bank, we'll talk in ten years....
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