If you’ve ever wondered what “cryptocurrencies” such as bitcoin, litecoin and ethereum are for, ask one of their legion of techie-libertarian fans.
And it’s dollars to dogecoins (yet another one) that the conversation will go something like this:
You: So what’s the purpose of bitcoin BTCUSD-4.06% ?
Fan: The technology is absolutely amazing!
You: Yes, but what’s it for?
Fan: Really, the “blockchain” technology is a total masterpiece, way ahead of its time!
You: Yes, yes, I understand that. But what is it actually for?
Fan: You don’t understand! It’s a completely decentralized money system! Totally revolutionary!
You: Honestly, does it have a purpose? Any purpose at all?
Fan: It’s the wave of the future!
And on it will go.
It’s now an $82 billion market
Cryptocurrencies, or cybercurrencies, which were in a massive financial mania until their sudden selloff that started last month, have two actual applications: online gambling and money laundering. Neither is the heart of a major business model. But that’s it.
And these, preposterously, are the fundamentals behind a mania that has driven these currencies up thirtyfold, so that today, in aggregate, the market for them is a staggering $82 billion.
None of the defenders’ other arguments stack up.
Online currencies are hardly a “store of value” when they can fall, say, about 30% in a week.
Are they really protections against the ravages of “inflation” and “monetary debasement” imposed by wicked governments? If so, how come people who keep their money in bitcoin and ethereum and the like have experienced Weimar Republic levels of consumer-price inflation in the past month?
That is, after all, what it means when the price of your “currency” plunges. Ethereum isnt just down 50% against the dollar since mid-June. It’s down 50% against the potato, the sack of rice, the gallon of gasoline and the new car.
Read: Ethereum has lost $17.5 billion in market value in 4 weeks
Pure speculation
Admittedly, before all this, the price of these cybercurrencies had skyrocketed. Those who got in at the start of the year had previously turned $1 into $30. But this looks more like a speculation than a currency. And what will tomorrow bring? I have a pretty good idea how many potatoes I can buy with my dollars next week. Bitcoins? Good luck with that.
You notice, incidentally, that these bitcoiners continue to measure the market price of their beloved new currencies in terms of, er, old-fashioned U.S. dollars.
I have upvoted you not because I agree with your points you highlighted but because to give you a reason to visit my page @riz-cryptonian to read some quality material that explains blockchain technology in detail.
I hope you catch up with the knowledge and start investing so you could also be amongst the winners in future... just cause I care. lol
no hard feelings though...
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I completely disagree with you on all points but I also respect your opinion to be different so , we will have to agree to disagree. More Bitcoins for meeee lol Nice to meet you.
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