Bitcoin peaked about a month ago, on December 17, at nearly $20,000. At the time of writing, the cryptocurrency was less than $11,000… loss of about 45%. That’s more than $150 billion in lost market capitalization.
In cryptographic comments, we see that you often have to wring your hands and grind your teeth. It’s neck and neck, but I think the “I told you” crowd has an advantage over the “creators of excuses.”
Here’s the problem: if you just haven’t lost your shirt because of bitcoins, it doesn’t matter. And there is a possibility that the “experts” you see in the press will not tell you why.
In fact, the collapse of bitcoins is great… because it means we can’t think about cryptocurrencies at all.
Death of Bitcoin …
After about a year or so people will no longer talk about bitcoins online, in the grocery store or on the bus as it is now. So.
Bitcoin is a product of legitimate disappointment. The developer stated bluntly that the cryptocurrency was a response to the government’s misuse of fiat currencies such as the dollar or euro. It was supposed to be an independent peer-to-peer payment system based on a virtual currency that could not be reduced due to the final number.
This dream has long been thrown overboard in favor of rough speculations. Ironically, most people care about bitcoins because it seems like an easy way to get more fiat currency! They don’t have it because they want to buy him pizza or gas.
Aside from the fact that it’s a terrible way of electronic transactions – it’s extremely slow – the success of bitcoin as a speculative game has rendered it useless as a currency. Why would anyone waste it if it’s growing so fast? Who would agree with one if it quickly depleted?
Bitcoin is also the main source of pollution. One transaction requires 351 kilowatt-hours of electricity, which also results in the release of 172 kilograms of carbon dioxide into the atmosphere. That’s enough to power an American home for a year. The energy consumed today by all bitcoin mines could provide electricity to about 4 million U.S. homes within a year.
Ironically, the success of Bitcoin as an old-school speculative game – rather than its supposed libertarian use – has prompted harsh government action.
China, South Korea, Germany, Switzerland and France have introduced or are considering banning or restricting bitcoin trading. Several intergovernmental organizations have called for coordinated action to stifle the obvious bubble. The U.S. Securities and Exchange Commission, which once approved derivatives based on bitcoins, now seems to be wavering.
According to Investing.com, “The European Union is introducing stricter rules to prevent money laundering and terrorist financing on virtual currency platforms. It also explores the limits of cryptocurrency trading.”
Perhaps one day we will see a functioning and widespread cryptocurrency, but it will not be bitcoin.
… but the growth of crypto assets
Well, the excess of bitcoins allows us to see what the real value of crypto assets is. Here’s how.
To use the New York subway, you need tokens. You can’t use them to buy anything else… although you can sell them to someone who wanted to enjoy the subway more than you.
If the number of subway tokens was limited, there could be an active market for them. In fact, they can be traded much more expensive than they originally cost. It all depends on the number of people who want to use the subway.
In short, this is the scenario for the most promising “cryptocurrencies” besides bitcoin. It’s not money, it’s tokens – crypto tokens, if you like. They are not used as a common currency. They are only good on the platform for which they are created.
If these platforms provide valuable services, people will want to get these crypto-tokens, and this will determine their price. In other words, crypto-tokens will have value to the extent that people like what you can get for them through the appropriate platform.
This makes them real assets with intrinsic value, because they can be used to achieve something that is valued by people. This means that you can reliably count on the flow of income or services if you own such cryptocurrency tokens. In fact, you can measure this flow of future earnings at the price of a cryptocurrency token, just as we do when calculating the price/earnings ratio (P/E) of the stock.
Bitcoin, on the other hand, has no internal value. It has only one price – a price determined by supply and demand. It cannot generate future revenue streams and cannot measure the P/E ratio for itself.
Someday it will be useless, because it will not bring you anything real.
Ether and other crypto assets are the future
Crypto-token-ether definitely looks like currency. It trades on cryptocurrency exchanges under the code ETH. The symbol is a sign of the Greek capital letter Xi. It is mined in the same (but less energy-intensive) process as bitcoin.
But broadcasting is not a currency. Its developers describe it as “the fuel for managing the Ethereum distributed application platform. It’s a form of platform customers’ payment to machines that perform requested transactions.”
Ether tokens give you access to one of the most advanced distributed computer networks in the world. This is so promising that large companies are simultaneously developing practical and realistic applications.
Since most people trading it don’t really understand or care about its true purpose, the price of ether has been heaving and heaving like bitcoin in recent weeks.
Ultimately, however, the airwaves will return to a stable price based on the demand for computing services that it can “buy” for people. This price represents a real value that can be estimated in the future. To do this, a futures market and exchange-traded funds (ETFs) will be created, as each of them will have a way of assessing the underlying asset over time. Just like we do with stocks.