CryptoCurrency: 💰 The Not So Positive Perspective of a Teenage College Student 💰
NOTE: I am a #cryptocurrency investor, and, like many, hope nothing but the best for the arena
Cryptocurrency is undoubtedly a very exciting space seeping with innovation and talent. In a world where great powers seem to dictate our lives, this new arena offers a very useful alternative. There are a MILLION articles online professing the gospel of bitcoin and other cryptocurrencies. Unsurprisingly, this excitement is met with opposition from white collar, institutional critiques that either have blinding apprehension or financial incentives that lead to them defiling this space.
Although, for financial reasons,I would love #bitcoin and the cryptocurrency market as a whole to shoot well into the trillions, one must look at the situation objectively. There is a high chance that this market may not go as we all hope 😬
Extreme Rise
Can we all acknowledge that this kind of growth is not normal? A year ago it was around $750, now we are approaching the $10,000 mark. Amazingly, there are currencies out there that have experienced even more extreme growth (Ethereum fanboys can atest to that). Not only is this growth very rare, but is also unhealthy. We all have heard of the “Bitcoin Bubble”. Although, many of us fight this claim, financial bubbles are legit. After eras of extreme growth, extreme drops usually follow. We can see this with the Dot Com #Bubble and Tulip Mania. For those who don’t know, the Tulip Mania was a Dutch speculative bubble where tulips were highly sought after for their aesthetic. Tulips were traded for incomprehensibly high prices and tanked unannounced.
Assuming Bitcoin will not meet the same fate is foolish (in my opinion). There is a chance that Bitcoin can avoid this catastrophe, but I urge everyone to have a Plan B in case.
I also must note that the pop of a bubble does not always mean the end of an investment commodity. For example, during the Dot Com Bubble burst, tech companies greatly lost value; however, some of the biggest companies we know today emerged from the rubble (ie. Amazon, Facebook, etc.) If Bitcoin were to drop to $1,000 next year, who is to say that a decade down the line we won’t see a $30,000 Bitcoin.
Really Looking At Bitcoin Objectively
Alright, so we get it. “Bitcoin will drive the modern economy”,” we are going to the moon”, “ #hodl and ride the wave to getting a lambo”. We really need to take a moment to look at bitcoin as if we had no prior knowledge coming in INCLUDING the fact that is has risen so much lately.
Today, we have a “digital currency” we can spend very few places. Furthermore, despite fervent opposition, Bitcoin is not truly backed by any innately valuable asset. Its price is purely based on the amount of people buying it (considering supply is fairly stagnant). You know what else isn’t directly backed by anything? Fiat Currency. But, at least the US Dollar is indirectly backed by the American economy.
Of course, Bitcoin is a very innovative idea. Its method of transferring wealth anywhere around the world with ease of use is undoubtedly useful. But is it truly a $163,863,876,758 idea at this state?
Government Acceptance
Central banks have high control over money supply around the world. With the authorities of governments, they alter money flow in order to invigorate the economy during slow times or reign in the #economy during unsustainable growth. Sometimes mistakes are made, but overall, this agency is helpful.
Many advocate for cryptocurrency to become a universal currency of the future. During this time that I have been active in the cryptocurrency community, I have yet to see a valid argument as to why we can expect governments around the world to allow cryptocurrencies to explode in the market and, by proxy, allow the growth to take away their control in the economy. If people use cryptocurrency over fiat, goverments’ fiscal and monetary policy would have diminishing effects. As mentioned before, we live in a world where those with insurmountable power control our lives. Let us not assume that they will not have the desire or power to fortify their economic stronghold.
If we are to witness a sharp decline in Bitcoin’s price, I personally would not be surprised. As many of you may relate, there have been numerous altcoins surrounded by hype. The price shoots up with the chatter of evangelist supporters. Inevitably, the price shoots down and everyone all of a sudden sees the flaws in the project. Don’t let Bitcoin be the same for you.