Bitcoin touched its all-time high in November 2021, reaching up to $69k. And in 2022 it almost lost %50 of that value. By the time I am writing this piece, it is trading at $35k. The year 2021 has been a roller coaster for the crypto market, in which it made sudden gains and sudden falls. Will 2022 be the same?
t’s not a surprise that bitcoin has devalued so much, it has happened in the past. Some economists even called it another Ponzi scheme. The logic behind it was simple and obvious. Once there is a rise in the shares of a certain stock you lure potential investors. Then you drop the price on purpose to make a profit. And you repeat the process to make more gains and userp people naivety with the economic system.
But all this creates panic; the new investors become more reluctant to buy the shares of such goods, deeming them unreliable and fraudulent.
This is not the case with bitcoin, in the past years, there have been many occasions where it lost almost fifty per cent of its worth. The environmentalist campaigned against its enormous use of electricity. Running a Crypto mine requires a lot of energy and that energy is mostly produced by burning fossil fuels. Many countries banned cryptocurrencies at that time and declared crypto as, escalating global warming. Even China which ran almost fifty per cent of the crypto mine banned the currency.
For a layman to make a transaction with cryptocurrency is an arduous job, it’s not as simple as we make transactions with our day to a day bank account. Despite all this most crypto investors don’t have a college degree.
Despite all the uncertainties, there is no stopping in the crypto market. After the cryptocurrencies, we were introduced to the NFTs in 2013, which are just cryptographic assets. By the way, NFT stands for Non-fungible assets.
IS crypto the New Future:
One has to keep in mind that cryptocurrencies are digital currencies. The difference between traditional currency and crypto is that traditional currency is controlled by the central bank or reserve bank and the government plays its role as well. On the other hand, crypto bypasses all these third parties, your currency is stored on a remote server in the form of bits.
One can ask simply that as we have a burst of technological revolution, will the currency be replaced by the same technology too.
Our normal currency values depend on the level of trust we have in a certain currency. For example, The American dollar has the highest trust all over the widely making it one of the most widely used currencies. There is nothing behind the American Dollar, no gold, no silver etc. Our trust in it makes it valuable. Can the same be the case with Cryptocurrency? At present crypto has won the trust of a small minority, but that day is not far when it will seep over the entire world. After all, once a human believes in a myth he wants to spread it to the rest of the world too.
There is strong resistance to blockchain technology from the Banks and governments. One can easily understand why the bank would resist such technology. Is crypto a threat to the Banking system? Of course not, there are many other ways in which banks can do their business. The whole fuss is about one myth replacing the other. Our concept of paper currency is just a myth just like the crypto myth.
We have fought wars to defend our myths. Communism vs Capitalism, Democracy vs Autocracy, I can mention many more. The resistance to bitcoin and Blockchain technology is quite understandable. We can hope the resistance stays on the internet and other publications, it should not take a shape of war.
With the bitcoin touching its six months low, we will see a lot of new investors buying the currency. We might see another all-time high in a span of six months or so. These are mere speculative arguments, something else can happen too because bitcoin is a very volatile asset. And it will take some time to win the trust of the government and the people around the world. Once it does so, our economic system will be reshaped. It has already introduced us to the new concept of money and reshaping the economy will be its next step.
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