Bitcoin and the brutal truth!

Bitcoin was the original cryptocurrency and has been on a wild ride since the day it was created. In the early stages of this year, Bitcoin reached a price level of $60,000. Within a few months, however, it again reached half of its maximum price. Let’s talk bitcoin and the brutal truth.

Then again, around November, it reached a price level of $69,000, the highest price ever for this crypto coin. Apart from that, the values ​​of other cryptocoins like DOGE have already seen significant rallies and surges.

And that’s because of the tweets of some influential people. Although bitcoin prices have fallen massively lately, the market cap for the entire cryptocurrency space has surpassed $1.5 trillion. However, it is a worrying situation since the value of virtual assets that do not exist in the physical world and are just computer code are increasing at such a rapid rate.

Do you think cryptocurrencies are trendsetting and you should invest your money in them? Also, you need to understand that the recent price surge wiped out the market cap of $1 trillion of the May 2021 total value.

It could have posed a serious threat to the financial mechanism. BTC came to allow people to make a transaction without involving third parties. The advent of cryptocurrencies happened during a global crisis in 2008. It caused people to flee their trust from banks and even governments that control the financial system.

Bitcoin enables people to use the digital financial medium to conduct transactions and make their identity digital. It allowed people to use cryptocurrencies with a high level of anonymity. Therefore, there are also some disadvantages of the strongly emerging cryptocurrency space. Hackers prefer to steal bitcoins from digital wallets because they are more valuable than any other asset today. Also, these digital coins are used for illegal activities around the world.

As bitcoin grows in popularity, it becomes cumbersome, expensive, and slow to use. It used to take just a few minutes to validate a cryptocurrency transaction, but now the time has increased. Mining blocks for bitcoin is taking more and more time, and the transaction fee in 2021 is around $20 for mining a block in bitcoin.

On the other hand, Bitcoin’s volatile value has made it a viable medium of exchange for most people. You can consider the example that one day you can buy beer with $10 worth of bitcoins, but the other day you can buy wine with the same bitcoins.

In addition, it has been shown over the years that transactions are not completely anonymous. Various governments have successfully traced the bitcoin transaction and retrieved some bits of bitcoin for portals like the FBC 14 algorithm. The BTC that was used on the dark web is now recovered and therefore you are not completely anonymous on the global crypto coin transaction platform either.

There have also been many questions about the security and non-traceability of bitcoin transactions worldwide. Even if it’s not 100% sure, people are still crazy about it and investing big sum of money in this digital company.

Bitcoin has failed to live up to the stated goal and has also become a speculative investment over the years. The valuation of bitcoin is very puzzling. There was no intrinsic value backing bitcoin. Still, people are crazy about it and just invest it as well.

The cryptocurrency enthusiast says these digital coins are benefiting from scarcity itself. The Bitcoin computer algorithm only maintains a market cap of 21 million digital coins. However, scarcity itself is not the ultimate medium for evaluating something. The basis for relying on cryptocurrency investors is a more excellent fool theory that says you can profit from investments by finding someone to buy them at a higher price.

Although bitcoin has a very high value in the market, the collapse of the entire cryptocurrency space will not affect the financial system. Banks, which are the central financial aid of various nations, have stayed away from the impact of crypto coins.

However, since these digital assets are a speculative bubble, the investors who reach them face a significant risk of losing a lot of money. Also, the government should be wary of retail investors who are much more likely to bear their risk. The government already regulates the securities that contribute to bitcoin speculation, but that’s the only thing it can do.

We can consider bitcoins harmless as the transactions are validated and approved by the miners. However, you also need an advanced computer system that consumes a lot of energy. The energy consumption for the Bitcoin network itself is equivalent to the energy consumption of an entire nation like Argentina and Norway.

Bitcoin and the brutal truth Article and permission to publish here provided by Jean Nichols. Originally written for Supply Chain Game Changer and published on January 29, 2022.

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