As anyone following the cryptocurrency industry will have noticed, Bitcoin (BTC) recently broke its all-time high of around $ 20,000. Now, Many analysts assume that the cryptocurrency will finally rise to USD 30,000 or more in the next few years.
Currently, BTC is trading around $ 23,300 and is briefly testing the $ 24,000 mark several times. Despite all these positive developments Many prominent people in the traditional financial market have spoken negatively about the crypto industry, using clichéd sayings – like “crypto is only for criminals” and “crypto is all hype and saucer, no substance” etc. – to describe BTC and other popular digital ones Currencies.
For example, The renowned economist and financial strategist David Rosenberg referred to it Recently to Bitcoin as a “massive bubble”This supports the argument by saying that Bitcoin’s supply curve is unknown, although some people claim to know otherwise. Likewise, Mark Cuban, who is generally quite open-minded about various futuristic technologies, He also criticized Bitcoin, stating that it was “more religion than solution”. However, he admitted that despite its shortcomings, it can be useful as a store of value.
And while cryptocurrency is far from perfect – admit that it will take many years to replace traditional financial instruments like fiat money – The opinions mentioned may seem like the ramblings of annoying traditionalists who fail to see the immense potential of the technology.
The 2020 rally differs from the 2017 rally
Once Bitcoin crosses the $ 20,000 mark, It was inevitable that analysts around the world would try to use the “this bull run equals 2017” argument to undermine the financial traction the industry as a whole is gaining.
In this regard, “CryptoYoda”, an independent cryptocurrency analyst, advised Cointelegraph It can be seen that the fearful outlook for the financial flow is due to a lack of understanding of the technology. In this respect, he believes that there is currently a shift from debt-based fiat currencies to decentralized financial systems:
“What has changed? Everything. While the 2017 bull run was largely driven by early adopters and retailers, this bull run is dictated by institutional players entering the market. […] From now on, the institutes buy a multiple of what is extracted per day. When an institution accumulates 500 million BTC, it means that 500 million is no longer available for the other major players watching the market. “
In a similar mindset, OKCoin COO Jason Lau told Cointelegraph that the long-awaited promise of the big players entering the crypto room has finally been fulfilled. In his view, this sustained uptrend was fueled by traditional financial institutions buying declines in Bitcoin prices as an investment and treasury product: “You have a long-term strategy for these assets. Due to the increased demand, the HODLing and the lower block rewards due to the recent halving, the price cannot have any limits.“.
Another important difference between the current and the previous cycle is that in 2017, The industry was in the midst of a feverish ICO madness. The bubble burst in just a few months and the entire crypto economy collapsed almost overnight.
According to Adam Neil, director of marketing at Bitrue, a digital asset management platform, people in the crypto market are much more pragmatic today, adding: “Publicly traded companies like MicroStrategy and PayPal have jumped on board, and the growth of the CME bitcoin futures market shows increased demand for regulated exposure.“.
Cryptocurrencies cannot and should not be compared with conventional financial media
It’s no secret that despite the bullish outlook, there is still some level of uncertainty about the value of BTC, as was evident in November when the price of the flagship cryptocurrency fell $ 3,000 in just 24 hours. . Even so, it is unfair to compare BTC, which is just over a decade old, with traditional systems that have been around for over a hundred years.
Therefore, it is worth investigating the true meaning of the term “safe haven”, especially as the world grapples with the financial devastation caused by COVID-19. CryptoYoda believes that while precious metals like gold and silver are tangible stores of value, they are not very practical, i.e. difficult to store, transport, secure, etc. Added:
“I will always remain an advocate of precious metals as they are the last store of value and have been an accepted form of money for hundreds and thousands of years. It is difficult to store everything in gold and then it still has to and cannot be protected . ” be moved easily. “
Neil believes that while it is not fair to compare Bitcoin to traditional stores of value, the world’s leading cryptocurrency seems to have been serving that expectation quite well lately. In his opinion lThe gold digital narrative is incredibly powerful in the community. Many people genuinely believe in the technology and are actively working to make Bitcoin more valuable, whether it is running nodes, mining, writing and reviewing code, or running HODL.
In addition, it is important to realize how far Bitcoin has come compared to various traditional financial systems. More and more top investors now want to enter the domain. Yoni Assia, founder and CEO of eToro, a multi-asset brokerage and social trading company, told Cointelegraph that cryptocurrency is no longer just the domain of computer programmers and fintech proponents. Add: “We expect this to continue through 2021 as inflation fears continue to mount around the world.“.
Cryptocurrencies aren’t perfect, and that’s fine
While cryptocurrency is capable of completely redefining the way the global financial ecosystem works, there are still many relevant issues ahead that need to be addressed. The losses from cryptocurrency theft, hacking and fraud amounted to a whopping 1.8 billion US dollars in the first ten months of 2020 alone, according to forensic company CipherTrace. The company even suggested 2020 was on track to see the second highest value in losses related to cryptocurrency crimes, exceeding $ 4.5 billion.
Due to regulatory uncertainties, cryptocurrencies continue to be used by certain areas of society as a means of tax evasion. For example, the US Department of Justice recently accused John McAfee, anti-virus software developer and cryptocurrency proponent, of millions of dollars in tax fraud related to his behavior in the crypto industry between 2014 and 2018. Additionally, CryptoYoda believes the industry is in its current state Condition is far from perfect, and adds:
“Scalability is a big problem. Similarly, government-level attacks pose another big risk, and these problems are very likely to increase as the industry gets bigger. Although the technology itself is well positioned, such attacks are not individuals. That The biggest risk I see in this market is forcing KYC on every exchange and individual, which undermines the promise of cryptocurrency. “
However, fiat currencies are also used by criminals. In such scenarios, however, the “fiat money is for criminals” argument never holds. For example, according to a recent BBC report, HSBC enabled tech-savvy scammers to transfer millions of dollars worldwide even after learning of their trick.
The leaked documents allege that HSBC transferred approximately $ 80 million through its US business to its Hong Kong accounts between 2013 and 2014. Even more surprising, the effort began immediately after the US banking institution was fined $ 1.9 billion for money laundering. Other reports also suggest that banks such as JPMorgan Chase and Standard Chartered were also involved in the move of around $ 2 trillion in “dirty money” between 1999 and 2017.
Hence, it seems that both the traditional world and the crypto world can only see the straw in their brother’s eye, not the tribe in their own. With lesser-known proponents of cryptocurrencies compared to traditional finance, it’s no wonder the blockchain sector is losing in the media war. As a result, many common misconceptions continue to creep into the mass consciousness, ultimately damaging perceptions and delaying the adoption of technologies.