Cryptocurrencies have become an in-depth topic and commented almost exclusively by those who work there and those who invest in it.
After reaching nearly twenty thousand dollars per unit in mid-December, the value of Bitcoin underwent several collapses and gradually decreased in the following months, reaching lows below $ 6,000, that is, less than a third of its maximum value, as in the October 2017. Today a bitcoin is worth about $ 7,260: it has not returned above 10,000 since last March and above 9,000 since mid-May.
Bull market, bear market
In the period of its peak value, Bitcoin’s market capitalization was over 320 billion dollars: today it is about 125 billion, that is, the market has shrunk by about 60 percent in just over eight months. To these data, cryptocurrency advocates point out that in the eight months preceding its maximum value, Bitcoin had risen by something like fifteen times. But the growth of the end of 2017 – that is, when the market was “bull”, bullbullish – had characteristics that are perhaps unrepeatable. And above all it was caused in large part, according to all objective evaluations, by huge speculative operations, which allowed few people to get very rich by exploiting a poorly regulated market and with many opaque niches and gray areas. An estimated 100 accounts hold 19 percent of the outstanding bitcoins.
Small investors who approached the world of cryptocurrencies between the end of 2017 and the beginning of 2018, that is when they reached their maximum media exposure, bought bitcoins and other cryptocurrencies more than anything else hoping to make money, more than for “philosophical” reasons. In most cases they found themselves with much less money than they had invested, because their entry into the market corresponded to the moment when it began to shrink, that is when it entered the “bear”, bear , downward phase .
Distinctions
The latest issue of the Economist, which has its own section dedicated to cryptocurrencies, has published an editorial entitled “Bitcoins are useless”, much criticized by enthusiasts and professionals. The Economist makes a fairly common distinction between cryptocurrencies and blockchain, that is, the technology behind them. For the former, he says, little suggests that they become more than an overly complicated and unreliable game of chance. For the blockchain, however, it suspends the judgment more cautiously, given that some of the largest international companies and banks are spending tens of millions of dollars in research in this field. Visit cryptosoft for getting more detail about this.
Currency or store of value
What is identified as Bitcoin bankruptcy is the aspect that concerns its daily use, for online purchases and in physical stores, where cryptocurrencies are used by a very small minority of people: so few that are not enough to make Bitcoin a real currency, a definition that can hardly be separated from its actual circulation. The upward trend of the end of 2017 further discouraged this type of use for bitcoins: using them to buy something was inconvenient, since in a few days they doubled their value. With the first collapses, several services, including the Expedia travel portal, stopped accepting bitcoin payments for the opposite reason, dealing a further blow to the spread of bitcoins in everyday transactions. Many experts and insiders argue that true cryptocurrency development is impossible without their penetration into people’s daily lives. So far there has not been: the vast majority of those who work there and those who speculate on them use them.
The nature of Bitcoin has always been halfway between the currency and the store of value, even in academic debates: but even its second nature has been questioned by the enormous devaluation of the last few months. What store of value is an asset that can lose half its value in a week, as happened between January and February?
Among the supporters of cryptocurrencies there are those who claim that these evaluations come from a western point of view, and neglect the importance that, despite these limitations, cryptocurrencies can have in developing countries, where there is a high inflation (such as Venezuela) or where central economic authorities impose severe restrictions.
