Cryptocurrencies have no “intrinsic value” declare recent headlines. “Will legislators move towards a cryptocurrency ban?” ask breathless commentators. Click a few links in the same publication, and you will find writers that want to “hodl to the moon” and pundits who say “bitcoin will hit $1 million.”
Doom or optimism — what’s going on behind the news? A quick analysis of the stories above would remind you that digital currencies do not need to have “intrinsic value” to succeed because we know that other stores of value have succeeded without it.
Gold’s practical value is miniscule compared to its market value. Its end use for jewellery and industry is a fraction of what has been extracted from the ground. And while it is true that fiat is backed by the government that printed it, the national debt of the United States currently stands at $22 trillion. That’s a lot of paper, which, incidentally, is comparatively worthless. In other words, money and gold also have no “intrinsic value.”
As for the ban? Well, cryptocurrencies have their own unique advantages over fiat. They are borderless, permissionless and decentralised. By their very nature, cryptocurrencies are designed to resist heavy handed government interference. So a ban is unlikely, just from practical considerations.
But it’s not all rosy. Markets go up and down. Many investors were burned or even wiped out during the downturn in 2018. Who is to say it won’t happen again? Additionally, many of the astronomical predictions currently floating around seem rather self serving.
The hype will always be there, because sensationalism rules the media and eyebrow-raising headlines and predictions exist to get clicks, regardless of truth or accuracy. Serious traders and investors, with real money at stake, need to make sense of it all. They need to be able to ride the waves of excitement and pessimism, but not get sucked into believing that nonsense is real.
CryptoMood exists to monitor market sentiment, with AI that uses natural language processing to assess the hype, accordingly, by giving cryptocurrency news and opinions a weighted score. CryptoMood shows instantly the direction in which the hype is flowing. But traders themselves must remain dispassionate and grounded in reality if they want to make sound trading decisions.