5 Reasons Why Bitcoin Will Continue To Devalue
Over 2017, Bitcoin prices grew 25-fold, and many crypto experts were predicting that it would soar to USD50k or even higher. The army of crypto investors and miners was becoming even greater, and cryptocurrencies got on the front burner as a conspicuous market trend. But something went wrong, and the prices slumped by 70% from the record highs. And here are the 5 reasons why this price drop is only the beginning of the real devaluation.
Zero Security
Cryptocurrencies are not backed by any tangible assets or values, or by a real commitment. There’s nothing behind them. Naturally, there are quasi-exceptions like the oil backed El Petro or Tether claimed by to be backed by one dollar for each token issued. Though this is nothing but a misleading illusion. Tokens have zero value without their originators. So if a cryptocurrency business like Tether Limited (creator of the Tether) suddenly winds up or collapses, there will be no one who will be able to convert the tokens back into cash.
Even though we have the real things like blockchain technology and infrastructures, they are actually not an intrinsic part of a cryptocurrency, and they do not back it in any way. Today, any person can issue their own cryptocurrency using the Ethereum open-source platform that enables hundreds of decentralized cryptocurrencies. ICOs and auctions can be launched with promises that your coin will grow and make its buyers prosper…
Zero Regulation
As of now, none of the major stock exchanges or regulators has recognized bitcoin as legal payment tool. The only country where bitcoin has been formally embraced is Japan, with specific requirements put on Bitcoin exchanges. Most of the world’s countries are not willing to trust, so they either treat the bitcoin technology cautiously or have banned the bitcoin and its mining.
In some countries, bitcoin terminals are used and become increasingly available. But it is not the same as recognition of the cryptocurrencies as a valid payment method along with the national currency.
Huge Amounts of Energy Needed
The cryptocurrency mining has reached the scale where value can only be captured by major investors running cryptocurrency farms. The private cryptocurrency mining is on the wane partly due to the much higher capacity requirements, and partly because of the growing amounts of power used. The power consumption due to the cryptocurrency mining is so high that even the areas with the excessive power production that used to encourage the inflow of bitcoin miners from around the world now have to impose bans and limit the new user numbers (which, specifically, was the case in Canada’s Quebec).
Top Finance Persons Starkly Negative About Bitcoin
The world’s top finance persons and economic experts are harshly negative about the cryptocurrency concept. Very illustratively, the world’s wealthiest stock investor Warren Buffet described bitcoin as a ‘mirage’ and said that the idea that it has huge instrinic value is just a joke. Nobel Prize winning economist Paul Krugman has said that ‘total collapse is a real possibility’. And ‘The Wolf of Wall Street’ Jordan Belfort called Bitcoin a fraud.
The Bitcoin Bubble
In 99% financial sector cases, the exponential growth evidences that a bubble is being inflated, with the growth pegged artificially without valid reasons. Bitcoin dynamics is often compared with the mid-17th-century Dutch tulip mania when tulip bulb prices saw the same unreasonable 25-fold growth, and then, overnight, no one had wanted to buy at prices as crazy as those. The prices plummeted almost 100-fold, and the tulip exchange saw its end.
All these factors, opinions and facts evidence that the cryptocurrency market is likely to be hit by a most powerful correction soon. Bitcoin price slump will hurt crypto investors. But that does not mean that everyone is bound to face losses. Today we have innovative products like Libertex offering access to either bullish or bearish deals. In 2016, Libertex was the best EAEU trading app according to Global Banking and the Finance Review. In 2017, the platform was a Forex Awards winner, as it was announced The Best Trading Platform.
