As anyone following the crypto industry will have noticed, yes, Bitcoin (BTC) recently cut its previous all-time high of around $ 20,000. Now, many analysts predict that the cryptocurrency will rise to the mid-$ 30,000s or even higher within the next few years.
As things stand, BTC is trading at around $ 23,300, testing the $ 24,000 mark short on multiple occasions. However, despite all these positive developments, many prominent individuals from the financial mainstream have spoken negatively about the crypto industry, using cliche wings – such as “crypto is for criminals” and “crypto is all in hype, no substance, ”etc – to describe BTC and other prominent digital currencies.
For example, renowned economist and financial strategist David Rosenberg recently referred to Bitcoin as a “huge bubble,” backing up the argument by saying that Bitcoin’s supply curve is unknown even though some people claim to know otherwise. Similarly, Mark Cuban, who is generally quite open-minded about various futuristic technologies, also passed Bitcoin, claiming it was “more of a religion than a solution.” However, he admitted that it could be useful as a store of value despite its shortcomings.
And while crypto technology is far from perfect – it must be admitted that it is many years away from replacing previous financial instruments like fiat – the views above may seem to come across as ramblings of troubled traditionalists who cannot see the tremendous potential of the technology.
The 2020 bull run is different from 2017
As soon as Bitcoin broke the $ 20,000 mark, analysts from across the board inevitably sought to use the “this bull run is the same as 2017” argument to undermine the financial traction the industry as a whole wins it.
In this regard, “CryptoYoda,” an independent cryptocurrency analyst, told Cointelegraph that one can see that the scary perspective provided by the financial mainstream is due to a lack of understanding of the technology. As such, it believes that what is happening right now is a shift from debt-based fiat currency to untrusted financial systems:
“What’s changed? Everything. While early adopters and retail are largely driving the 2017 bull run, this bull run is dictated by institutional players entering the market. […] Currently, organizations buy multiples of what is mined daily. When one institution pools 500MM in BTC, it means that 500MM is no longer available for the other key players observing the entry market. ”
In a similar way, Jason Lau, OKCoin’s chief operating officer, told Cointelegraph that it is safe to say that the long-term promise of mainstream players entering the crypto space has finally been fulfilled. In his view, this continuous bull run is driven by traditional financial institutions that buy Bitcoin price dips as an investment and treasury product: “They have a long-term strategy for these assets. So with increasing demand, HODLing, and fewer block rewards due to the recent halving, there may be no limits on the price. ”
In addition, another major difference between the ongoing cycle and the previously seen one is that, back in 2017, the industry was in the midst of a hot-tempered initial coin offering a craze, with the bubble bursting appropriately from within just a few months, leading to it all. crypto economy crashed almost overnight.
According to Adam O’Neill, chief marketing officer of Bitrue – a digital asset management platform – these days, people in crypto are much more pragmatic, adding: “Publicly listed companies like MicroStrategy and PayPal have joined , and the growth of the Bitcoin Futures CME market is showing increasing demand for regulated exposure. ”
Crypto cannot, and should not, be compared to traditional financial media
It’s no secret that despite its bullish outlook, some uncertainty over BTC’s value still exists, as was made clear in November when the price of the leading cryptocurrency dropped $ 3,000 within a span of just 24 hours. That said, it is unfair to compare BTC, which is just over a decade old, with legacy systems that have been around for more than a hundred years.
Therefore, it is worth exploring the true meaning of the term “safe haven,” especially as the world struggles with financial devastation caused by COVID-19. CryptoYoda believes that while precious metals like gold and silver are certainly tangible stores of value, they are not very practical – ie, they are difficult to store, transport, secure, and so on. He added:
“I will always be an advocate for precious metals as they are the highest value stores and have been a form of money received for hundreds and thousands of years. It’s all hard to store in Gold, and then it still needs protection and it can’t be easily moved. “
O’Neill believes that while it may not be fair to compare Bitcoin to traditional value stores, lately, the world’s leading cryptocurrency seems to be meeting that expectation quite well. In his view, the digital-gold narrative is unbelievably strong in the community, with many people truly believing in the technology and working to make Bitcoin more valuable, whether by running goals, mining, writing and reviewing code, or HODLing it.
Additionally, it is important to recognize the extent to which Bitcoin has come in relation to various previous financial systems, with an increasing number of mainstream investors now looking to enter the domain. In providing his insights on the issue, Yoni Assia, founder and CEO of eToro – a multisite social trading and brokerage firm – told Cointelegraph that crypto is not just a domain of computer programmers and fintech advocates, adding: “We expect this to continue into 2021 as fears of inflation continue to creep around the world. ”
Crypto is not perfect, and that’s fine
Although crypto stands to redefine the way the global financial ecosystem works, it still faces many pertinent issues that need to be resolved. For example, over the first 10 months of 2020 alone, losses from cryptocurrency thefts, hacks and fraud totaled $ 1.8 billion, according to blockchain forensics company CipherTrace. The company even suggested that 2020 is on track to record the second-highest value in crypto-crime-related losses, exceeding $ 4.5 billion.
Furthermore, due to regulatory uncertainty, some sections of society continue to use crypto as a means of tax evasion. For example, the U.S. Department of Justice recently cited John McAfee, an anti-virus software creator and proponent of crypto, accusing him of multi-million dollar tax fraud related to his crypto earnings between 2014 and 2018. In addition, CryptoYoda believes that in its current state, the industry is far from perfect, adding:
“Scalability is a major issue. Similarly, state-level attacks pose another major risk, with such issues most likely to arise as the industry grows from strength to strength. While the technology itself is well-placed for such attacks, individuals are not. The biggest risk I see in this market is to impose KYC on all exchanges and individuals, which undermines the promise of cryptocurrency. ”
That said, fiat currency is also used by criminals; however, in such scenarios, the “fiat for criminals” argument is never taken out. For example, according to a recent BBC report, HSBC allowed tech-savvy scammers to transfer millions of dollars worldwide even after it learned of their ploy.
The leaked documents claim that HSBC moved about $ 80 million through its US business to its Hong Kong accounts between 2013 and 2014. What is even more surprising is that the effort began right after the banking institution was fined $ 1.9 billion in the US over money. laundering charges. Other reports have also suggested that banks such as JPMorgan Chase and Standard Chartered have been involved in moving about $ 2 trillion of “dirty money” between 1999 and 2017.
So, it seems that the traditional world and the crypto world are only managing to see the bugs in the eyes of their brother but not the log in their own right. Moreover, given that there are fewer well-known advocates for crypto compared to traditional finance, it is not surprising that the ambitious blockchain sector is losing out as a result of the spiraling media war. As a result, many common misconceptions continue to enter the consciousness of the masses, ultimately damaging perception and delaying the adoption of the technologies.