Cryptocurrency is a revolution. By its very nature, it wants to disrupt traditional financial hierarchies and bring power back to the people. Don’t let its bad PR in the mainstream media dissuade you from realising its true potential.
Recent comments from non-crypto behemoths such as JP Morgan would have you believe that crypto isn’t important. Well, we’re going to tell you exactly why those type of comments are wrong.
Mining is ‘uneconomical’
JP Morgan has been trying to push a rhetoric that suggests mining for crypto is dying.
Coin Rivet recently reported on JP Morgan CEO Jamie Dimon claiming Bitcoin mining “costs more than it is worth.” This isn’t the first time Dimon has taken a swipe at crypto either.
While it is true mining has become unprofitable for many thanks to the fall in value of Bitcoin, mining still hasn’t stopped.
Cryptocurrency is a technology, and technology can be designed to overcome faults.
Bitcoin is designed so that a fresh block can be generated every 10 minutes providing the network is running optimally. To help ensure this balance is reached, there is something called ‘mining difficulty.’
The difficulty alters over time, and it simply refers to how complex the task is that miners need to solve. The difficulty is determined by the network hash rate, which is correlated to the amount of miners attempting to mine a certain coin.
If there are a lot of miners, the difficulty will rise so that the optimal balance can remain intact. But, if mining fades, the difficulty will lower. This in turn ensures that blocks can still be mined as miners will be able to mine more blocks at a faster rate, improving their chances of becoming profitable.
Simply put, the machine cannot be stopped. The network will readjust itself in accordance to the network hash rate and the amount of miners taking part in the process.
‘Cryptocurrency is best suited for one use: criminal activity’
Bill Harris, a former CEO of Intuit and founding CEO of PayPal and Personal Capital, made the above statement back in 2018.
While it is true pump-and-dump schemes are rife within the cryptosphere, cryptocurrency isn’t always used to fund criminal activities.
If it was, then why has Fidelity Investments decided to pursue a Bitcoin custodial system? For those unfamiliar with Fidelity, it is an asset management company that currently oversees $2.5 trillion in assets. A company with so much at stake would not willfully enter a market it doesn’t believe to be legitimate.
People understand that criminals use crypto to launder money amongst other illicit activities. But to claim crypto’s only use is for criminal activity is absurd. Particularly when you consider that the DEA announced last year that Bitcoin transactions related to crime had dropped by 90%, and that the US dollar is still more commonly used by criminals to launder money through traditional banking institutions.
Technologies need time to advance
People like to forget that Bitcoin is only 10 years old. Satoshi Nakamoto’s white paper was only released in 2008.
Technology needs time to advance – change doesn’t occur overnight. In an age of digital prevalence, we expect advances to occur much quicker than they realistically can.
This is why soft forks and hard forks are necessary components in the development of cryptocurrencies. Whenever there is a fundamental fault, or a disagreement within a token’s community, developers implement a fork to remedy the issue.
You couldn’t possibly expect a technology that wants to disrupt modern life to be perfect from the get-go.
BusinessInsider recently reported that a JP Morgan analyst had commented, “We have long been skeptical of cryptocurrencies’ value in most environments other than dystopia, characterized by a loss of faith in all major asset reserves.”
By insinuating crypto’s only valuable use lies within a dystopia, doesn’t that oddly sound like scaremongering?
A buzzword like ‘dystopia’ is only ever used to evoke a negative reaction. But at the same time, the analyst openly admits that there is a loss of faith in all major asset reserves. Isn’t that more telling that crypto is doing its job right? It’s already disrupting faith in centralised institutions despite its relative infancy.
Instead of berating new ideas, we should be encouraging them. Revolutions such as cryptocurrency take time to nurture and perfect.
Blockchain has only ‘one falling and imploding application: cryptocurrencies’
Coin Rivet reported on the above statement from Nouriel Roubini, chairman of Roubini Macro Associates and co-founder of Rosa & Roubini. He is also a professor at Stern School, NYU.
His statement was made back in October, and it has not aged well. Blockchain definitely has other applications other than cryptocurrency.
Recently, both Ford and WWF Australia have decided to implement blockchain technology to track their supply chains.
His argument rested on the belief that blockchain has existed for “almost a decade” without real application. Ford and the WWF might argue otherwise if their implementation of blockchain proves a success.
Furthermore, HSBC settled $250 billion worth of FX transactions using distributed ledger technology (DLT). Even NASA has toyed with the idea of using DLT to secure flight data information.
If blockchain and DLT were really “falling and imploding,” would we be seeing mass amounts of implementation across global industries?
There is another prominent reason why cryptocurrencies will persist. They have die-hard communities.
A quick #XRPArmy Twitter search will showcase just how devoted the XRP fan base is. XRP fans seriously cannot get enough of the token. Arguably, the persistence of XRP fans has helped skyrocket XRP to second place in terms of market capitalisation.
The same could be said for Tron, particularly if you look at how hard Justin Sun, the founder of Tron and marketing guru, promotes his company.
The r/Bitcoin page on Reddit has 1 million subscribers, and r/BTC has another 240,000. That’s 1.25 million subscribers to just two subreddits for Bitcoin alone. Another page, r/cryptocurrency, has another 750,000 people subscribed. The r/Ethereum page has its own following of 427,000 subscribers.
Unlike a lot of subreddits, these subs are incredibly active. News is posted like wildfire, and that wildfire spreads once people engage with posts.
Social media is a hub for connectivity. When cryptocurrency is designed to be peer-to-peer, it is natural for communities to gather based on their favourite token. Communities won’t fade away anytime soon, and neither will crypto.
Future bull runs
If you are well versed in technical analysis, you may well have spotted a trend in the Bitcoin market since its inception. The market cycles back to a bull run following each all-time low. This isn’t to say that Bitcoin will definitively reach another all-time high, but there is certainly a chance for recovery.
Fiat crises could lead to bull runs too
If another fiat debt crisis arose such as the financial crisis of 2008, we could see many people turning to crypto to protect the value of their money.
What would happen if masses of people swarmed to crypto?
A bull run.
If you have been in the space for a while, you might remember the 2013 bull run. This bull run occurred around the same time as the Cypriot financial crisis.
If a fiat currency stumbles, people have a tendency to exchange that currency to achieve some level of stability. Crypto cannot serve as a primary currency because of the lack of regulation, but it can serve as a buffer until fiat restabilises.
If people really are losing faith in major asset reserves, it stands to reason many of them will turn to crypto as a short-term solution.
Don’t be the boy who cried FOMO
Make no mistake about it, crypto is here for the long haul. You’re more than entitled to disagree, just don’t be the boy who cried FOMO during the next bull run.
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