As anyone following the crypto industry will have noted, yes, Bitcoin (BTC) recently broke its previous all-time high of about $ 20,000. Now many analysts expect the cryptocurrency eventually rise to the mid-$ 30,000 or even higher within the next few years.
As things stand, BTC is trading around $ 23,300, briefly testing the $ 24,000 on several occasions. However, despite all these positive developments, many prominent figures from the financial mainstream have spoken negatively about the crypto industry, using cliché adages – such as ‘crypto is for criminals’ and ‘crypto is all hype, not a substance’, etc. – to describe BTC and other prominent digital currencies.
The well-known economist and financial strategist David Rosenberg, for example referred for Bitcoin as a “huge bubble,” which supports the argument by saying that Bitcoin’s supply curve is unknown, even though some people claim they know otherwise. Likewise Mark Cuban, who is generally quite open-minded with regard to various futuristic technologies, also hit Bitcoin, claiming that it is “more religion than solution.” However, he admitted that despite its shortcomings, it can be useful as a store of value.
And while crypto technology is far from perfect – admittedly still many years away from replacing old financial instruments like fiat – the above views seem to come across as the bickering of irritated traditionalists who fail to see the technology’s immense potential.
2020 bull run is different from 2017
Once Bitcoin broke the $ 20,000 mark, it was inevitable that analysts across the board would try to use the “this bull run is the same as 2017” argument to undermine the financial grip being gained by the industry as a whole.
In this regard, “CryptoYoda”, an independent cryptocurrency analyst, pointed out to Cointelegraph that one can see that the frightening perspective of the financial mainstream stems from a lack of knowledge of the technology. As such, he believes that what is currently happening is a shift from debt-based fiat currency to reliable financial systems:
“What’s changed? Everything. While the 2017 bull run was largely driven by early adopters and retail, this bull run is dictated by institutional players entering the market. […] From now on, institutions will buy a multiple of what is mined per day. When an institution collects 500 million in BTC, it means that 500 million is no longer available to the other major players observing the market for entry. “
In a similar line of thought, Jason Lau, OKCoin’s chief operating officer, told Cointelegraph that it is safe to say that the long-held promise of mainstream players entering the crypto space has finally been fulfilled. According to him, this ongoing bull run is driven by traditional financial institutions that bought Bitcoin price drops as an investment and treasury product: “They have a long-term strategy for these assets. So with higher demand, HODLing, and less block rewards due to the recent halving, the price may have no limits. “
Additionally, another major difference between the ongoing cycle and the previous one is that in 2017 the industry was in the midst of a feverish initial coin supply craze with the bubble bursting quite a bit within a few months resulting in the entire crypto economy crashing almost overnight.
According to Adam Neil, chief marketing officer of Bitrue – a digital asset management platform – people in cryptocurrency today are much more pragmatic, adding, “Publicly traded companies such as MicroStrategy and PayPal have come on board, indicating the growth of the CME Bitcoin Futures market. to an increased demand for regulated exposure. “
Crypto cannot and should not be compared to traditional financial media
It’s no secret that despite its optimistic outlook, there is still some degree of uncertainty regarding the value of BTC, as it was made clear in November when the flagship cryptocurrency’s price dropped by $ 3,000 in the space of just 24 hours. That said, it’s unfair to compare BTC, which is a little over a decade old, to legacy systems that have been around for more than a hundred years.
So it’s worth researching the true meaning of the term ‘safe harbor’, especially as the world grapples with financial destruction caused by COVID-19. CryptoYoda believes that while precious metals such as gold and silver are certainly tangible stores of value, they are not very practical – that is, they are difficult to store, transport, secure, etc. He added:
“I will always be in favor of precious metals as they are the ultimate store of value and have been an accepted form of money for hundreds and thousands of years. It’s difficult to store everything in gold, and then it still needs to be protected and cannot be moved easily. “
Neil believes that while it may not be fair to compare Bitcoin to traditional value stores, lately the world’s leading cryptocurrency seems to be carrying that expectation quite well. In his opinion, the story of digital gold is incredibly strong within the community, with many people really believing in the technology and actively working to make Bitcoin more valuable, be it running nodes, mining, writing and revising. code, or HODLing it. .
Additionally, it is also important to recognize how far Bitcoin has come with regard to various legacy financial systems, with an increasing number of mainstream investors looking to enter the domain now. Yoni Assia, founder and CEO of eToro – a social trading and multi-asset brokerage company – gave his insights on this issue, telling Cointelegraph that crypto is no longer the preserve of computer programmers and fintech advocates, adding: 2021, while inflation fears continue to grow worldwide. ”
Crypto isn’t perfect, and that’s fine
While crypto will completely redefine the way the global financial ecosystem works, it still faces many pertinent issues that need to be ironed out. In the first 10 months of 2020 alone, losses from cryptocurrency theft, hacks and fraud amounted to a whopping $ 1.8 billion, according to blockchain forensic company CipherTrace. The company even suggested that 2020 was on track to record the second highest value of crypto crime-related losses, at more than $ 4.5 billion.
Additionally, due to regulatory uncertainty, crypto is still used as a means of tax evasion by certain sections of society. For example, the United States Department of Justice recently charged John McAfee, a maker of anti-virus software and crypto advocate. accusing him of tax fraud worth millions of dollars linked to its crypto returns between 2014 and 2018. Additionally, CryptoYoda believes the industry is far from perfect in its current state, adding:
“Scalability is a big problem. Likewise, state-level attacks pose another major risk, with such problems most likely increasing as the industry gets stronger. While the technology itself is well positioned for such attacks, individuals are not. The biggest risk I see in this market is forcing KYC on every exchange and individual, which undermines the promise of cryptocurrency. “
That said, fiat currencies are also used by criminals; in such scenarios, however, the argument “fiat is for criminals” is never put forward. According to a recent BBC report, HSBC Allowed tech-savvy scammers to transfer millions of dollars around the world, even after learning about their trick.
The leaked documents allege that HSBC moved about $ 80 million through its US operations to its Hong Kong accounts between 2013 and 2014. More surprisingly, the pursuit took off right after the US banking institution fined a whopping $ 1.9 billion for money. money laundering costs. Other reports also have suggested that banks such as JPMorgan Chase and Standard Chartered have also been involved in moving about $ 2 trillion in “dirty money” between 1999 and 2017.
So it seems that both the traditional and crypto world only see the speck in their brother’s eye, but not the log of their own. Additionally, since there are lesser known proponents of crypto compared to traditional finance, it is hardly surprising that the aspiring blockchain sector is losing the media spin war. As a result, common misconceptions continue to seep into the consciousness of the masses, ultimately damaging perception and delaying adoption of the technologies.