Cryptocurrency: money or myth? (23 May, 2022)

[aardvark_admin]

This column is archived at: https://aardvark.co.nz/daily/2022/0523.shtml

Has the crypto-bubble finally burst?

What happened to all the claimed strengths of crypto? Security? Privacy? Anonymity? Freedom from regulation?

It would appear that each and every one of those promises made for crypto have been broken.

So what is the point of crypto-currencies now and will they actually prosper or even survive?

[hagfish]

Part of me is kicking myself for not buying any when they were less than a dollar each. The rest of me is assured that I would absolutely have cashed out the moment they that hit their first proper 'crash', after hitting the dizzy heights of US$30 back in 2011.

Anyone who has held it all the way to today either has diamond hands, or lost their wallet password, and it's eating them up inside. Imagine having a couple of dozen bitcoin in a thumb drive you can't access

[pid@ifm.net.nz]

I am a crypto miner, so my perspective comes from that foundation.

Lots of things were touched on in the article. I'll contain my reply to Bitcoin, my primary interest. The vast majority of other cryptos come and go and are super high risk, so they are not of interest to me. 99.99% of them will go to zero and the holders in them will loose everything.

Bitcoin runs on a four-year cycle due to the built-in halving process (which happens every 4 years). Last year was the end of the four-year cycle, and this year is the beginning of the new cycle. At the start, the price usually falls to the previous cycles' high. In this case, that is USD$20k. Currently, it is sitting around USD$30k. So those into Bitcoin will not be surprised or upset if the price falls a lot further. Next year it should consolidate. Year three it should increase in value considerably. Year four it should hit a new all-time high, and then commence the process of crashing to get back to the beginning of the cycle.

This stock to flow model shows this happening over the last 12 years. If it follows that trend from the last decade, you could reasonably expect it to hit USD$100k in about 2 or 3 years. By the end of the decade, it should be hitting a million dollars.
https://stats.buybitcoinworldwide.com/stock-to-flow/

Bitcoin is more of a get rich slowly crypto because of these cycles.


Bitcoin itself is a digital asset rather than a digital currency. People understand currency better and use this term in error. Bitcoin will never be used to meet the day to day needs of a transactional system. A better analogy is to compare it to asset classes like gold or property.

I don't know anyone who holds BTC who would not welcome regulation. Regulation would allow BTC to be turned into things like ETFs, which would allow big managed funds to participate. There is an expectation that once this tidal wave of cash is unleashed demand will go through the roof. So yes please, bring on more regulation.

BTC is a "public" blockchain. If you know someone's BTC address, you can see every transaction they have ever made. Who they got BTC from, who they sent it to, and how much they are holding. Anyone who thinks the BTC blockchain brings privacy or anonymity has badly mis-understood the "public" bit.
A standard fiat bank account gives you far more privacy.

[Perry]

People understand currency better and use this term in error.

What term?

Given the hereabouts-oft-discussed fragility of e-based and/or computer-related transactional dependencies, if there's any sort of prolonged and serious socio-economic disruption / emergency, I see digital currency as less certain than paper currency. Probably even moreso.

[Kiwiiano]

Two things I can't figure out about crypto: How do they get converted back into coin of the realm?

And would it work to 'invest'" say 10units, wait till they've increased in value to 100, cash up 90, reinvest 10... etc etc.
It works for me with the pokies when I put in $20, play until the value gets to say, $30, withdraw $20 for the wallet and carry on gambling with the $10 until the machine spills it's guts or the dosh evaporates, well, it would except my usual experience in that it goes $20...$12...$14...$5...$10...$2...$8...$1...$0......... ah well, lets go get a beer....