Both Sides of the Fence:
- Bitcoin Simplified
- Current Events
- Bitcoin Misunderstandings
1. Bitcoin Simplified
Bitcoin is a digital currency that uses blockchain technology. What you need to
know is that it's records or ledger is held up by computers all over the world, you can't simply shut it down or counterfeit it. No government controls it.
2. Current Events
After hitting a record high of around 69,000.00 a bitcoin is now selling for 38,000.00 Why did it experience this recent correction? A correlation(pattern) in stock and crypto performance has emerged. This suggests that crypto holdings are entering portfolios. The S&P 500 has had quite the positive run recently and had to eventually have a correction and crypto followed suit.
The federal reserve are giving signals that they will raise interest rates with the leader, Jerome Powell, saying "in the mind of" raising rates. This typically says to people that economy may be slowed and safer investments need a look. The government is showing more interest in regulation and some see it as a positive thing while others are probably spooked by what it will do to price.
Not a huge surprise, but governments are considering their own digital currency known as CBDC(Central Bank Digital Currency). Yes, the creation of this would probably spook bitcoin investors. However, major world governments will not create a limited supply such as bitcoins 21 million. It's just not how modern money policy works.
Bitcoin is a very volatile asset and has seen massive price swings. Some people think we're headed to a repeat of 2018. A counter to this is the established infrastructure surrounding bitcoin. Mainstream finance now covers bitcoin, crypto exchanges exist and are in compliance with the government, and projects(tools) have grown tremendously to assist crypto.
There are people on both sides of the fence. Nobel laureate, Paul Krugman, stated he is "seeing uncomfortable parallels" to the 2007-2008 financial crisis in cryptocurrency. Yet, we have intelligent, respected people claiming we'll see bitcoin prices of 100,000.00 soon. You'd expect this kind of division in opinion otherwise we would see it go straight up or straight down.
3. Bitcoin Misunderstandings
Bitcoin is worth nothing. Bitcoin is a pyramid scheme or ponzi.
Bitcoin is a digital gold and that makes it more practical to send across the world. The reason people can't understand how similar the precious metal is to bitcoin is gold has had a 5,000 year head start in agreed value.
Gold has a utility of being used in electronics, jewelry, and more. Bitcoin has the utility of sending a quick store of value across the world undercutting the cost of international bank wires. Some people accept gold as payment for things just as some accept bitcoin as payment. Bitcoin has a true limited supply of 21 million coins and it is not possible to identify how much gold there is in the world. If real utility exists then it isn't really a ponzi or pyramid scheme.
While bitcoin price may get ahead of it's utility or agreed value, the same can be true of any asset. Gold can be considered "overpriced". Just as gold is a hedge against inflation so is bitcoin.
Bitcoin is used for terrorist and criminal activities.
Yes it is true that it is unfortunately sometimes used for this. BUT, gold is used by terrorists and criminal activities. Small, non-sequential U.S. dollars are also used for the same thing. While bitcoin works for decentralization(no government backing) and attempts to bring a paperless record, I think you would be very surprised how advanced governments are at tracking it. Don't underestimate them. If they can use it to track illegal activities they aren't gonna let the public know they can.
Anything of strong value is going to bring fraud with it because there are people that deem it worth while to pursue it. How many times do you think fake gold has been passed off as real or something had a thin layer of gold on it's surface to deceive the recipient into thinking it was solid gold.
Bitcoin is dependent on electricity and makes it vulnerable
Earlier we discussed how the entire world of computers upholds the bitcoin ledger. Yes it could be vulnerable to an EMP, or electric magnetic pulse on a global scale. However, if you think governments and people are not protecting themselves from such an attack you would be mistaken. Things can be done to prevent it.
Bitcoin uses too much electricity
Well, how important is bitcoin? Many things have a cost that are needed or wanted. Cars need fuel and cause harm to the environment, but we use them. Gold is heavy and needs to be stored, but we use it. We clear out forests for our needs producing clear negative effects, but see it as necessary.
Bitcoin can be counterfeited
This is not possible because blockchain technology uses a ledger system backed by so many computers that a local change of bitcoin ownership will be discarded as not agreeing with the overall consensus. This is why the word "confirmations" is used in transferring bitcoin.
Which side of the fence will you take.
