Contents:
For instance, the most prominent digital currency, bitcoin, has given stellar returns since its inception , beating all asset classes over a decade. But it remains a speculative bet. Hence, the value depends purely on what an investor is willing to pay for it. As a result, its price can be easily swayed.
The price of bitcoin spiked significantly on Feb. Even in the months of February and March last year, when the spread of Covid and economic slowdown had rocked the stock markets, bitcoin plunged sharply. Other virtual currencies also have a similar trajectory. With its value fluctuating drastically in a short period, it can destabilize the economy, in which goods and services are traded for currency on daily basis.
If the value of the payment changes frequently, it can create huge uncertainty for buyers and sellers. While the record of bitcoins is kept on an open ledger, the identity of the owner is concealed. This can create problems for financial institutions to track the flow of money.
And hence cryptocurrencies could be used to transfer illegal money or evade taxes. Besides the misuse of virtual currency, security is also a grave concern.
While it is impossible to tamper with the ledger or key of digital coins, they can be stolen from the wallet of exchanges, which has happened in the past in India and across the world. A Delhi-based cryptocurrency exchanged had filed a complaint against its employee for hacking and stealing bitcoins from a wallet. So, even as bitcoin continues to outperform other asset classes and has certain advantages, the concerns around cryptocurrencies are hard to ignore, especially for a regulator.
Rather the cryptocurrency craze is a sub-species of religious mania.
That may seem odd given that Bitcoin is just a mathematical construct, albeit one that has become a capacious vehicle for hopes and fears and fantasies played out on a global scale. Yet the religious language and attendant mythos are there for anyone to see.
To Understand Bitcoin, Just Think of It as a Faith-Based Asset. The world's favorite cryptocurrency was developed by a mythical figure whose. With its prophet and its texts, Bitcoin is like a religion: The Indicator from Planet Money As the value of a bitcoin recently passed $50,, market watchers struggled to explain how a virtual currency could reach such dizzy heights. One possible answer? It's kind of like a religion.
So it is that Bitcoin has a historic messiah figure who appeared, spoke scripture, and then disappeared. It has many schisms and heresies. It has a strong death-and-resurrection theme, and a powerful end-time eschatology. The Gospel of Bitcoin promises if not eternal life, then at least perpetual wealth. It is a post-meltdown religion for the age of the internet pirate, the day trader and the digital huckster.
As such Bitcoin is emblematic of the age. We are in a period of great technological change and heightened uncertainty, a period when old systems and established rules seem to be evaporating before our eyes. These are exactly the conditions in which alternative belief systems and manias thrive.
Of course that is not what the believers will tell you. All three of these propositions suffer from the same flaw: they are not true. It is not a store of value because it is as unstable as plutonium and prone to self-destruction. And it is not an investment because both underlying asset value and income are absent. The fact that Bitcoin is useful only as a vehicle for financial speculation is obvious, but the prospect of fast money will always make converts.
Yet in the real world most people get little or nothing from Bitcoin. So the real draw is something above and beyond pure profit. The real draw is the religious communion. To put it in recent historical context, back in when the financial economy collapsed and the world was placed on a new and chaotic footing, Bitcoin did not exist. But that same year a short technical paper proposing a new sort of non-bank non-national digital exchange appeared on an obscure discussion board.
This was the foundational scripture of what would become Bitcoin, and it was signed with the name Satoshi Nakamoto. Nakamoto has never been identified either as a real person or a composite, and if he ever existed he has since disappeared — although not before creating around a million Bitcoins.
Bitcoin takes belief, trust and faith to a new level. Can the technology behind Bitcoin be used to build a belief system? In the late s, when he was a struggling writer of pulp fiction, L. Our Franchise Advisors are here to help you throughout the entire process of building your franchise organization! Oakland follows Stockton in yet another trial balloon of guaranteed income schemes.
What Nakamoto could not have known is that he or they had created a weird hybrid religion, where technology and dislocations of history and dreams of alchemy all combine to bedazzle millions of believers — with the uniquely persuasive twist that a handful of randomly lucky individuals really have become unimaginably rich in the Church of Bitcoin. The lost Nakamoto coins remain in deep and perhaps perpetual sleep in cyberspace, a kind of collective Holy Grail around which Bitcoiners weave fantasies of quest and redemption.
Inevitably the day this will happen is repeatedly postponed sound familiar? Monetary authorities have been pumping high-pressure liquidity into the world economy ever since the global financial crisis, and the Covid pandemic has just necessitated an additional extra-strong dose of easy money.
And since money has to go somewhere the fact that a lot of it has gone into Bitcoin and other speculative adventures is pretty much inevitable. And that brings us back to speculation. All the talk inside the Church of Bitcoin about a new form of money and a new means of exchange is nonsense.
It is just old money being risked and frequently manipulated in opaque markets in new ways.