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David Gura. This illustration photograph taken on July 19 in Istanbul shows a physical banknote and coin imitations of the Bitcoin cryptocurrency. Regulators such as Securities and Exchange Commission Chairman Gary Gensler are promising tougher action for cryptocurrencies. For many people, cryptocurrencies like Bitcoin are part of an exciting and lucrative new financial frontier. But for the country's top market watchdog, Gary Gensler, they seem "like the Wild West" — and he's promising a crackdown. The market for cryptocurrencies has ballooned.
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Content:
- What 2022 may have in store for the cryptocurrency investor
- What is the problem with cryptocurrency (bitcoin)?
- It’s Hard to Tell When the Crypto Bubble Will Burst, or If There Is One
- Bitcoin and crypto prices are volatile — What to do when they’re crashing
- SEC Change in Definition of Exchanges May Affect DeFi
- Cryptocurrency prices fall in December, and investors blame omicron, climate change
What 2022 may have in store for the cryptocurrency investor
Bitcoin is again in the news. Does bitcoin offer something unique as an emerging store of value, blending some of the benefits of technology and gold? Chi Lo , senior economist for Greater China, provides his analysis. Theoretically and legally, cryptocurrencies such as bitcoin are not money despite what some people may think.
Money serves three functions: it is a medium of exchange, a unit of account and a store of value. Not many goods and services are priced in and settled by bitcoin or other cryptocurrencies. Bitcoin is not universally accepted as a unit of account and a means of payment.
Granted, many cryptocurrency payment apps have been created in recent years to promote its use. Crucially, cryptos are priced in USD or other fiat currencies. So they are no different from any item priced in USD standing on the opposite side of money in a transaction.
Veteran bitcoin investor Mark Cuban summarised it succinctly when he said:. It would have to be completely friction-free and understandable by everybody first. Despite being digital, DCEP is strictly speaking not a cryptocurrency. Legal tender status is usually given to means of payment that can be easily transferred and used by the population in daily life. To use bitcoin, or cryptocurrencies, a digital infrastructure including computers, smartphones, internet networks and connectivity must be in place.
This condition makes it unrealistic for cryptocurrencies to become money. Bitcoin supporters say it is an investible asset. Investible, yes in the speculative sense, in my view. Asset, I am not sure. There is an income stream associated with a financial asset. Granted, there are assets with a zero yield such as commodities, but they are traded because they have a practical use for production or consumption.
Hence crypto prices are subject to violent and random movement. This brings up the other problem, store of value. For something to serve as a store of value, it has to be liquid, universally accepted, and have a stable value. Cryptocurrencies including bitcoin certainly do not have any of these characteristics.
It would therefore only take a few whale wallets to manipulate the bitcoin market, causing violent price moves. Huge price volatility has made bitcoin and cryptocurrencies unsuitable as store of value vehicles.
Contrary to the conventional wisdom that the finite supply of bitcoins and cryptos is a benefit and protects value, it is in fact a big problem for them being considered as money.
The maximum number of bitcoins that can ever be mined is 21 million. At the time of writing, there are already The last bitcoin would be mined in All cryptocurrencies have a finite supply and the speed at which they can be increased is uncertain and not controllable by anyone.
These supply limitations make cryptocurrencies unsuitable as legal tender because the static 'money supply' would deprive central banks of the ability to conduct countercyclical policy. They have skillfully twisted this supply problem into an argument for cryptocurrencies as a hedge against doomsday scenarios.
I believe this is wrong. China, which used to be the largest crypto mining country, has seen through the smoke and mirrors and has cracked down on trading and mining without reservation.
This shows how quickly regulators could destroy the freewheeling, decentralised crypto market. China instead has created an official DCEP with centralised control.
What crypto aficionados do not appear to understand is that countries will take steps to protect their monetary systems and currencies and their ability to tax and manage the economy. The more people believe cryptocurrencies are money, the greater the risk of government intervention in this market.
The emerging trend of official digital currencies is a sign of central banks fighting back. Thus, the rise of cryptocurrencies can be seen as reflecting the anti-establishment movements in many countries since the GFC. Viewed positively, this 'crypto protest' could prompt governments to change their economic management to become more responsible and regain trust and credibility. Time will tell. I believe crypto prices will eventually crash. This could be triggered by a shift in monetary policy or regulations.
Alternatively, a crash could simply occur because prices are so inflated that much like the Dutch tulip mania, marginal buyers are priced out of the market, leading to a self-feeding process of liquidation and falling prices when leveraged investors start to sell.
Crypto-renminbi to challenge US dollar. However, they failed because of low public acceptance and the inconvenience of using gold for transactions. Crypto apps could suffer a similar fate, in my view. Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice.
Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay.
Past performance is no guarantee for future returns. Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions social, political and economic conditions.
Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk. A round-up of this week's key economic and market trends, and insights on what to expect going forward. Bitcoin is not money Theoretically and legally, cryptocurrencies such as bitcoin are not money despite what some people may think.
Bitcoin is a vehicle for speculators Bitcoin supporters say it is an investible asset. Bitcoin is not a store of value For something to serve as a store of value, it has to be liquid, universally accepted, and have a stable value. Fixed supply is a problem, not necessarily a benefit Contrary to the conventional wisdom that the finite supply of bitcoins and cryptos is a benefit and protects value, it is in fact a big problem for them being considered as money. What next? Also read: Crypto-renminbi to challenge US dollar [1] Many gold ATM machines and settlement mechanisms were installed around the world in the early s as players were trying to promote the use of gold as an alternative to fiat money and a medium of exchange for daily transactions.
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What is the problem with cryptocurrency (bitcoin)?
Here's What Investors Should Know. Ethereum Just Hit a 6-Month Low. Upgrade Bitcoin Rewards Card: 1. There Are Thousands of Different Altcoins.
It’s Hard to Tell When the Crypto Bubble Will Burst, or If There Is One
The rising number of cases of the Covid omicron variant in the U. ESG — or environmental, social and governance — investing and concerns over energy use have also been a catalyst in recent crypto declines, according to Lou Kerner, partner at Blockchain Coinvestors. Relative to the massive value we are getting from it, the energy I think will become much less of a concern next year. Stocks that hold or mine cryptocurrency saw deeper declines than the assets themselves in December. The coins and stocks are closely correlated in the minds of investors, something Kerner sees changing. It's a small part of the market, so you don't have a lot of institutional investors devoting massive amounts of time to it. It's easier for them to just look at it like a basket. With rising rates and inflation, investors are split on how to value bitcoin. Stocks that are inflation plays are moving closely with cryptocurrency, Trivariate Research found.
Bitcoin and crypto prices are volatile — What to do when they’re crashing
A cryptocurrency , crypto-currency , or crypto is a digital currency designed to work as a medium of exchange through a computer network that is not reliant on any central authority, such as a government or bank , to uphold or maintain it. Individual coin ownership records are stored in a digital ledger , which is a computerized database using strong cryptography to secure transaction records, to control the creation of additional coins, and to verify the transfer of coin ownership. In a proof-of-stake model, owners put up their tokens as collateral. In return, they get authority over the token in proportion to the amount they stake.
SEC Change in Definition of Exchanges May Affect DeFi
It's possible to get filthy rich by investing in cryptocurrency in But you could also lose all of your money. How can both be true? Investing in crypto assets is risky but also potentially extremely profitable. Cryptocurrency is a good investment if you want to gain direct exposure to the demand for digital currency, while a safer but potentially less lucrative alternative is to buy the stocks of companies with exposure to cryptocurrency. Several factors make cryptocurrency not entirely safe, at least currently, while other signs are emerging that cryptocurrency is here to stay.
Cryptocurrency prices fall in December, and investors blame omicron, climate change
Welcome to Finextra. We use cookies to help us to deliver our services. We'll assume you're ok with this, but you may change your preferences at our Cookie Centre. Please read our Privacy Policy. Long-time regulators were not sure on if at all or how to handle the crypto ecosystem. But that has changed fundamentally with the crypto industry witnessing massive growth and interest from traditional institutions and major investors.
While bitcoin only managed to return As a result, many cryptocurrency prices were more dictated by the value and functionality of their protocol and applications rather than their correlation to bitcoin. Litecoin and Bitcoin Cash also provided meagre double-digit percentage returns, as payment-focused cryptocurrencies were largely ignored for projects with smart contract capabilities. Ethereum greatly outpaced bitcoin in , returning
The crypto has breached a number of key support levels, stirring debate over whether it has further to decline or is primed for a bounce. Pick your prognostication. Check bitcoin and cryptocurrency prices, performance, and market capitalization, in one dashboard. Beckham announced in November that he planned to convert his salary for this NFL season into bitcoin. A weekly look at the most important moves and news in crypto and what's on the horizon in digital assets. The Diem Association, the consortium Facebook founded in to build a futuristic payments network, is winding down and selling its technology to a small California bank that serves bitcoin and blockchain companies for a
The world's 1 most-trusted cryptocurrency data mobile application. Market cap and rank, prices, exchange volumes and currency conversion! Track your holdings with our new portfolio and make detailed comparisons — plus stay updated with crypto news. You can find market capitalization and ranking, price alerts, candlestick charts, portfolio tracking, currency converters and news about tokens and coins in this crypto app. From Bitcoin to altcoins, get accurate and real-time rates in one place, from the crypto data authority you know and trust.
Graeme Wearden. Wed 19 May The sell-off has been triggered by news that China is looking to ban the use of cryptocurrencies. The speed of the sell-off suggests that leveraged accounts are being hit badly and the indiscriminate slump across the space also points to a lack of buying intent.
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