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The recent fluctuations in Bitcoin and altcoin prices has resuscitated the debate on cryptocurrencies functioning as a true store of value. After rising about $20,000, this dip in price had seen the most popular cryptocurrency slump to almost $6,000 before rising again and then trading around the $8,400 region as at the time of writing.
Rising and falling, and rising again has been one of the usual characteristics of the Bitcoin and cryptocurrency price trend. However, probably due to the increased level of awareness and the literal monetary value of the current price dip, the anti-crypto campaigners found a reason to make loud their criticism of the technology.
Cryptos Have Been Predicted to Fail
Delivering his speech in London on February 8 2018, Yves Mersch, Member of the Executive Board of the ECB noted that the wild fluctuations in the value of virtual currencies (VCs) mean that businesses pricing in VCs could find themselves with a large and detrimental gap between their actual price and their optimal price. He explains that when there is considerable uncertainty around how many goods and services an asset can buy in the future, or indeed whether it can be used to purchase anything at all, the asset becomes a poor store of value.
Another form of criticism and negative prediction for Bitcoin has come from the popular billionaire investor, Warren Buffet.
Buffet says that Bitcoin and cryptocurrencies are in a free fall, noting that he would never invest in any of them. He says:
“I can say almost with certainty that cryptocurrencies will come to a bad end”.
Some other critics have registered their opinions on the current dip in price of Bitcoin and altcoins, most of whom predict a bleak future for cryptocurrencies. However, the dilemma comes when some of them categorically condemn the idea of cryptocurrencies, but have a soft side for the underlying technology, blockchain. At this point, the question will arise if blockchain and cryptocurrencies can exist as separate entities, or whether it is possible for blockchain technology to thrive while the tokens upon which they are powered fail.
Current crypto Behaviour is normal
Michael Vogel, CEO of Netcoins does not share the opinion that the recent slump in price of Bitcoin and other altcoins signifies failure of the technology. Vogel notes that considering the developmental stage of cryptocurrencies, the volatility that is being experienced at the moment should be considered as normal.
Vogel says:
“I think for long term investors that bought one year ago or even six months ago, I’d say they would be very happy with their return to date. Volatility is part of the crypto scene at the moment given that there are still years of growth ahead. 2015-2016 saw less volatility and thus more users were interested in using Bitcoin as a spendable currency in those days, however given how rapidly Bitcoin has surged in value I think it has made a lot of people realize the potential in Bitcoin as a store of value / digital equivalent to gold.”
Vogel explains that pullbacks are part of a healthy trading and go against the notion of a crypto bubble, even as he insists that cryptocurrencies cannot be separated from Blockchain. “Digital money has been attempted before, and the reason those attempts failed is due to not having the decentralization that blockchain offers”, he says. “Blockchain and cryptocurrencies are intimately connected, and both technologies are destined for massive success and impact akin to growth of the Internet itself”.
Some Technical Analysis
Kumar Gaurav of Auxesis Group however considers the technical price analysis as he explains the Bitcoin price behaviour in recent times. Gaurav explains that the recent pullback only came after the Bitcoin price reached the hockey stick growth stage which was frequently predicted in past due to the slightly parabolic growth throughout its history, and is now back again at a less drastic growth which is more in line with the past years. According to him, this that means Bitcoin has stored at least the same value for everyone who invested in it until just around 2 months ago.
Gaurav also notes that while in absolute terms this pullback is unprecedented which scared beginners or made sceptics feel confirmed, everyone familiar with the history of Bitcoin knows that in percentage terms it should not be a surprise at all and that it had in such situations always quickly recovered.
Blockchain or Cryptocurrencies
Gaurav elaborates that the distinctive consideration of Cryptocurrencies and blockchain in most quarters should be seen neutral, not based on ideology but simply on legal and practicality reasons according to where a cryptocurrency is possible and needed and where not.
In government for example, blockchain technology has many use cases in which it can help achieve better efficiency and transparency, which do not have anything to do with cryptocurrencies. Recently, the Indian Finance Minister Arun Jaitley acknowledged blockchain’s potential, stating that the Government will “explore the use of blockchain technology for ushering in digital economy”.
Kumar explains that Auxledger, the largest private ledger with 54+ million users onboard already, resulting of Auxesis Group’s work with the State Government of India has custom plugins for different sectors which allow companies to adopt faster based on their needs. These solutions include a Distributed Ledger Protocol for financial institutions, Benefit Distribution Program for government bodies, Darwinsurance for Insurance settlement; Genuinity, an anti-counterfeiting program for supply chain and Reservoir, which addresses issues of products availability.
Despite these solutions, Gaurav explains that had it not been for cryptocurrencies, we may have never seen the ongoing blockchain involvement throughout the institutions, as it was what sparked everyone’s interest, and also as it created the wealth enabling the ongoing innovations in the industry since its beginning, even before traditional investors came in.
First there needed to be cryptocurrency as the first use of blockchain technology to enable further use cases. However interests over the past years have shifted away from mere cryptocurrencies to tokens representing anything, while being more transparent.
Source:https://www.ccn.com/news-outlet-salon-mining-monero-alternate-revenue-source/
