Question from our reader:
Recently, we have come across many criticisms of cryptocurrencies, whether from our government or from foreign experts. Where did this tendency to criticize cryptocurrencies as an asset come from? Are the critics right or do they just fail to understand cryptocurrencies?
That’s a very good question. In order to answer it, we will use articles published on Investopedia, where opponents of cryptocurrencies often explain their doubts. There are about two thousand cryptocurrencies on the market. This should be a clear signal that the sector is flourishing. But, according to critics, numbers are deceptive. According to a CNBC report, more than 800 out of those 2000 cryptocurrencies are basically dead – that is, they are worth nothing. And when it comes to the remaining ones, only a small number of them should be paid attention to. Not to mention the reports of crazy frauds and scams on the ICO market and other issues cryptocurrencies face.
The problem started with bitcoin, because it was this cryptocurrency that faced serious difficulties in 2018. After reaching a huge value, with a valuation of nearly USD 20,000 in December 2017, bitcoin’s prices fell in January 2018 and it was difficult for them to get back to previous peaks. In addition, the value of cryptocurrency transactions, which was astronomical in the first quarter of 2018, decreased by almost 75% in the second quarter.
But, does this critical picture reflect the whole situation? Although it is true that bitcoin’s prices – and thus most other cryptocurrency prices – collapsed at the beginning of 2018, the volatility that once defined the market seems to be gradually disappearing. Although this is bad news for speculators, it is excellent news for other investors – who, according to many, are the key to unlocking the future of cryptocurrencies.
Cryptocurrencies and blockchain in general are becoming more and more popular. While buyers are cautious about digital currencies, banks, large technology companies and other corporations have already started using them. Cryptocurrencies may still not be a standard in payments and in the exchange of values, but the technology that stands behind them – blockchain – is rapidly becoming a standard in various sectors and industries.
Despite many people who are doubtful, the cryptocurrency market keeps developing. Although prices have fluctuated heavily – and in some cases went dramatically down – the sector is finally starting to stabilise and, more and more often, it seems to be starting to recover. As more and more companies discover cryptocurrency and blockchain applications, and more and more users accept them as a way to simplify their lives, government criticism has begun to fade away.