Nowadays Bitcoin brings more joy to its owners and pulls the rates of other cryptocurrencies upwards. But how reliable is such growth?
"No, we're not having a crash here," Julian Hosp says in his new YouTube video, reassuring more than a hundred thousand of his followers of the steady decline in the Bitcoin exchange rate. "These fluctuations are quite normal and maybe they will calm down all this hype," adds a self-named Austrian cryptocurrency expert, who is currently speaking from Singapore about the world of cryptocurrencies. He is a former professional kitesurfer and calls himself an investor and consultant. According to his words, he himself is the owner of a lot of koins - this is how the representatives of the cryptocurrency world call various cryptocurrencies. But his biggest project is his own electronic currency, which he wants to use to make lending, payments and stock trading possible without intermediaries.
The recent fall of the exchange rate by some 20 percentage points is already a routine matter for Gospa, he says in his video. But at the end of the day, the 34-year old export manager, ironically, had a great zest for the cryptocurrency frenzy. For example, the Bitcoin has increased its value by more than six times since June 2020. Those who bought Bitcoin back in the early months of the year can now be satisfied with the price of Bitcoin. A similar picture with other electronic currencies. The biggest follow-up to Bitcoin is Ethereum (Eph. - Ed.). Such names as Ripple, Litecoin and Cadano are also on everyone's lips, and the list of all cryptocurrencies is quite long. But it is still Bitcoin that attracts the most money from investors.
The symbol of digitalization
Why is it that, apart from the extravagant cryptopreachers on the Gospa staff, more and more people believe in blockchain and invest their own money in a fully virtual product? After all, electronic currencies in part are not more than a complex program code, which, as in the case of Bitcoin, allows for quick, anonymous and profitable transactions.
It can be assumed that all this hype is only the next step in the digitalization of society, accelerated by the COVID-19 pandemic. The column of numbers becomes a very specific resource for many people. The fact that confidence in virtual values is growing is demonstrated by the stock prices of technology companies, which are growing at an alarming rate in the course of and, perhaps, due to the pandemic.
A new class of assets for strong nerves
For economist and cryptoanalyst of the German DZ Bank Sören Hettler the reasons for this phenomenon lie in the excessive monetary policy of international central banks. In simple terms - there is a lot of money in the market, and interest rates on the part of regulators in the long term is hardly worth waiting for. "Investors are now forced to consider non-traditional classes of assets," Goettler responded to DW's question. So far, Bitcoin remains a non-traditional way of investing for most investors. Thus, the value of all Bitcoins on the coinmarketcap.com platform is estimated at 640 billion dollars. This may seem like a significant amount, but as of June 13, this is less than the exchange value of no less hype electric car manufacturer Tesla.
But, apart from cryptocurrencies, more and more attention to bitcoins is starting to be paid by institutional investors. According to Patrick Hansen from Bitkom group, for him the increase in the rate of cryptocurrency is explained by the fact that "enterprises and investors are transferring their capital reserves into Bitcoin".
This includes such solvent players as the insurers at MassMutual or asset managers at One River, which recently took $600 million in Bitcoin. The largest number of Bitcoins in the world now has another asset management company - Graytrust of New York has accumulated nearly three hundredths of all Bitcoins available in the market. In the video on its website Graytrust illustrates the benefits of such investment: gold bars fall from the sky, people reach for them and begin to fight for them one by one. The main goal - cryptocurrencies are much more secure than "material" gold.
Why gold and Bitcoin are often compared
The comparison between the most popular cryptocurrency and gold is heard often enough to explain the Bitcoin phenomenon. Bitcoin is limited in its quantity as a resource. This is how the Bitcoin code was made by its creator Satoshi Nakamoto. But gold has long been regarded by investors around the world as a "safe haven. Bitcoin is still far away from such recognition - mainly due to large-scale fluctuations in exchange rates.Excavators and miners move tons of stone for one gram of gold. Bitcoin requires great processing power and electricity for so-called "mining". This, as in the case of gold, generates a range of minimal costs necessary to cover the production, explains Seren Hettler of DZ Bank. But there is no really percolating model, which can be used to calculate the appropriate price, the analyst believes: "Cryptocurrencies cost as much as others are willing to pay for them.
Another reason for the growth of interest was accessibility. If earlier only technically "savvy" people were able to buy cryptocurrencies, now everything has become simpler. The best example is the payment system PayPal, which in January announced that its customers in the U.S. will be able to buy and sell Bitcoin and three other cryptocurrencies. PayPal has over 350 million users worldwide - many of them will be able to access the world of cryptocurrencies for the first time.
Lousy cryptojungles
But before cryptocurrencies had one more role - that of gambling, which brought great winnings to some and great losses to others. As in any market that grows, there are many bad sheep in the world of cryptocurrencies. For example, Bitcoin is constantly criticized for the fact that it allows criminals to make transactions using the blockchain. The fact that cryptocurrencies can be created by people who are only interested in increasing their own capital is demonstrated by Ripple. Shortly before Christmas, the U.S. government filed a lawsuit against two proponents of this currency. Ripple is involved in a total amount of 1.8 billion dollars in fraudulent transactions.
Court hearings will begin in February.
Hansen of Bitkom says that, in his opinion, among thousands of cryptocurrencies "most do not have grounds for long-term existence. And the most electronic currencies are given very close attention by financial watchdogs.
Reputation of cryptopropagandist Julian Gosp is also important to call unreasonable. In the Internet there are messages about the equipment, associated with the unreliable startup. But the State, in any case, remains a fixture of cryptocurrencies and has no fear of collapse of their exchange rates. He called the rapid fall in the value of Bitcoin "a healthy downward trend" and a good opportunity to buy more Bitcoins. Now, in his words, everything points to the fact that "it will grow further," says Gosn in one of his videos.
Goettler from DZ Bank also expects that "people's openness to cryptocurrencies and their general acceptance on the part of the public will grow. However, whether the rapid growth of Bitcoin does not mean that the main bulb "is difficult to say at this time," the expert admits.
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