When Bitcoin was just shy of $20,000 in December 2017 everyone was shouting “To the MOON”. However, the events took rather a different turn and large portion of the crypto fortune got wiped off within days. It’s not that experienced crypto traders hadn’t seen the market crash before. 2018 is different because everyone had great expectations and had their pink sunglasses on.
Say that back in December it wasn’t just like that. If somebody had told me then that the crypto market will enter a downward spiral and will crash literally twice a month, I would have laughed my ass off. Well, karma is a bitch they say it this might actually be the truth. But what on earth happened? What got us begging for mercy? Why even the greatest opponents of crypto regulation now deemed it Bitcoin’s last chance? There are certainly many factors that played a role and I might possibly not cover all of them in this article but here are they anyway:
The Immense Hype
Yes, when the market is flourishing and the prices are surging nobody believes things might go the other way. The positive trend kept in November and December and that short two-month period got our perception of reality blurred. What am I talking about? Well, when your parents start talking about viral technology/financial/supposedly revolutionary things, then you know the topic has outgrown itself. I’m talking overhype here. It created the illusion that virtually everyone can become a millionaire overnight. There were people getting loans just to invest some cash in “the next Bitcoin”. Does that ring a bell? Sorry, but overhyping things usually leads to their demise. We collectively pumped the balloon and it eventually burst.
Scams, frauds, and swindles
Fraudster and criminals of all kinds exist since the dawn of humanity and they are capable of doing anything just to get your cash in their pockets. Yes, the crypto world makes no exception. Do you know how much money cyber culprits have snatched from January to June this year? More than $1.1 billion. These include exit-scams, phishing scams, crypto blackmails, physical crypto thefts, exchanges hacks and whatever you can think of. See, the crypto world is by no means a safe place and it’s not even necessary to see the market crashing to lose your investments.
Where are the authorities?
Scams lead us to my next point. The governments are willing to intervene for a variety of reasons – they want to regulate the space and eventually protect victims, solve disputes and so on. Another crucial pain point for the officials is that currently, cryptocurrencies are a great tool to launder money and finance crime organizations. Obviously, it wouldn’t have been that easier for criminals to do so if there were proper regulatory frameworks. Lack of regulation makes tokens volatile apart from just scaring the sh*t out of investors. Especially institutional ones.
Where do we spend cryptos?
Ok, I get it. There are retailers and merchants that do accept cryptocurrency payments. However, ask your uncle to name of few. See, if only crypto geeks know who they are there is no real cryptocurrency adoption. Since we cannot spend digital currencies the way we spend fiat, cryptocurrencies become illiquid. It’s like you have a vault with $10k in it but you don’t have the key. No one would enjoy that. Period. If you are still interested what are your spending options, click right here.
Crypto mining monopoly
Just like cryptocurrency trade, cryptocurrency mining can be very profitable. However, the more time passes by, the harder it gets to mine through a regular hardware. That’s why hardware manufacturers are cashing on the trend by producing ASIC machines, which are specifically designed to mine certain cryptocurrencies. The current industry behemoth is Chinese-based Bitmain. And guess what, it accounts for 85% of the mining rigs sales worldwide. Moreover, its devices don’t come cheap, which means not everyone can afford them. Some say this centralizes the hash power in the hands of the rich. What do you think? Are cryptocurrencies really setting us free from the current financial system? Think twice, it’s alright! Yeah monopoly, really drives off early crypto supporters.
Some of the above-mentioned factors you can control and some you cannot. The good news is that cryptocurrencies are here to stay. However, before we see all their promises come to life, we really have to learn to think in the long-term.