Will Bitcoin and Other Cryptocurrency Rebound in 2019?
Bitcoin's explosion in value throughout 2017, launched over 1600 new cryptocurrencies and they all seemed like unstoppable money making machines until bitcoin lost 83% of its value in 2018, and so did nearly all of its spinoffs. Is this the end of cryptocurrency? Or will there be a cryptocurrency rebound? Was it all just a fad? Are Bitcoin just digital beanie babies or is there actually hope in the new year? Well, let's talk about what actually caused the crypto market to crash.
In a nutshell, a lot of the excitement that led to the massive bubble focused on cryptocurrency being unregulated and untraceable by authorities. Well, it turned out that when put to the test, a lot of those claims turned out to be too good to be true. For one, as governments and financial institutions took a closer look, they discovered that a decentralized currency creates a huge number of regulatory problems. Most importantly in preventing tax evasion and crypto being used for illegal transactions. They cracked down. India, for example, announced that they would prohibit banks from doing any business with cryptocurrency exchanges. And most countries have stated that crypto is not legal tender, including the United States, the UK and the European Union as a whole.
Another major problem was the total lack of security surrounding investments and banking. A few massive exchanges have a shutdown. Most notably Mt. Gox, which lost 850,000 bitcoins at their peak worth $1.7 trillion and the company filed for liquidation. With little recourse for those who had trusted the exchange to keep their money safe. Although some of the currency was recovered, the event and others like it proved that unlike traditional banks and currencies, using cryptocurrency currency was a massive risk without further regulation. These issues coupled with the massive uptake in energy necessary to mine bitcoin. Brought it's dramatic rise to a dramatic halt. Where does that leave us in 2019? Have these challenges proven that cryptocurrency is dead? Will there be a cryptocurrency rebound after it all?
Well, not at all. Although the original excitement has hit a dead end. Crypto has seen success in an unexpected way. Around the world, a number of countries have started experimenting with their own cryptocurrency subject to their own regulations and protections. Sweden, for example, is gearing up to launch a digital currency to complement their national currency, which will eventually branch off and exist as its own cryptocurrency once it's stable. In short, the country has fully embraced the idea of a regulated, cashless future. Other countries, most notably Venezuela, which recently saw a total economic collapse, has turned a cryptocurrency as a possible way out. The Petro cryptocurrency is extensively backed by 5 billion barrels of oil. And it'll be tied directly to the cost of oil rather than to their own existing economy. In fact, a number of countries that are struggling economically because of sanctions, like Iran, North Korea, Syria, and even Russia, have been looking at decentralized cryptocurrency as a way to bypass economic sanctions.
It's often said that the private sector innovates and the government appropriates and regulates, and that's exactly what's happening to cryptocurrency. But maybe that's actually a good thing in the long run. Especially for anyone who wants to jump on the Crypto Bandwagon. Because the biggest problem with bitcoin and cryptocurrencies is that they're not actually based on a tangible good. It may be called digital gold. But unlike gold, there's no actual use for bitcoin beyond a bunch of ones and zeros that consume as much electricity as the entire country of Ireland. And while you may be thinking that ones and zeros aren't much better than a piece of paper, like all the other world currencies, those other currencies are backed by actual countries. In other words, people and labor and resources.
While free-standing, cryptocurrency has taken a beating country backed cryptocurrency may just see a resurgence in 2019. And if you're not totally sick of crypto after the last year, it may be a good idea to shift your focus. You might just end up making a little bit of money after all.