Bitcoin and Cryptocurrencies: 6 Things You Should Know
I’m no expert on Bitcoin or cryptocurrencies. (I don’t believe anyone is, but I’m sure someone will show up in the comments to tell me otherwise.) However, I do have a bit of experience dabbling, following, and conducting my own research.
Many people quickly jumped on the Bitcoin bandwagon in late November when the price was high. At the time of writing this, BC has tanked (dipping to almost $7,000 today). But can you really call that tanking when the price is still up several grand from last year?
The only thing that’s certain about cryptocurrencies is that they are extremely volatile. They really aren’t intended to be a form of lucrative investment but that hasn’t stopped people from treating them otherwise. Plus, it’s kind of hard to argue with the numbers. People are making a lot (and I mean a lot) of money from BC.
6 Things You Should Know About Bitcoin and Cryptocurrencies in General
Now, everyone and their mothers are trying to make a quick buck or get left behind. Unfortunately, these people haven’t the slightest clue how BC and these currencies work. (I’m not going to pretend I do either.)
Nonetheless, here are some things I can reasonably argue based on facts.
1. Glitches can cost you thousands of dollars.
Search the internet and you’ll find out there are tons of BC exchanges out there. These are the apps and websites you use to buy, sell, and trade cryptocurrencies. Funny thing is, these exchanges never report the same value amount for BC — but that’s a whole different story.
The most popular exchange — likely due to their search engine optimization (SEO) — is Coinbase. Coinbase supports digital exchange for BC, BC Cash, Litecoin, and Ethereum.
In December, the price of BC skyrocketed to over $19,000 on Coinbase: about 2 grand more than listings on other exchanges. It reached $19,000 after gaining a few thousand dollars just within the previous few hours.
As you can imagine, that sent people running for the exit door. Of course, that’s exactly when Coinbase had a brownout: buying and selling were disabled supposedly due to high trading volume.
Whether or not that’s actually true we’ll never know. But it’s frightening to know that you probably won’t be able to sell off when you really need to. I don’t buy and sell frequently, but I would imagine this could end up costing a person thousands upon thousands of dollars depending on how often the glitch occurs (which is actually very often).
2. They still rely on traditional currencies for value.
You can call BC and cryptocurrencies an alternative to the global system all you want, but that doesn’t change the fact that you still need actual dollars to buy them.
Plus, their entire value is calculated in the form of dollars.
Your other option is to mine the coins yourself which again: costs a lot of actual money to do. Running a computer that mines BC isn’t cheap.
3. Cryptocurrencies can’t and won’t undermine traditional economies.
Cryptocurrencies began as a way to undermine the global system through dark corners of the internet like Silk Road.
Silk Road is gone. You can’t even buy drugs with BC anymore — unless your dealer accepts it I suppose. What good is an alternative currency if you can’t even use it for illegal activity? (This is a joke, please don’t call the FBI.)
The fact is, world governments have a dramatic effect on BC and other cryptocurrencies. Crackdowns on the digital coins send the price plummeting. On the other hand, when a coup recently took place in Zimbabwe, BC skyrocketed because their own currency’s future was uncertain.
Digital currency will never undermine the global economic system because the global system will just co-opt and exploit it — just like it does with everything else.
In December, the New York Stock Exchange began listing Bitcoin futures trading. If that isn’t a death sentence for a supposedly “revolutionary” currency I don’t know what is.
On the other hand, you now see places like Russia and Venezuela creating their own digital currencies to help side-step sanctions. So, I guess in that respect, digital currencies have some pretty revolutionary potential — just not in the same way most average American dudes think.
4. The transaction fees are astronomical.
A lot of people out there have Bitcoin, Ethereum, and other currencies.
Where do they spend it? Nowhere.
You can’t pay bills with it, buy food, or like I already said — buy drugs. Places that do accept digital currency are a novelty and they make headlines for weeks.
There’s been some mention today that eBay will ditch PayPal for crypto. If true, BC’s price could go way up again, but that remains to be seen.
Why doesn’t anywhere accept it?
Crypto exchanges are greedy. It costs about $20 to buy or sell on Coinbase. Do you want to pay triple the price for your cup of coffee? Didn’t think so.
5. You won’t become a millionaire from Bitcoin.
Short of an act of God himself, you won’t become a millionaire from BC. That train passed.
I’m sure some people will show up to argue in the comments about how “now’s the time” to buy because the price is so low. I won’t argue that because it could very well be true. Digital currencies are volatile and the price could change at any time.
That doesn’t change the fact that BC isn’t really meant to be an investment — it’s a currency dependent on the dollar system.
For those looking to make a “quick” buck, you’re much better off doing some research about up-and-comers and riding out a different digital currency with a lower price. But just like the stock market, there aren’t any guarantees.
6. 1,000 people control nearly half of the world’s BC.
One thousand people control about 40% of the world’s Bitcoin supply. As a result, they can also manipulate the value through buying and selling.
Digital currency advocates will tell you this is a system that supports the little guy because it isn’t interwoven with the current dominant system (which clearly isn’t true to begin with). However, that doesn’t change the fact that digital currency promotes wealth inequality in a number of ways.
Besides the fact that we’ll never have more BC than the ultra-wealthy investors, most of us can’t even afford to use crypto.
About 40% of rural America doesn’t even have internet access. They can’t buy and trade digital currency. Even if BC was to take off like the utopian advocates claim, it would still leave the majority of the world’s most vulnerable population behind in its dust.