Predictions
As people around the world increase their awareness of the cryptocurrency revolution, investment experts are lining up to express their opinions. In recent weeks, pro-crypto forecasters are predicting gravity-defying numbers. It is not uncommon to see a forecaster on television explaining why they believe that Bitcoin is destined to reach between $ 250,000 and $ 500,000 per coin in the next two years. At $ 500,000, the coin would have to rise more than 6000% from its current levels. The numbers are staggering.
On the other side of the fence, we found the naysayers. There are many respected financial analysts who are not afraid to warn people about the investment bubble. Some even admit that cryptocurrencies still have some stakes left, but sooner or later the bubble will burst and people will get hurt. To drive home their point, they just need to ponder the 2001 IPO bubble.
Technical obstacles
The cryptocurrency revolution is still in its infancy. As such, most currencies, including Bitcoin, are traded without historical indicators to help investors. It is a free market in its purest form. Unfortunately, free market trade is likely to influence from all directions. Therein lies the problem for cryptocurrency investors. With no track record to draw on, investors must make decisions based on their instincts.
The obstacles that complicate the decision-making process for Bitcoin investors are many. The currency is always susceptible to the technical aspects of trading. The exponential price increase is driven by high demand and a shortage of products. Still, investors get a little restless when the price rises too much, too fast. Then we see the typical correction that occurs when an investment is bought in excess. The problem is that these corrections are proving tough, testing the mettle of investors who are not used to such high levels of volatility.
Technical analysis aside, technological issues are also driving the market today. There is no denying that the cryptocurrency market has had its troubles. After proclaiming that blockchain technology is the safest approach to disseminating information, there are holes that are exposed almost daily. The bugs will be resolved as this type of technology appears to be intended for prime time. Unfortunately, Bitcoin has blockchain technology under a microscope right now.
No matter how secure a system can be said to be, hackers are sure to expose weaknesses quickly. The cryptocurrency industry has already been besieged by hackers, who have stolen billions of dollars worth of Bitcoin and other cryptocurrencies. Losing money to hackers tends to make investors a bit nervous. It also generates a lot of litigation from those harmed by technology that may not yet be as secure as promised.
The fundamental obstacles
There is an old adage: When school teachers and custodians start to make millions on investment, prices will plummet because we need school teachers and custodians. The truth is that governments get nervous when their residents start to lose money or make a lot of money without paying taxes. It is no coincidence that India and South Korea are among the most active countries in cryptocurrency exchanges, but both governments are considering banning the trading of all cryptocurrencies. The United States, potentially the world’s largest Bitcoin player, is working in Congress to decide how to regulate the cryptocurrency market. They have already banned several exchanges for possible fraudulent activity. China is discussing a total ban, while Europe seems poised to follow the example of the United States.
If Bitcoin or any other cryptocurrency aspires to become an international currency for daily payments, success will depend on the world’s largest economies joining the parade. Unfortunately, the main players (mentioned above) seem to be moving in the other direction.
The biggest concern seems to be Bitcoin’s appeal to the criminal element. Evidence has been presented showing that North Korea has been stealing Bitcoin to help fund its nuclear program. ISIS routinely moves money between its affiliates via Bitcoin, undetected until it is too late. Drug traffickers also enjoy the anonymity provided by blockchain technology. More and more initial coin offerings (ICOs) are proving to be nothing more than common scams. These are all serious problems.
These are all fundamental problems that must be resolved favorably for cryptocurrencies to survive and prosper one day.
Searching or Solutions
For the most part, people are interested in all aspects of cryptocurrency. Bitcoin has already demonstrated the potential to easily solve payment problems between customers and providers. However, trust is a big problem going forward. If the anonymity feature is the driving force behind the cryptocurrency revolution, it will be difficult to get governments to jump on board and approve of cryptocurrency trading.
Let’s see how South Korea decided to solve the Bitcoin problem. The South Korean government recently passed a bill giving six Korean banks authority to allow their clients to exchange Bitcoin from their bank accounts. There is only one stipulation: the account must be opened in the client’s real name. Fagot! There goes the anonymity feature. However, South Koreans can still trade Bitcoin through a Bitcoin wallet as long as tax evasion is not the reason they want to do so. It’s a good compromise, but its appeal may be limited.
Over the next few months, investors should start to get answers to many questions. Until that time, the prices of Bitcoin and other cryptocurrencies will remain volatile. The price will increase due to demand, but will go down each time a new number makes the news. Until prices stabilize, people should focus on an investment rule. Never invest more money than you can afford to lose. Indeed, Bitcoin is reaching its crossroads.