Cryptocurrency in particular bitcoin was introduced with 3 traits that characterize it:
1) Anonymity 2) Deregulated 3) Immutable
Lets look at why these 3 traits are horrible when considering a gamble into cryptocurrency.
1) Criminals are unidentifiable & tax avoidance - if you cant identify a user or whether or not their trade has good intensions it makes for a cesspit of bad activity that can occur with no issue. 2) 2 exchange collapses in Australia today. One owing wallet holders $21M. Who might I add can they refer to, to report bad behaviour? No one. The exchanges have limited regulators and with such limited rules or processes to follow in the event of bad behaviour. As an example of share trading lets look at the Australian Stock Exchange. Shares are issued under CHESS. This system is governed by ASX and is reknown worldwide on markets. Thus even if an exchange such as Commsec collapsed many other platforms would recognize your shareholdings. To not have any regulation is like having kids jumping on a bed with no parent there to tell them not to. "Its all fun and games until someone gets hurt" 3) Immutable - unable to be changed. Everyone in a modern world is aware of how rapidly things change. To have a form of technology that is the opposite is just thick, lets be honest.... If you have currency that you plan to use that cannot adapt to changes in global or local markets, what chances has it got of survival. Zilch! The fact BTC has a cap on currency itself means that it will never be a cryptocurrency that "could" potentially threaten real world currencies. Lets look at a practical example:
Hypothetically if the globe used BTC as a currency. All currency has been mined and is held. The global market experiences a economic depression/recession. During this time local governments use 1 arm of stimulus to help drive the economy. Monetary policy. This is through lowing the cash rate of central bank to stimulate spending. How exactly do they stimulate spending of BTC in said situation? It wont work.... Same can be said with financial stimulus packages. How do they issue more currency when its all mined, all already in a wallet and cannot be changed to introduce more? Again doesn't work.
Another separate issue that sets of my alarm bells is when an assets "value is driven by its demand". So if no one wants it? whats its value?
Perhaps im just old fashioned, but I prefer not to "invest" into things where value is driven purely by people wanting it. Most reputable investors see value investment as determined by the price of an asset being below its intrinsic value. If one looks at BTC with this mine set they ask themselves, what intrinsic value does this asset have even in a worst case (to hedge your risk of losses). Well the value would be zero. So what would you be prepared to pay for it?
Many will argue against the above. With many coins that are coming out with some of the above traits changed or non-existent. I dont dispute that a cryptocurrency could be a globally used coin. But it wont be bitcoin that is certain. An even when this coin does come about. It will lack the very characteristics that make it a cryptocurrency per the 3 traits listed above.
Chuck all the environmental issues with mining it on the table and it makes for a horrible choice for parking your money.
One does not invest in cryptocurrency, one gambles in it. I'm just as likely to see a return on it as I am at the casino putting it all on red.
