Cryptocurrency here to stay | The Royal Gazette: Bermuda Opinion

Published 5 January 2019 at 8:00
(Updated January 5, 2019 at 8:33)

Thmas Knapp, opinion

The cryptocurrencies have had a hard ride in 2018. Starting from January 7, 2018, the total market capitalization of all cryptocurrencies tracked by CoinMarketCap.com has reached more than $ 800 billion, its highest point ever.

As I write this January 3, 2019, that total market capitalization has fallen to about $ 130 billion – one-sixth of the highest point in the market.

You might be surprised to learn that I'm still a fan of cryptocurrencies. But, just to be in front, yes, I am.

Not because I'm sitting on a big pile of things – since then, my cryptocurrency holdings are worth less than $ 100 – nor because I'm expecting to speculate to kill. When I get a bit of encryption, I usually spend it without waiting very long to see if it increases in value.

I am still enthusiastic about cryptocurrency because I have seen what it can do and make plausible predictions about what it will be able to do in the future. Cryptocurrency takes control of money from governments and puts it in the hands of people.

With improvements in its privacy aspects, this will only become more true. In short, cryptocurrency feeds freedom.

But can it last? The winner? I think that last year, far from dispelling that notion, it strengthened it. Let me explain.

Two types of cryptocurrency noise seem to have faded into tandem with the downward trend of market capitalization. As might be expected, the "ultra-bullish Bitcoin will soon go to $ 100,000 real now!" Items have decreased in number and volume. But also the voices that compare the cryptocurrency with a Ponzi scheme or the seventeenth-century "bubble of tulips".

Yes, there are exceptions. One is the Nobel-winning economist Paul Krugman, who still seems to think that transaction costs and the lack of "links" to fiat government currencies will make the crypt a bad bet. Of course, in 1998, Krugman also said that "by 2005, it will become clear that the impact of the internet on the economy has not been greater than that of the fax".

So, however experienced I may be in other areas, I doubt that I am the only one to serve his predictive skills when it comes to technological advances.

This annual correction of the market was exactly this: a correction towards real values. After a period of hype ("initial offers of coins" based on bizarre use cases) and scams ("pump and dumps" cons based on new "Altcoin" fly-by-night), the wheat is separating itself from the straw, the fraud is settling on a level consistent with the rest of human activity, and the "mainstream" financial attitude has gone from contemptuous to curious to "how can we get into this?"

Cryptocurrency is improving more and more in the way it was conceived: it facilitates transactions without regard to political boundaries, safeguards the registers of these transactions through a system of distributed accounting ("blockchain") and to varying degrees (depending on the currency and the habits of the individual user) protects the privacy of those who use it from prying eyes.

Cryptocurrency and the freedom it entails are here to stay. Welcome to the future.

Thomas L. Knapp is senior director and analyst at the William Lloyd Garrison Center for Libertarian Advocacy Journalism