Crypto Wipeout a Hype?

Let’s admit it: we’re all at least a little bit curious about cryptocurrencies. Sure, Bitcoin and its ilk are terribly risky and not very useful.

After the “stablecoin” TerraUSD’s value unexpectedly fell, more than $200 billion was erased from the cryptocurrency exchanges. Causing a ripple effect throughout the industry.

• The largest stablecoin, Tether, fell below the $1 mark
• The largest cryptocurrency, Bitcoin, fell to its lowest point in 16 months; this year, it has lost more than 45% of its value
• Coinbase, a platform for trading cryptocurrencies, has lost more than half of its value in the past week

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In a world where so many things feel like they’re falling apart, what’s more, exciting than the idea of an entire alternative economy springing up without permission from old-world central banks?

The truth is, though, that digital currencies aren’t much of an economy yet. Even if they develop into one someday, that future is probably a long way off — even further away than most people think.

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Virtual currencies are only useful if they’re actually used. It’s simple logic, but it’s worth repeating. The value of any currency is derived from its utility: you can’t eat dollars or use them as fuel to warm your home in the winter.

Aren’t backed by any central authority—not even blockchain technology itself—so there is no intrinsic value that gives them credence as money (unlike gold).

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All this means that unless people want to use digital currencies as a medium of exchange for goods and services, they don’t have any value at all. If nobody wants to buy or sell anything using bitcoin or Tether—the two most popular ones in the market—then what do either one of those digital assets actually represent?

Nothing more than a bunch of ones and zeroes stored somewhere on somebody else’s computer somewhere else around the world! And if nobody wants those ones and zeroes, then they have no real-world utility whatsoever!

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If cryptocurrencies aren’t used, they’re not worth anything

If you want to know what makes them valuable, it’s this: they are only useful if they are widely used.

This is why we should expect a crypto wipeout. If they aren’t used, they’re not worth anything.

And right now, despite the hype, there’s very little use of cryptocurrencies

So, what’s the point when they aren’t widely used? Well, they have value as long as people believe that they do. The problem is that this can’t go on forever. As soon as there are enough people who don’t believe in such currencies and start selling them off en masse (as is happening right now), then the price will collapse.

And once it collapses, any remaining value becomes almost entirely based on speculation rather than actual use—which often happens during a bubble burst like we’re seeing now with prices falling so drastically over such short periods of time (some coins lost 90% of their value).

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And right now, despite all the hype about cryptocurrencies being an alternative way to pay for things or buy goods online (and even though there are some legitimate reasons why this might be true), there’s very little use for these coins outside of simply moving money around between people who want to speculate on them.”

It will take a while for regulators to allow cryptocurrencies to be widely used

Unlike traditional currencies, These are not regulated by any central authority. The lack of regulation has led to a lot of fraud and scams in the market, which has made regulators wary about allowing them to become mainstream.

However, there’s also hope that they might be able to figure out how to regulate these digital currencies in the future: China is shutting down exchanges so it can control who uses them; Japan and South Korea have actually begun setting up regulations for crypto trading on their exchanges.

Russia has proposed legalizing cryptocurrencies; India’s central bank has started working on new rules for digital assets; Indonesia’s central bank is reviewing its stance on digital currencies like Bitcoin (and may even consider issuing its own); France plans to tax capital gains from trading as it would any other financial instrument

Right now, there’s no reason to think that cryptocurrency will replace “fiat” currency any time soon.

Cryptos aren’t widely accepted in the real world. You can’t walk into a restaurant and pay with Bitcoin or Ethereum. You can’t take an Uber (or Lyft) with them. And if you want to buy something from Amazon, you’ll need to convert it back into fiat currency before completing the purchase (and even then, some people don’t offer this option).

Because of that lack of acceptance and use in the real world, They are extremely volatile—meaning their value can change rapidly over short periods of time—and they’re not stable enough for widespread use as money in stores or at restaurants or on rideshare services like Uber and Lyft or even Amazon (some merchants do accept payment through bitcoin).

It’s also important to note that because digital currencies aren’t regulated by central banks like traditional currencies are regulated by governments, they are not considered trustworthy investments by many financial professionals who advise consumers about how best to manage their money responsibly within retirement portfolios

That’s because a lot of the things that make fiat currency work — trust, stability and wide acceptance — are lacking in cryptocurrencies

The problem with virtual currencies is not the idea of a decentralized currency, or even their cryptographic nature (which enables them to function without banks). The problem is that they’re not widely accepted by businesses or governments as valid forms of payment.

This lack of use means there’s no real value in holding them at all; you might as well just hold your dollars in your mattress if they’re not getting any traction with merchants or vendors willing to accept them as payment. That makes them inherently risky investments because they don’t actually have any intrinsic value outside of being used for payments or exchanges between parties who want something from each other (like Bitcoin miners mining bitcoins).

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Right now, digital currencies are only good for funding criminal transactions and for speculation by investors

While these currencies are currently incredibly popular and have grown in value substantially, they’re not widely used for any other purpose. In fact, the only reason digital currencies are currently good is to fund criminal transactions and speculation by investors.

If you ask a pro-crypto advocate why you should use bitcoin over traditional currency or credit cards, their response will likely be that it’s cheaper than other payment methods (which isn’t true) or that it allows for faster transfers (also false).

It’s also unclear how it can become more widely used as a medium of exchange if there are no merchants willing or able to accept it as a form of payment. The main benefit seems to be speculation by investors—but if that were true, then we’d see more people buying goods with Bitcoin than just buying Bitcoin itself!

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Cryptocurrencies won’t matter much until there’s more regulatory certainty about them.

Until there are regulations for such currencies, they’ll be a niche investment. And that’s unfortunate—virtual currencies have the potential to change how we think about money and trade.

But it’s also understandable. Digi exchanges are still new and untested, with no government oversight or regulation. They’re not subject to any kind of investor protections like custodial accounts or fiduciary obligations (which means they don’t have to act in your best interest). And that makes them risky investments even though they’ve grown rapidly over the past few years.

It’s not just exchanges: there are no legal restrictions on cryptocurrency mining, which means anyone can buy equipment and start mining coins without having any knowledge of what they’re doing or how much electricity it costs them per month—or even if they’re actually making money at all!

Conclusion

Regulators need to step in and make trading cryptocurrency easier and more secure. Until that happens, all the hype around cryptocurrencies is just that — hype.

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