Bitcoin and cryptocurrencies continue to divide people faster than political climates. It seems that for every doubter and misbeliever, there’s someone that stands by crypto as the financial savior the world needs.
Yesterday, we discussed the numerous losses that crypto investors have induced over the past several months. Bitcoin, for example, reached a near $20,000 figure last December, but has been rolling downhill ever since. Other forms of crypto, such as Litecoin and Ethereum have also followed suit, losing hundreds or even thousands from their December peak prices.
Those that chose to invest in cryptocurrency in the new year ultimately experienced financial crises that they’ve yet to recuperate from. Tony Yoo, for example, is a 26-year-old financial analyst living in Los Angeles. At the start of 2018, he invested over $100,000 of his personal savings into various tokens and cryptocurrency ventures, but his investments have since dropped by over 70 percent, and that $100,000 has fallen to about $30,000. A massive blow if there ever was one…
Tony Yoo, invested more than $100k of his savings last fall, his holdings dropped almost 70 percent in value. Image from NYTimes
But unlike others that have fallen victim to the “crypto trap,” Yoo isn’t terribly concerned. While his opinions of the coins themselves vary, he’s extremely confident in blockchain – the technology behind the coins – and is convinced that the benefits blockchain offers will bring our financial infrastructure to newer and greater heights.
“There’s just so much more behind this new wave of technology and innovation that I’m sure will take over our society in due time,” he comments.
Blockchain Is a Powerful Tool
What personally fascinates him is the way blockchain can cut out the middle-man – rendering most banks and traditional institutions null and void – and bring the global population closer to having complete control over its personal banking. No more expensive fees, no more corruption – just you and your money.
In addition, both the bitcoin and cryptocurrency communities are laden with people known as “hodlers,” or rather individuals that refuse to sell their stashes and hold onto their coins regardless of the present circumstances. The crypto market could be lying in a trash can, and yet the thought of selling a single coin would border on sacrilege.
Governments Need to See the Truth
Most hodlers believe that a rally is always possible, and they don’t want to be left in the dust should crypto ever decide to travel north. The reasons for such a rally tend to vary, though a common one is that governments of both developed and third-world nations will soon recognize the abilities and benefits of blockchain and implement it into their present systems. Should this occur, the platforms behind crypto are universally thought to go mainstream.
Dominik Rehse – a blockchain specialist with Germany’s Center for European Economic Research (ZEW) – explains:
“Governments need to be careful not to miss out on this vital innovation, which is really driving large areas of economic activity.”
Are Stable Coins the Answer?
However, he further commented that the addition of more stable coins to the cryptocurrency space could largely help to legitimize it. He says that for cryptocurrencies to become mainstream, people need to trust it more. This involves ridding crypto of its volatility, and the only way to do that is by the introduction of more stable tokens:
“Just like countries with high inflation often struggle due to unstable currencies, the same applies for cryptocurrencies. For them to become a commonly accepted method of payment, they need to be stable.”
Some Think Otherwise
But not everyone agrees. Obi Nwosu – founder and chief executive of crypto exchange collective Coinfloor – says that stable coins, at present, require a central organization for backing and governance, which ultimately goes against the primary principles of cryptocurrencies. He says that the idea of crypto was to put financial power back in the hands of those who use it, and that having a central body in the middle prevents this from occurring.
“We think that although stable coins could be popular in the short run, a decentralized currency that is stable and doesn’t have a central organization behind it will be safer in the long run.”