Our View on Crypto Currency
Within the last few months the crypto currency markets have been the talk of the town, everyone is speaking about it and also trading it. Some understand the world of crypto/blockchain and how it works, but most don’t. For this specific reason, I have decided to construct an article explaining the pros and cons of the revolutionary crypto currency, and the Golden Seeds FX general view on this current speculative market. Due to Bitcoin’s substantial 108,107% increase reaching highs of $19687 it has been the main crypto currency that everyone seems to somewhat be interested and eager to be involved in. This is not the only crypto currency that is available for exchange, in fact there is actually currently 1,381 crypto currencies. However, there are currently 6 main crypto currencies with the highest market cap and volume and they are..
And many more..
Let’s firstly focus on Bitcoin. This is a crypto currency that was predominately used for exchange on the dark web for illegal trade online from approximately 2009, when a whole Bitcoin was just $0.07.
The founder of Bitcoin is Satoshi Nakamoto. No-one actually knows who he/she is as they have not disclosed themselves to the public. Considering the name of the individual it could be a Chinese resident with attempts to destroy the US Dollar, they could be an ex Government entity who is totally against the current monetary system and pushes for a shift, I mean they could even be your next-door neighbour! Regardless of the non-disclosure of Satoshi, their intentions are quite clear in my point of view. I am assuming that Satoshi is attempting to alter our payment system, and ultimately shift power out of the Government’s possession and create a Global Free Market via crypto currency, and Satoshi is doing an incredible job at this so far considering the growth, recognition and most crucially the value of one Bitcoin as of right now. The underlined question is though, will this create a deflationary collapse towards the US Dollar, and ultimately shift the power out of the Government and the Central Banks possession? We’ll get into that later in this article. The crypto currency world is built from something called a Blockchain – this is essentially where ‘Bitcoin Mining’ takes place. Any miner that solves the complex equations that is produced by the blockchain correctly enters into the blockchain and the unsolved equations are discarded. Bitcoin is also built on something called the ‘Byzantine General’s Problem’. This is a equation that bitcoin has claimed to solve.
The pros within the crypto currency world is that it is a decentralised system, meaning it currently cannot be controlled by governments and central banks the same way each nation’s currency can easily be manipulated and printed into existence which I expanded on in our previous article. This is a very positive factor. The more merchants begin to accept it as a method of payment, the more there is a demand for it – and off course whenever there is a demand for anything it usually sends the price up (which we have evidently witnessed within the past 18 months on Bitcoin). BTC is a convenient method of transferring value without any ‘middle men’ in the way. It is currently well securitised as there are two different keys that you receive when you own bitcoins, a public key and a private key. If we compare it to the normal credit card of today, the public key is similar to the front of the card which contains the information for people sending you money. The private key is somewhat similar to the back of the credit card where your signature lies, and security code. With this being said, keeping your public key open to the public for incoming payment, and your private key very closely and hidden is the best way to go about ensuring your coin’s safety and security. It is virtually impossible for someone to commit fraud by stealing your bitcoin’s if they do not have your private key or log in information. Bitcoin is a currency and also a simple payment system, this is how this it gets its value.
The cons with bitcoin is that there are only a limited amount available, there can never been more than 21 million bitcoin’s in circulation, and there is currently 16 million in circulation. So this is a negative in terms of bitcoin not being able to completely take over our monetary system alone. There are various bitcoin exchanges available for the public, a commonly known one is called ‘Coinbase’ A disturbing downfall about exchanging bitcoin is the insane fees that is charged for each transaction. There was even someone who filed a complaint in regards to the fees being greater than the actual value of Bitcoin that one attempted to send. That isn’t great at all. If bitcoin is used as a global payment system it would consume a huge amount of energy considering the mining for bitcoin (PC’s being left on for hours), which actually creates it in the first place (solving complex equations). Energy prices are expected to rise in the future also, so this is definitely another downfall of bitcoin in the future.
There are various crypto ATM machines now all over the world, and 77 currently in London, England. This does create more trust for this specific method of exchange, as the general public are naturally use to conventional ATM machines. However the fees for withdrawing your own crypto to fiat currency via ATM ranges from 7.4% – 5.4% which is quite high. The common retail brokers in the UK offer bitcoin trading on their platforms now (spread betting, CFD’s). Due to the high level of volatility bitcoin has, they have limited the average and uneducated retail investors chances of exploiting the volatility of this instrument financially. On a average day, Bitcoin ranges approximately 1,000 points in terms of volatility, and sometimes even more! With the above being said, there is actually a technical chart for bitcoin priced in US Dollars that can now be analysed technically, with key supply and demand levels and other price action indications. However, even though certain retail brokers receive this specific underlying instrument from 6 different exchanges, they still manage to have a widened spread at 100+ points and unprecedented leverage offerings at a max of 1:10 – whilst other asset classes go as high as 1:500. Bitcoin is doing quite well in comparison to the other crypto currencies in terms of valuation – but it may not be the one that succeeds. It is currently a speculative experiment at this point.
Now taking into consideration these pros and cons – I personally do not feel as though ‘Bitcoin’ on its own will take over our monetary payment system, however there are other crypto currencies that has a bigger chance such as…
This is another crypto currency which is currently priced at $3 for one whole coin. Ripple and Bitcoin are both crypto currencies, however they obtain many differences.
It takes up to 60 minutes to transfer bitcoin’s from one party to another. When you exchange Ripple, it takes up to 3 seconds for someone else to receive it. Pretty amazing. Ripple is something more centralised as well, the Banks are in favour of it due to its incredible cheaper fee rate to make an exchange saving the banks $3.67, amongst many other reasons. Santander retail bank, Raise Bank and ATB Financial and many others are currently using Ripple as of now. Once more corporations acknowledge the benefits of Ripple exchange, and the fact that it is much more cost effective as oppose to bitcoin’s insane exchange fees, we should expect a huge demand for this crypto currency, amongst a few other crypto’s: which should send the price higher.
Will Crypto Currencies Take Over Our Monetary System?
This is by far the most talked of topic in the world of finance. There are quite a few factors to take into consideration.
The crypto currency market is still indeed a speculative market as of now, however it is by force creating a revolutionary system whether the governments and central banks like it or not. They cannot do anything about it, as long as there is even one Blockchain; bitcoin can still be virtually re-created millions and billion times over within minutes regardless of how many blockchain’s they attempt to ‘destroy’. This evidently means that the blockhain is more powerful than all the governments combined, and there is something that is also more powerful and useful than the actual blockhain also. There is only roughly 1,000 people who actually know how to code bitcoins. If bitcoin and the rest of the crypto currencies does shift our monetary payment system, these people will ultimately become like congress, we would have to go to them for changes instead of the current world leaders. Due to the clear fact that Bitcoin is a free market, there is no government or central bank that control it or inflate it – this creates FREEDOM to the public. The ones that are attempting to, and pushing for it to be shut down will be the government’s and central banks as it shifts power out of their hands. This fact alone should motivate you to encourage it, and study further into crypto currency because we could be witnessing a huge shift in our monetary payment system, freedom to the public and ultimately put the government and central banks out of business. I think it’s pretty evident that the blockchain is here to stay as it cannot be destroyed, so once this monetary shift occurs the general public will be forced to use a crypto exchange that is faster to make a payment, and also cheaper.