Cryptocurrencies are a real hype right now. Everyone jumps on board, hoping to make some money. I tested it out, too, to understand it a bit more. But it doesn’t feel right — so I sold my few coins and quit.
Here are my doubts and reasons for feeling uncomfortable with those currencies.
Unpredictable and Speculative
Few coins have a real usage and if, it is very limited. The price for these currencies is so speculative and changes so fast that no one can predict if the price at the end of a transaction has the same value as in the beginning. Even Steam, which accepted Bitcoin as a payment option early on, no longer accepts it due to high fees. Real usage is not possible under these circumstances.
The rise of these currencies feels like a pyramid scheme. Someone creates one of these currencies, defines how new coins are created (or creates them all at once) and of course has a lot of these coins, as they are early on board. They convince people to invest in their currency and as people do so, the value rises. As more and more people invest they get more revenue.
It is unbelievable that the creator of the currency Ripple was listed as the fifth richest person on the Forbes list because of the high price for the currency. What else than a pyramid scam is that?
There is no regulation
At some point the early investors want to get real money from their investment — that’s when the prices will drop. Even in Bitcoin, the biggest of those currencies, about 1.000 people hold 40% of the coins. They have a massive influence on an unregulated currency.
There is the possibility that scammers invade these currencies and profit of the good will of some of the people using the currencies. This happened to Dogecoin already.
The mining and the verification of a lot of these currencies needs to be calculated. The algorithms get more complex over time and use more and more computer power. The energy needed for those calculations already surpassed that of some countries. And that’s just for Bitcoin!
It’s like an evil maniac, wanting to destroy the world, convinced the population that generating heat to increase climate change by using massive energy resources is a good idea.
Exchanges are like banks — but trading is not guaranteed
Trading with cryptocurrencies can happen peer to peer in theory but takes place on big traders which act like banks. The original idea was to create a system by not having banks in there. Now these exchanges behave like banks and you have to trust them. You have to trust that they are secure. You have to trust that you can trade when you want to.
The trading demand can be very high in some situations, e.g. when the value of a currency is dropping. But trading is not guaranteed then. Coinbase, on of the biggest exchagens, frequently halts the trading due to technical reasons. As a developer myself I can understand the reasoning. But it may also be to prevent the value from dropping further — I don’t know those people and their motivations.
Read more on Bitcoin is none of the things it was supposed to be.
I try to live a sustainable life, choosing my bank for social and ecologic reasons, buying fair trade and organic things if possible. I avoid the traditional financial industry, especially the stock markets, for reasons. Those cryptocurrencies seem just like the financial industry — but without any regulation.
It’s no fit for me.