It’s a rich man’s game now.
Bitcoin is no longer the safe-haven digital gold it once was. Volatility has returned, media ban on crypto has been completed and blockchain is mostly being implemented by global corporations who can afford to break through the noise, like Facebook’s Libra.
The Problem with Bitcoin — Most are Too Poor to Own It
However when the next global recession occurs, I think once again cryptocurrencies such as bitcoin are becoming more and more appealing to investors as safe-haven assets as trade tensions, slowing global growth, manufacturing woes and a worsening economy for China, Germany, the U.K. and Japan catches up with the rest of us.
Bitcoin isn’t the poster-child for digital money it once was. It’s a young man’s game and a rich man’s game and nothing much else. That’s not exactly the criteria to inspire the world.
The Problem with Bitcoin — Manufactured Hype and Market Manipulation
CNBC also likes to bully Bitcoin, sometimes artificially manipulating it’s price, a bit like Trump. Recently Tom Lee, co-founder, managing director and head of research at Fundstrat Global Advisors — said Bitcoin is nearly ready to reach all-time new highs.
These are the kind of headlines we’ve been suffering from since 2008. But in an age of economic uncertainty and recessions that can be profound in their impact, crypto is still thought of as an alternative to the monetary system and capitalism that favors fewer and fewer people at the top of the food chain. The problem is, those are the same “whales” who own most of Bitcoin.
When the ultra-rich owns the most Bitcoin, that’s not decentralized digital money at work. That’s yet another pyramid scam.
The Problem with Bitcoin — Volatility & Greed-Factor
“Volatility” implies sharp and unpredictable changes, and usually has negative connotations. But when that volatility is due to manufactured headlines by Trump or CNBC, or whales purchasing or selling large quantities of Bitcoin, that’s not a market you can trust. Bitcoin isn’t tethered to things you can trust.
Bitcoin reached an all-time high of $20,089 in late 2017. What are the conditions that it could occur again? And who would it benefit, if not the rich who hoarded it like an investment scheme, a digital gold with “fear-ladden” volatility.
In this new world of wealth inequality, Bitcoin doesn’t stand for hope, it stands for greed. That’s a problem for the future of all cryptocurrencies.
Owning Bitcoin in the 2020s is like joining a crypto mafia gang where you think the fear and greed-based asset will continue to scale in value simply due to sentiment, scarcity and a declining global economy where real-world currencies might suffer.
That’s a problem. It would feel almost dirty in those conditions to own such an asset or investment.
Its desirability is also confusing. Investors hate it unless it makes them money. Traders love it unless it means too high a risk premium. Others envy it because its implied volatility could be profitable sometime down the line. That’s not a use case of blockchain that’s changing the world in a positive manner.
The Problem with Bitcoin — It’s Misunderstood and Controversial
The mainstream media (MSM) narrative on Bitcoin goes like this: Bitcoin and cryptocurrency adoption has failed to live up to expectations over recent years and fears around scams, fraud, and theft have not helped. This is a narrative built for GenX and Baby Boomers who are entirely suspicious of new things they don’t understand.
However, this is the same population that still controls the world and has the majority of its wealth, on Wall Street, in Silicon Valley or in Washington.
Bitcoin enthusiasts are like the ultimate echo-bubble of cyber junkies cyberpunk culture reinvigorated by the somewhat “alternative” version that Bitcoin and other cryptos will change the world and somehow overthrow wealth inequality.
Yet we find the same fundamental wealth inequality in Bitcoin’s ownership and in the various crypto alt-coin schemes and pyramids. So where do we go from here?
According to Lee, in the 10 years since bitcoin’s launch, the best years for the S&P have coincided with best years for bitcoin. This means with the S&P strong, Bitcoin should show strength in the second half of 2019.
“Bitcoin may be ambidextrous [in] that it works well in a risk-on world, but as you start to get nervous, then you treat it like digital gold.”
Bitcoin is today worth $10,287.40. Not bad for a digital gold with a lot of problems. It was a market that looked like it was on the precipice, it looked like it could fall, but it never did. Still, it has issues because wealth inequality is continuing to corrupt capitalism as we know it. The same inequality is mirror in crypto as more investors get into it.
Owning Bitcoin is like owning “dark money”. When tycoons buy it up you know it’s becoming fundamentally polluted. The world’s largest-ever bitcoin transaction has taken place, with just over $1 billion (£802 million) worth of cryptocurrency transferred between accounts.
Powerful men love to gamble with Bitcoin, because it’s fun to invest in digital money. But let’s not say that crypto is making the world a better place. Let’s not assume if money corrupts, crypto doesn’t too. It’s probably even worse. Bitcoin has problems that’s making me less of a believer each year.