The Wild World of Crypto
Cryptocurrency has become a bit of a trend in the last few years — with more and more promotions through celebrity endorsements, conventions, and Super Bowl ads. With cryptocurrency skyrocketing to fame through the media, is it actually skyrocketing in value?
The results are mixed. With more fame seems to come more scandals — Kim Kardashian will be paying over $1 million dollars to the SEC over her crypto endorsements. Two CEOs, Jesse Powell of Kraken and Alex Machinsky of Celsius, have both stepped down due to a fall in cryptocurrency value. The crypto world cannot seem to stay away from scandals, as hacking is also a major concern for crypto banks. Some can lose billions overnight through hacks overnight.
So what’s the appeal? People who do believe in crypto are often believers in the hope of decentralized finance, or DeFi. There are some major benefits to this; as the middlemen, we usually see in banks or stocks, disappear with DeFi. People with the decentralized currency can trade directly to each other as software regulates the transaction. So yes, there’s an aspect of convenience that adds to cryptocurrency, but not without consequences.
When we look at what is probably the most well-known crypto currency, Bitcoin, things seem to be trending downwards. And quickly, more the less. Multiple Nobel Prize winners in Economics have labeled Bitcoin an economic bubble, and with a massive crash of Bitcoin this May, it’s hard to dispute them. Bitcoin isn’t alone in their collapse. Companies literally labeled “stablecoins” because their prices are not supposed to fluctuate, have completely shattered in value (like Terra UST). And yet, people are still buying Bitcoin. Whether it is the name recognition or the celebrity plugs, Bitcoin rose in sales during the month of September, even though it’s 50% less in value than what it was last November. The fluctuating values of every other currency is definitely aiding Bitcoin’s appeal — the British pound hit a record low this September, while the US dollar value is surging.
Bitcoin’s most puzzling appearance, however, is in the Central African Republic. The country’s president announced that Bitcoin will be accepted as a national currency along with the Central African Franc. There are dozens of problems with this, especially with CAR’s struggling economy, but the number one issue? 10% of CAR residents have access to the internet, a requirement for using Bitcoin. The introduction of Bitcoin has done nothing to improve the economy. If anything, it seems to be taking advantage of their economic status.
This is a dramatic example, but still one that shows such a central flaw with
cryptocurrency. Its flashy ads and Elon Musk’s endorsement do not actually translate into a stable, trustworthy investment. The more crypto grows, the more it seems like an empty promise. The problems of cryptocurrency seem to keep growing — it’s shifting with inflation (despite claims it would be resistant), it still faces governance issues due to its ability to be hacked, and is also posing an environmental issue — some cryptocurrencies have transaction processes that take the same amount of energy it would take to power an American home for two days. The “trend” of cryptocurrency and the culture surrounding it has allowed it to establish a name for itself, but not legitimacy.
Sources:
Kim Kardashian to Pay $1.26 Million to Settle S.E.C. Charges Over Crypto Promotion
Kraken CEO Jesse Powell Is Stepping Down
Celsius CEO resigns in the middle of bankruptcy proceedings
'Only good for drug dealers': More Nobel prize winners snub bitcoin
Bitcoin investors are panicking as a controversial crypto experiment unravels
The British pound has hit a record low. How will it impact your holiday?
Why the Central African Republic adopted Bitcoin
Op-ed: The toughest challenges for cryptocurrency lie ahead, not in the rear-view mirror