A couple of months ago, we wrote about the phenomenon of crypto collectibles. Purchased with cybercurrency. As we enter June 2021, the volatility of cybercurrency is high. What is next for cybercurrency becomes more uncertain. In this post, we consider what is next for cybercurrency.
Where Cybercurrency Stands Today
Before we turn to what’s next, we review one brand — Bitcoin. What an interesting recent ride for investors.
Recently, we proclaimed 2021 to be “the year of the cryptocurrency.” It was just four weeks ago (ages in crypto terms). And a whole raft of major currencies were flying high. They been set on a dramatic upward course around the start of the year. Now though, this bubble — and it was a bubble in a lot of cases — appears to have burst. Caused by a number of significant setbacks for specific currencies as well as the whole concept itself such as the tightening of restrictions in China.
The biggest of them all has been no exception to this most recent downfall. And as CoinDesk data show, the latest drop is not the first. However, it is probably the most dramatic in the cryptocurrency’s storied history. Having surged to an all-time high of over $60 thousand in April, Bitcoin plunged to around the $35 thousand mark as of the end of May.
Forecasting the Future: What Is Next for Cybercurrency
Today, financial wizards cannot accurately forecast the value of cybercurrency over a four-week period. Thus, how will they fare with longer forecasts? Our view — not very well.
On Monday May 24, the price of bitcoin found some footing after a turbulent weekend, rising to almost $37,000. Still a painful 37% drop from the start of the month. For now, investors are engaged in the rational but onerous task of figuring out whether virtual currencies are immensely valuable because they can threaten governments’ fiat money, or just worthless digital tokens.
Lately, their price seemed to fluctuate at the whim ofa single man: prominent crypto cheerleader and Tesla Chief Executive Elon Musk. During May, he said his company will no longer accept bitcoin as payment for electric cars. Allegedly, because of the emissions generated by computers verifying transactions and “mining” tokens. One estimate puts bitcoin’s massive carbon footprint on a par with Portugal’s.
There is probably another reason. While Tesla pledged not to sell its stash of bitcoins, getting paid in a noncash volatile asset poses accounting problems for any company.
The value of modern money doesn’t come from artificially imposed scarcity. But rather the power of the issuer. Of which governments have plenty. Crypto does currently provide loopholes for illegal transactions, financial engineering, and the circumvention of capital controls. Yet, none of this is socially productive. As China hinted this past week, officials will squash these innovations if they get too big.