You are viewing a single comment's thread from:
RE: Research Suggests Tether Inflated Bitcoin's Price
As long as there is no physical asset backing crypto currencies,they will resemble the stock market in many ways.
if you consider it from an investor angle, a token is the stock of a blockchain company. their performance must be tied into the value of the stock. right now there is no correlation. you have millions of small investors and a few large speculators. the price is being controlled as there is no reason for it to go up or down.
It's value is in the performance of the chain in some cases where there is a use case or service. BItcoin service and other crypto is is the service of another asset, money, that people value by what their willing to pay for it. There is nothing backing it like labor of a national currency indeed, That's why I have had issues with crypto in the past.
you are right that there is a service that is being provided today. it is a mutually agreed service. the problem is not in the service itself, it is in the perceived value of the service. e.g. we agree that the service of bitcoin is money (spending and receiving). but that agreement is incredibly transient w.r.t. the value of the service. that does not seem correct.
if collective agreement drives value and there is no evaluatable basis for the "agreement" then we have speculation. frequent annoucements that bitcoin's value will be 100K or some such number does not help at all. in fact it serves to stereotype all crypto currencies as having grossly inaccurate valuations.
come to think of it, there is another danger looming with the main contention of bitcoin being non inflationary, its value is like digital gold and hence it will climb to some unimaginable value. so whats wrong with this statement, after all gold is gold, right?
the problem is that bitcoin is caught between Scylla and Charybdis. if it becomes too expensive, it has lost its purpose. if it becomes too inexpensive and achieves mainstream usability, it will lose its fans and hence the perceived value.
the answer is probably the evolution of universal worldwide crypto currency as the only monetary system but then we will be back to inflation and internecine controls!
Once the banks control crypto, then the world repeats itself. so it is healther for us to keep bitcoin at affordable levels to cut speculation and increase its usage so that a parallel economic system develops to full maturity and where governments are also stakeholders rather than controllers.