The cryptocurrency craze is on! Social media websites have been swarmed by advertisers hoping to entice people to jump on the Bitcoin wagon or tempting them to invest in any of the ICOs (initial coin offerings) popping up almost on a weekly basis for various competing cryptocurrencies. It’s almost hysterical.
The Bitcoin has grown by more than 1400% in about a year. That’s a staggering development no matter who you ask. Many analysts warn that the bubble will soon burst^, but they’ve been saying this^ for months and the Bitcoin is still growing.
There are a lot of Bitcoin pessimists out there, including people that worked with blockchain technology for a long time. It’s interesting to read what this senior Bitcoin software engineer^ was saying back in January. I wonder if he still has the same opinion now when the currency has climbed this much.
I would love nothing better than to see the current financial system shaken to the core and forced to evolve. Competition is great. We’ve been abused long enough by banks using centuries-old practices and mentalities, working like packs of ruthless sharks instead of collaborators in the world we build for our children.
Increasing in value the way it does, the Bitcoin’s upcoming crash seems more inevitable with every psychological threshold it passes. And given the network’s already known weaknesses (such as long transaction confirmation times) not if but when this correction occurs, it risks bringing a lot of people to tears. Or, as an analyst put it: “it’s going to be pandemonium”.
As it crashes, the Bitcoin will drag along with it the rest of the cryptocurrency market whose growth, to be honest, is even more ridiculous than that of the Bitcoin. Just look at this insane list of one hundred different cryptocurrencies, most of which are not even more than a year or two out in the “market”:
The Bitcoin may survive any number of crashes and even the dents in reputation that come with such an erratic evolution. What the Bitcoin will not survive, however, is a heavy-handed regulatory crackdown that may happen if the rich & powerful 1% see it as a threat to the financial status-quo. China is already taking steps towards regulation^ and the fact that countries such as North Korea rely on Bitcoin to sponsor shady deals might bring cryptocurrencies in general under serious scrutiny. The enemies of an independent financial system are waiting for their moment to destroy this initiative.
But then again, there’s other, more devious ways to tarnish the reputation of cryptocurrencies for years to come. For example, a disastrous cryptocurrency crash that will send investors scurrying back to their comfort zones of old. Oh, how banks would love that! I wouldn’t be surprised to see banks one day investing and the next day dumping their Bitcoins faster than most people can escape the collapsing hell. It’s the little guys that usually get squashed during a market crash.
On an entirely different note, what about the environmental impact of cryptocurrency mining? Yes, there is such a thing. In a previous version of this article, I was wondering if this is a worthy question. Just weeks later, this excellent article^ showed up. BitCoin is the worst offender when it comes to wasted energy. During late 2017, mining BitCoin amounted to the output generated by anywhere from 1 to 3 nuclear reactors. All this for a currency that is backed by little more than public sentiment.
How much will cryptocurrency mining waste in the coming years? There are better things to do with our energy supplies than investing in digital currency. I want and believe in an alternative to the current financial system, but the costs at which it comes might be too great. Fortunately, alternatives to BitCoin are less wasteful, but investing too much of our resources in this digital coin rush seems reckless and even disrespectful towards our ecosystem.
Update 2017-12-14: A bit over two weeks after publishing this article, the BitCoin fever is still in full swing, with the currency having gained another massive ~20% on top of its already huge price point – all within a single week. Here’s what Reuters had to say about it:
The risks are higher than ever. If I’d own BitCoin, I’d sell at least 75% right now.