Home Cryptocurrency News Bitcoin plunge: Question of trust lingers for cryptocurrency

Bitcoin plunge: Question of trust lingers for cryptocurrency

by admin
Bitcoin plunge: Question of trust lingers for cryptocurrency


It’s been a red-ink spring for American investors. Stock markets stumbled as inflation, shortages, and war sapped economic optimism. In the world of digital money known as cryptocurrency, the losses were far worse.

Bitcoin has lost more than half its value from November highs. Some digital currencies, designed to be worth $1 at all times, collapsed. 

Why We Wrote This

At root, money or currency is built around trust. Will it be worth its promised value? Cryptocurrency may seem to have failed that test, yet people are turning to it for reasons that go beyond stable value relative to traditional dollars.

Why would anyone trust such shaky money?

For some in cryptocurrency, the volatility has been part of the appeal – when prices are going up rather than down. But one key reason is also that the technology behind it promises a revolution in finance.

Wait a minute, you may protest. I already can move money digitally for free and almost instantly with services like Venmo and Zelle. But that is a bit of an illusion – involving an advance on money that still takes traditional financial institutions hours or even days to transfer. 

The new technology behind cryptocurrency, called blockchain, is a radical departure. This software allows money to be decentralized. Anyone can launch new digital coins without government permission. And in theory, users don’t need to trust any of the players in the system, only the technology and the assets that back it.

Waltham, Mass.

It has been a red-ink spring for American investors. Rattled by real-world inflation, shortages, and war, stock markets in the United States and around the world have stumbled. In the world of digital money known as cryptocurrency, the losses are far, far worse.

Bitcoin, the world’s biggest cryptocurrency, has lost more than half its value from November highs. Another digital currency called TerraUSD, designed to be worth $1 at all times, collapsed along with its sister token, Luna. Another so-called stablecoin, DEI, has lost its $1 peg and is now trading around 51 cents. 

Yet, despite all this turmoil, acceptance of cryptocurrency keeps spreading. In May, a law firm based in Dubai, United Arab Emirates, began accepting payment in bitcoin and a few other digital currencies. An Italian restaurant in Wales claimed it was that country’s first restaurant to do the same. Here in Waltham, Massachusetts, Bentley University announced it’s now ready to take tuition payments in cryptocurrency.

Why We Wrote This

At root, money or currency is built around trust. Will it be worth its promised value? Cryptocurrency may seem to have failed that test, yet people are turning to it for reasons that go beyond stable value relative to traditional dollars.

Why would anyone trust such shaky money?

For high rollers interested in investing in cryptocurrency, as opposed to using it as a currency, the volatility has been part of the appeal – at least when prices are going up. But one key reason is also that the software technology behind most cryptocurrencies promises a revolution in finance – through efficient and secure transactions independent of the traditional banking system.

Source link

Related Articles

Leave a Comment

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More