Are Bitcoins the new Beanie Babies, or is there hope in 2019? – Digital Trends


Are you following Bitcoin? You know, the cryptocurrency that went from being worth less than a penny in 2010 to peaking at nearly $20,000 in late 2017, then spent 2018 in a freefall crash? So, what happened? Is it dead? Can it survive the next year?

Bitcoin’s explosion in value throughout 2017 launched more than 1,600 new cryptocurrencies — and they seemed like unstoppable money-making machines … until Bitcoin lost 83 percent of its value in 2018. And so have nearly all of it’s spinoffs. Bitcoin Cash and Bitcoin Gold are each down 98 percent, Etherium and Litecoin are both down 93 percent, and others, like BitConnect, have lost 100 percent of their value in the last year and shut down entirely. So is this the end of cryptocurrency? Was it just a fad? Are currencies like Bitcoin just digital Beanie Babies, or is there hope in the new year?

Well, let’s talk about what actually caused the crypto market to crash. In a nutshell, a lot of the excitement that led to the massive bubble focused on cryptocurrency being unregulated and untraceable by authorities.

Well, it turned out that when put to the test, a lot of those claims turned out to be too good to be true. As governments and financial institutions took a closer look, they discovered that a decentralized currency creates a huge number of regulatory problems – most importantly in terms of preventing tax evasion and crypto being used for illegal transactions. So they cracked down – India for example announced that it would prohibit banks from doing business with cryptocurrency exchanges, and most first-world countries have stated that crypto is NOT legal tender, including the United States, the United Kingdom, and the European Union as a whole.

Another major problem was the total lack of security surrounding investments and banking. A few massive exchanges have shut down, most notably Mt Gox – which lost 850,000 Bitcoins, which at their peak were worth $1.7 trillion dollars, and filed for liquidation, with little recourse left for those who had trusted the exchange to keep their money safe. Although some of the currency was recovered, the event, and others like it, proved that unlike traditional banks and currencies, using cryptocurrency was a massive risk without further regulation. These issues, coupled with the massive uptick in energy necessary to mine bitcoin, brought it’s dramatic rise to a dramatic halt.

So where does that leave us in 2019? Have these challenges proven that cryptocurrency is dead? Actually, not at all. Although the original excitement has hit a dead end, crypto HAS seen success in an unexpected way.

Around the world, a number of countries have started experimenting with their own cryptocurrency – subject to to their own regulations and protections. Sweden, for example, is gearing up to launch a digital currency to complement its national currency that will eventually branch off and exist as it’s own cryptocurrency once stable. In short, the country has fully embraced the idea of a regulated cashless future.

Other countries, most notably Venezuela, which recently saw a total economic collapse, have turned to cryptocurrency as a way out of financial messes. The “petro” is ostensibly backed by five billion barrels of oil and will be tied directly to the cost of oil rather than the existing weak economy.

Related video: Inside a Bitcoin mine, fans, silicon, and frigid temperatures keep crypto pumping.

In fact, a number of countries that are struggling economically because of sanctions — including Iran, North Korea, Syria, and even Russia — have been looking at decentralized cryptocurrency as a way to bypass economic sanctions. So while the lack of regulation has been killing crypto, in a very backwards — and technically illegal — way, it may end up boosting their the currencies’ once again.

It’s often said that the private sector innovates, and the government appropriates and regulates — and that’s exactly what’s happening to cryptocurrency. But maybe that’s actually a good thing in the long run. Especially for anyone who wants to jump on the crypto bandwagon.

Because the biggest problem with Bitcoin and cryptocurrencies is that they’re not actually based on a tangible good. It may be called “digital gold,” but unlike gold, there’s no actual value for bitcoin beyond a bunch of ones and zeroes that consume as much electricity as the entire country of Ireland. And while you may be thinking that ones and zeros aren’t much better than a piece of paper, those other paper currencies are backed by actual countries — in other words, people and labor, and resources.

So while freestanding cryptocurrency has taken a beating, country-backed cryptocurrency may just see a resurgence in 2019 — and if you’re not totally sick of crypto after the last year, it may be a good idea to shift your focus. You might just make a little money after all.



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