Opinion Start of Summer Promises Chaotic Cryptocurrency Markets

Start of Summer Promises Chaotic Cryptocurrency Markets

June 27, 2020

Historically speaking, the middle of the summer in the western hemisphere is for some reason the ideal time for experts in the traditional economy to provide their claims about the bitcoin network. The same by proxy applies to other digital currencies and the entire field of crypto as well. This year is exhibiting the same trend, but being that this is 2020, it is ramped up to completely new and brazen heights.

Of course, the COVID-19 coronavirus pandemic and the lockdown it produced are the main reason for the overall economic confusion and havoc. Now, experts are certain that this will continue to translate itself into the crypto market as well, even though this trend is already highly disputed in the wake of the April bitcoin rebound. Somewhat expectedly, this includes projections ranging from those that predict a general status quo in terms of regular volatility, to those that see either the downwards or the upwards spiral taking the price to extreme values.

These usually come to the conclusion of BTC either hitting zero USD or something close or revising the records of 2017 and going much further. Here is a breakdown of current theories and a potential middle ground among all of them, along with the caveat that 2020 so far produced very few correct long-term analysis of anything, but especially cryptocurrency markets.

Guns make Money

One of the more interesting and weirder perspective on the future of cryptocurrencies comes as a courtesy of Jim Rogers. He is an investor and also the head of Beeland Interests. He is also the co-founder of Soros Fund Management and Quantum Fund, with a personal net worth of about 300 billion USD. Rogers thinks that bitcoin and other cryptocurrencies would sooner or later end up being worth nothing. Even though he does not see this coming about at some particular point, apart from the vague future, he sees a very defined scenario why this happens.

That level of clarity is not very common in the crypto analyst domain, even when coming from naysayers. According to Rogers, the ultimate undoing of cryptocurrencies would come because they do not have the proper military backing. Unlike any government in the world, Rodgers belies that the problem is that crypto does not have guns. In his view, the ultimate backer of fiat currencies are governments and their ultimate backers are armies and other agencies of force. Bitcoin, no matter how popular it might be or might become, cannot aspire to get to the position where it has the same kind of leverage.

Rogers thinks that even if bitcoin managed to reach the status of actually becoming real money, unlike, as he put it – a speculative tool that is used for only gambling – the governments would have to act. In his scenario, that would mean taking action to whip it out and make it completely illegal. Digital tokens might become the ultimate survivalist of that scenario, but not in this form. Instead, they would have to be basically nationalized, put under government control and the entire network would be turned into a centralized setup.

Crypto Nationalization

While it sounds like a page from a dystopian sci-fi novel, the analysis offered by Rogers opens an interesting possibility, at least a hypothetical one. Yes, the governments of the world have force as the ultimate enforcer of a designed ruleset. This force can be applied both domestically, in the case of police, or externally, in the case of a nation’s military. It is also true that the bitcoin community neither has not wants to have armed forces. Yet, is a potential nationalization process possible? No, it is not, barring from the eventuality that the entire world wholeheartedly stands behind – and for the first time – rooting out of cryptocurrencies. Even in that case, as long as some nodes survive, so will the entire bitcoin digital transaction ledger and the network with it.

That ensures that the bitcoin network in its current form continues to exist – also, ensures that its current form cannot be changed or modified. In other words, there is no way any force, no matter how big, can take the bitcoin network and make it its own. For a lack of a simple term, there is nothing to take. In the analogy of warfare, no conventional army can overtake a decentralized guerilla force. As long as a single cell exists, the same force is there and active. Only in this case, the force is not based in mountains and forests, but the entirety of the internet. This makes the process of crypto nationalization not just far-fetched, but literally impossible to achieve with the present level of technological advancement.

Fed Predictions

While billionaire investors are envisioning drastic possibilities, New York Fed analysts see something completely different for the immediate future of bitcoin. One such report opened up the possibility that bitcoin, in fact, might as well be money. The text also took into consideration what many traditional experts fail to do – the idea that any kind of financial system is based on trust and belief.

Now, like many other digital ventures, including social media, streaming services and esports, which are popular on a planetary level, bitcoin is also a crossbreed between a traditional system of truest and a novel, contemporary one. It also blends radically new concepts with some old alternative notions on the way monetary exchange can function in the real world. Fed does not see bitcoin changing drastically in the upcoming months and even years, but it also does not foresee it going anywhere either.

No Changes

In many ways, the report by the Fed is right on the money – while some might create scenarios where governments try and nationalize cryptocurrencies, these actually push on in the real world. The summer with all of its turbulence will provide a similar scenario.

No one knows what can be expected from the global financial situation, the COVID-19 coronavirus pandemic or anything of these massive events, but cryptocurrencies and bitcoin will continue to function. This is true not only just because they have a strong and solid foundation, but because they offer something that people need, from the US and the EU, to the Middle East, Asia, and the rest of the world.