Crypto Crash: The Future of Digital Currency PlatoBlockchain Data Intelligence. Vertical Search. Ai.

Crypto Crash: The Future of Digital Currency

Stephen Pelzel
Crypto Crash: The Future of Digital Currency PlatoBlockchain Data Intelligence. Vertical Search. Ai.

Bitcoin, along with the entire cyrpto market, recently went through one of the largest crypto crashes since their inception. Bitcoin alone went from an all time high of $64k per coin, to a low of $30k; over 50% value lost. At the time of writing this, Bitcoin has recovered to $34k per coin, but the damage done is still prevalent. So why did this crash happen, and what does this imply about the reliability of decentralized cryptocurrencies into the future?

The crash can mainly be attributed to two highly influential sources in the cryptocurrency world: China and Elon Musk. Lets start with China.

China, running an authoritarian style government, strictly regulates the flow of money through their economy. Bitcoin uses Blockchain to maintain a decentralized system, which is the antithesis of China’s economic model. Unregulated money moving between citizens with no monetary footprint is an issue when you run a Communist state. On May 19th, the CCP issued a warning to Chinese businesses to not to accept cryptocurrency as real money, and that the Chinese government does not recognize Bitcoin as a legitimate currency. This is specifically a problem because China currently mines about 70% of ALL Bitcoin on Earth. So when 70% of all Bitcoin holders fear a Government crackdown on crypto, it is going to cause a mass panic sell.

The second main reason for the crash is Elon Musk’s interesting relationship with Bitcoin. Elon has a history of boosting and dipping Bitcoin through the actions of his company Tesla. At one point Tesla purchased $1.5 billion worth of Bitcoin, as well as claiming to accept Bitcoins for Tesla purchases, which skyrocketed the price as investors saw a potential market opening for crypto coin use. He has since revoked those promises, as well as sold the $1.5 billion Bitcoin his company bought, which scared investors into selling. More recently, Elon appeared on the show ‘’ and made several remarks about cryptocurrency that did not sit well with investors, leading to a major selloff of crypto as faith in the coin was diminished.

The system of Blockchain that crypto relies on has not diminished in its efficiency despite the crypto crash. The issue is not cryptocurrency itself, but rather the power structures they are competing with. An unregulated currency is unable to be taxed and monetized by central institutions, which means every government will forever be against adopting Bitcoin as a standard for transactions to avoid tax scammers and lost money.

Stablecoins such as Tether, USDCoin, and TrueUSD are gaining govt. support

Banking institutions, the centralized systems blockchain hopes to dethrone, has been working on their own digital currency based on “stablecoin;” cryptocurrency that is monetarily tied to the dollar. Governments like the United States and China have already developed these digital currencies and are planning to implement them into the economy. Their hope is to dethrone decentralized coins like Bitcoin in order to further regulate and tax their market economies.

Bitcoin will continue to exist in the United States and China, for now, but based on what we are seeing in today’s political and economic climate it is hard to see Bitcoin becoming the standard currency for digital transactions simply because the government will not allow it to happen; there is too much money at stake. China is the first roadblock decentralized crypto must overcome if it is going to succeed in a world dominated by central monetary systems, and only time will tell if Bitcoin can recover from this major market blow.

Source: https://medium.com/upskilling/crypto-crash-the-future-of-digital-currency-b2754893c982?source=rss——-8—————–cryptocurrency

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