As people around the world raise awareness of the cryptocurrency revolution, investment experts are lining up to express their views. In recent weeks, pro-crypto forecasters have predicted figures challenging gravity. You can often see a forecast indicator on TV explaining why they think bitcoin will reach between $250,000 and $500,000 per coin over the next two years. At $500,000, the coin is expected to grow by more than 6,000% from its current level. The numbers are staggering.
On the other side of the fence we find opponents. There are many respected financial analysts who are not afraid to warn people about the investment bubble. Some even admit that cryptocurrencies still have some leeway, but sooner or later the bubble will burst and people will suffer. To get their point across, all they have to do is think about the stock market bubble in 2001.
Technical hurdles
The cryptocurrency revolution is still in its infancy. Thus, most coins, including Bitcoin, are traded without historical indicators to help investors. It is a free market in its purest form. Unfortunately, free-market trading is subject to influence from all sides. That’s where the problem of investors in cryptocurrency. Without a history to rely on, investors should make decisions based on their feelings.
The obstacles that complicate the decision-making process for bitcoin investors are numerous. Currency is always sensitive to the technical aspects of trading. Exponential price growth is associated with high demand and product shortages. However, when the price rises too strongly, too fast, investors are a little concerned. Next, we see a typical correction that occurs when the investment is overbought. The problem is that these adjustments are proving to be tough, testing the courage of investors who are not accustomed to such a high level of volatility.
In addition to technical analysis, technological challenges are also driving the market. There is no denying that the cryptocurrency market had problems. Once blockchain technology has been recognized as the safest way to disseminate information, gaps appear almost daily.
As far as the system is safe, hackers are sure to quickly discover its weaknesses. The cryptocurrency industry has already come under attack by hackers who stole billions of dollars in bitcoins and other cryptocurrencies. Losing money by hackers often makes investors nervous. It also creates a slew of lawsuits against those affected by the technology, which may not yet have been protected as promised.
Key obstacles
There is an old saying: when teachers and janitors at school start making millions on investments, prices will fall because we need teachers and janitors. In truth, governments get nervous when their residents start to lose money or make a lot of money without paying taxes. It is no coincidence that India and South Korea are among the most active countries in cryptocurrency trading, but both governments are considering banning all cryptocurrency trading. The United States, arguably the largest bitcoin player in the world, is working in Congress to decide how to regulate the cryptocurrency market. They have already banned several exchanges due to possible fraudulent activity. China is discussing a blanket ban, while Europe seems ready to follow America’s lead.
If bitcoin or any other cryptocurrency aspires to become an international currency for daily payments, its success will be based on participation in the parade of the world’s largest economies. Unfortunately, the main players (mentioned above) seem to be going the other way.
The main concern is Bitcoin’s penchant for criminalism. Evidence has been provided that North Korea stole bitcoin to help fund its nuclear program. ISIS regularly transfers money between its affiliates through bitcoins, and does so discreetly until it’s too late. Drug trafficking also benefits from the anonymity provided by blockchain technology. More and more initial coin offerings (ICOs) are nothing more than a common scam. These are all serious problems.
All these are fundamental problems that need to be solved positively, so that cryptocurrencies will one day survive and prosper.
Look for solutions
For the most part, people are interested in all aspects of cryptocurrency. Bitcoin has already demonstrated the ability to easily solve payment problems between buyers and suppliers. However, trust is a big problem in the future. If the function of anonymity is the engine of the cryptocurrency revolution, it will be difficult to convince governments and approve the cryptocurrency trade.
Let’s see how South Korea solved the problem of bitcoins. The South Korean government recently passed a law giving six Korean banks the right to allow their customers to exchange bitcoins from their bank accounts. There is only one condition: the account must be opened in the client’s real name. Poof! There is a function of anonymity. However, South Koreans can still trade bitcoins through a bitcoin wallet if tax evasion is not the reason they want to. This is a good compromise, but its appeal may be limited.
Investors are expected to answer many questions in the coming months. Until then, the prices of bitcoins and other cryptocurrencies will remain volatile. The price will rise due to demand, but will decline every time the new release becomes news. As long as prices don’t stabilize, people should focus on one direction of investment. Never invest money that you can afford to lose again. Bitcoin is really coming to its crossroads.
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