In the aftermath of crypto winter regulators are busy cleaning up after crypto excesses and outright fraud. Bitcoin took a big hit and has now recovered to more than half of its 2021 peak. Nevertheless, there are now predictions that private digital tokens are on their way out.
https://youtu.be/78smq3UVjLo
2. In the aftermath of crypto winter regulators are
busy cleaning up after crypto excesses and
outright fraud. Bitcoin took a big hit and has
now recovered to more than half of its 2021
peak. Nevertheless, there are now predictions
that private digital tokens are on their way
out.
3.
4. This comes from a central bank official in
Singapore. He says that private crypto tokens
have failed the fundamental tests of financial
services. Meanwhile, he says that stablecoins
backed by hard currencies and government
digital currencies will become important in
the larger financial system.
6. Long ago barter was the only way that goods
and services were exchanged. Around five
thousand years ago coins made from valuable
metals like gold and silver were first used. It
was not until around 1500 BC that minted
money had dates on it. Coins became a
common means of exchange because they
were portable, durable, and had inherent
value. Besides that, kings and other leaders
could control how many coins were minted
(the money supply).
7. This beat other forms of wealth like cattle as
coins were easier to store, transport, and
protect. An essential aspect of this “new
invention” was that the currency maintained
its value over time unlike cows that wandered
off, got sick, or were stolen. Thus one of the
tests of a currency is that it has a reliable
value.
9. Anyone who thought that putting their life
savings into Bitcoin on November 21, 2021
was sorely disappointed when the digital
token fell to lower and lower price plateaus
throughout 2022. Anyone who put their life
savings into Bitcoin on December 30, 2022 is
currently very happy. The problem is that
Bitcoin works better for speculation than it
appears to work for long term saving. Many
people invest in the stock market.
10. They put their money into exchange traded funds
that track the S&P 500. They are under no illusion
that their shares in the ETF are a currency. Rather
they are a relatively stable and generally
profitable form of investing. Although traders
buy and sell volatile stocks they do not leave
their money in these assets. They attempt to time
the market and then get out. They hold their
assets between trades as cash or cash
equivalents such as US treasuries or bank CDs.
For long term appreciation, they buy shares of
Apple or Microsoft.
13. Stablecoins backed by the US dollar, yen, or
euro are excellent ways to hold assets while
doing business in decentralized finance.
Although the underlying dollar, yen, or euro
may vary in value over time the amount of
volatility is nowhere near that of Bitcoin or
other private crypto tokens. This is why folks
like the Singapore central bank official say
that properly managed and backed
stablecoins will survive as part of the financial
system.
14. They fulfill the role of a currency in the
financial world. Likewise, digital currencies
issued by governments and backed by their
currencies will play the same role. A problem
with governmental digital currencies is that
they might hurt banks and even pose a threat
to the whole banking system. Nevertheless, if
this form of currency comes into general use
it will work the same as a national currency
and not be a speculative asset.
16. As regulators ramp up pressure on the crypto
world we are seeing some being treated like
stocks or other securities. Others are being
treated like commodities like gold, oil, or coffee.
Any and all of these may provide profitable
investment opportunities. It does not mean that
they are currencies. Who ends up regulating a
given digital token will tell us where it falls in the
scheme of things. Currently it would appear that
only dollar backed stablecoins will emerge as
true currencies.
17. For more insights and useful information about
investments and investing, visit
www.ProfitableInvestingTips.com.
