The cryptocurrency market is a one-of-a-kind financial wonderland where timing is everything and nothing is guaranteed. When you think you’ve got a firm grip on the market, a billionaire tweets a meme, forcing you to choose between margins.
Unfortunately, the road ahead isn’t going to be easy. On paper, decentralized digital currencies such as Bitcoin and Ethereum appear to make perfect sense.
If the US government decides to condemn me and declare my citizenship void, I still have a dollar’s worth of Bitcoin. I would, however, lose every dollar of fiat currency I had in US markets, banks, 401Ks, and other investments.
In a genuinely decentralized financial system, no single government or other cryptocurrency-holder should be able to revoke your holdings. However, technology is frequently the only thing preventing government agents from taking cryptocurrency. What happens if that situation shifts?
Today, we’re guaranteed that our crypto assets would be protected by physical cryptography against intrusion, theft, and withholding. The government shouldn’t be able to access our bitcoin holdings in the same way that it can’t technically read our WhatsApp communications since they’re encrypted.
And, because Bitcoin and other large cryptocurrencies are based on decentralized (but well-managed) blockchain networks, there’s no risk of a government gaining a technological advantage to take assets. If China or the United States, for example, develops a quantum computer, The Bitcoin platform is large enough to solicit community support for technology to counter these assaults, as it is capable of cracking binary cryptography.
However, Bitcoin and Ethereum account for 99.9% of the market. There’s no distinction between a pure scam and a legal cryptocurrency without encryption to safeguard what’s in your digital wallet. Because of his prominence and popularity among cryptocurrency enthusiasts, Elon Musk, for example, can currently alter entire cryptomarkets with a single tweet.
In today’s market, however, there is some equilibrium. Hundreds of equally-legitimate cryptocurrencies are seeking to push their way into the next whale’s heart and social media feed for every DogeCoin riding the wave of Elon Musk’s emotions.
That may come across as sarcastically, but if you’re one of the countless people who have transformed your spare change into Lambo cash with nothing more than a couple hundred dollars, a cryptocurrency trading software, and a Reddit account, you probably don’t mind. The point is that the current crypto market creates the illusion of choice to the point where, if all you care about is short-term financial gain, any investors, whether guppies or whales, may make a lot of money.
However, the eventual introduction of quantum computers into government institutions could completely transform the game. Cryptocurrency holdings already account for more than 90% of the total funds confiscated by the IRS in 2020, and the agency anticipates that number to rise in the fiscal years 2021-2022.
