Bitcoin: What does history tell us? | ECONOMY | DW

The rapid growth of Bitcoin is on everyone’s lips. On the one hand, there are those who say that the digital currency may be the gold of the future, on the other hand, they think that it is a completely exaggerated bubble.

Bitcoin broke a new record by reaching $ 58,000 last Sunday, but fell to $ 46,000 on Tuesday morning. The decline, which came after Tesla CEO and Bitcoin fan Elon Musk said “the cryptocurrency may be overvalued,” continued to rise for some time after Tuesday, especially in the hands of skeptics of Bitcoin. The cryptocurrency revived on Wednesday and traded above $ 50,000.

Microsoft co-founder Bill Gates said of Bitcoin, “My point is that if you have less money than Elon, you probably need to be careful.” What date can tell us about this cryptocurrency? To find out if the future is gold, or a large bubble ready to explode, these experts were asked.

Gold cannot replace it

Bernd-Stefan Greve, a history professor at the University of Tübingen in Germany and a gold researcher, says Bitcoin and gold are incomparable. Speaking to DW, Grewe said that gold is accepted all over the world and can be easily converted into local currency wherever it is located.

According to Grewe, it is very important to be able to convert digital money into local currency, reminding us that Bitcoin is not like that. Grewe said, “If things change and I want to convert Bitcoin quickly, who can guarantee that I can convert it to another currency and sell it at the price I want to sell?” He said. he asks. He added that it takes days to cash Bitcoin.

These trading points will undoubtedly play an important role in determining the future success of Bitcoin. Because the majority of Bitcoin-related scams stem from the anonymity of digital currency exchanges. Bitcoin exchange transactions are recorded and secured with a blockchain, but the anonymity of accounts that send and receive Bitcoin may be in the case of criminals. According to the authorities, information can be collected at these operating points.

“The first idea behind Bitcoin was that you can’t track transactions and have an alternative currency that doesn’t depend on the influence of the central bank. It’s a bit of a naive idea,” Grewe says. “For that. And I believe that’s the point where Bitcoin has become a traditional currency,” he said.

Grewe predicts that with the growing interest and acceptance of Bitcoin, the interest of the legal and regulatory authorities will also increase, noting that criminals can exchange money through Bitcoin, “Government agencies will definitely follow. At least I hope.” What awaits Bitcoin in the future? Grewe warns: “If the conversion faith is lost, Bitcoin will collapse. Like any other currency. There could be very high inflation.”

The former bubble rises

So is it fair to call Bitcoin’s rise a “bubble”? According to Will Quinn, a professor of finance at the University of Belfast in Northern Ireland, there is a short answer: No.

“There are a lot of similarities with cryptocurrencies that have exploded in the past. But basically Bitcoin is new and different,” Quinn told DW. “The Royal Bank of France, which first developed the use of money, bought a company to help a French colony in Louisiana, then increased the company’s popularity through an effective marketing method, resulting in the company’s shares growing to require more paper notes.” Looking back, prices are there you will see that it is very high, ”Quinn also warns.

The future of fraud?

Another thing that reminds Bitcoin of Quinn is the Ponzi scheme, a fake method in which investors are paid with money from the next investor.

Quinn said the early Bitcoin system was designed to generously pay for funds raised by subsequent investors. Comparing this to early adopters and aggressive new adopters, Quinn said, “It’s happening on the Internet. People are always trying to convince you to buy Bitcoins.”

“It’s almost an improved version of a Ponzi scheme.” Quinn pointed out that there is no central operator where you can withdraw money. But what does all this tell us? Looking ahead to history, neither Quinn nor Grewe think that everyone will trade Bitcoin in the future.

“Personally, I expected this foam to explode for three years,” Grewe says. The Bitcoin transaction limit for Quinn is, among other things, a major obstacle to its adoption. “It’s a governance structure designed to stay the same,” Grewe said, adding that because Bitcoin is not a responsible person, there is no way to implement these changes.

“It looks like a balloon to me,” Quinn said.

Kristie pladson

© Deutsche Welle Turkish

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