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One attribute that is always known as cryptocurrencies is that they are disruptive. As they continue to disrupt the common order within the financial sector, they have proved divisive. Today there are legions of supporters and opponents alike. ir motivation is the value or lack of what they perceive in them. For their supporters, they are the panacea that the financial sector longed for. However, their opponents see them as a scandal that shouldn’t have happened.
It shows that cryptocurrencies have held their own despite the criticism and objections they face. Some even think that, ironically, the sentence turned out to be good for them. Instead of slowing down their progress, he ended up promoting them.
So what are these criticisms that cryptocurrencies have ended up promoting? Today, let’s take a look at three common objections against cryptocurrencies and how they have spurred them on.
y facilitate illicit activity
Charlie Munger does not soften his dislike for cryptocurrencies and Bitcoin (BTC) in particular. For example, in an interview with CNBC, he described BTC as “worthless artificial gold used to fund illegal activities.” He adds that it is confusing and that despite being a smart science, respectable people should discourage others from using it. Clearly, he’s not beating around the bush in expressing his contempt for the crypto prime minister.
As he says, Munger is not the only respectable person who claims that cryptocurrencies help illegal businesses. Jim Rickards, Bill Gates and even former British Prime Minister Teresa May are also believed to be holding their own. Janet Yellen called them a lot.
Cryptos do not favor crime.
Cryptocurrencies use code to mask individual identities. Privacy coins like Zash and Monero further add anonymity by adopting zero-knowledge protocols, protecting user information from other parties to a transaction.
question is: does this narrative hold up? simple answer is no. Research on the subject absolves cryptocurrencies of this charge. For example, a Chain Analysis Report shows that in 2019 only 2.1% (about $ 21.4 billion) of total crypto transactions supported criminal activity. 2020 saw a sharp decline in numbers to 0.34% ($ 10 billion in transaction volume).
Traditional finance allows more crime
In 2020, Rand Corporation conducted a study that showed that 99% of crypto transactions used centralized exchanges. se exchanges are strictly adhered to AML / CFT requirements of the jurisdictions in which they operate. In addition to the mandatory KYC controls they perform when opening an account. It concludes that private currencies do not allow crime as much.
Other studies indicate that traditional financial systems favor crime. UN, for example, estimates that money laundering and illegal activities account for between 2% and 5% ($ 1.6-4 trillion) of global GDP per year. In comparison, the income from illicit activities in cryptocurrencies is significantly lower. A 2020 SWIFT report says so.
I’m a bubble waiting to burst
Jim Rickards has chosen a few words to describe cryptocurrencies. He called them reprehensible and singled out BTC for a managerless Ponzi. For him, they are nothing more than a fraud.
Warren Buffett and Peter Schiff have a similar view of them. Both have compared cryptocurrencies to a bubble whose bottom is eager to fall. Once again they have been called the gold of fools. When asked to explain how cryptocurrencies have appreciated over time, they used the big fool theory.
Cryptocurrencies do not generate value.
For them, cryptocurrencies are a speculative scheme. y argue that the initial investors are the ones who benefited and that the new entrants are bigger fools who buy into the myth that… Hodling will enrich them.
ir argument is that BTC and other cryptocurrencies do not generate any value. Rickards went so far as to attribute its meteoric rise to the users who paint the tape. refore, for them and their peers, the drivers of cryptocurrency demand are speculation and FOMO rather than good investment thinking.
Fluctuations are normal for an emerging market
re is no denying that some crypto enthusiasts thrive on their volatility for speculative purposes. With that said, some cryptocurrencies are challenging suggestions that they are just fads that will pass over time. BTC, for example, has been around for twelve years. It has experienced booms and busts and has regained relative stability at both ends.
Analysts say the periodic ups and downs that cryptocurrencies go through are expected in any evolving market. And cryptocurrencies are still young. n, over time, the market will correct itself, reaching stability. However, one thing is for sure. negative comments haven’t dampened cryptocurrency lovers’ enthusiasm for them.
y lack intrinsic value
For skeptics, cryptocurrencies, unlike fiat, lack intrinsic value. Bill Haris went on to say that they have no archival value. Instead, they suggest that fiat has value because there is government trust behind what we accept as legal tender.
One thing they are right about is that cryptocurrencies do not have an underlying asset to back them up. However, stablecoins are an exception. It has no gold or other resources that guarantee the value of BTC or any other cryptocurrency, for that matter.
Crypto infrastructure adds value
So where do digital assets come from? One is the infrastructure that supports cryptographic transactions. Think of the Blockchain technology this is the backbone of all crypto projects. n there is the mining infrastructure without which cryptocurrency exchanges will stop.
supporting infrastructure requires a lot to install. So, assuming this, it could be argued that there is some underlying ‘asset’ behind every cryptocurrency. In addition, there is the entire payment system that accelerates crypto transactions.
Second, cryptocurrency lovers believe that their growing demand constitutes value. y insist that cryptocurrency users find something of value in them, so they keep asking for it. If there was nothing of value to them, they wouldn’t have cared.
Although they are not a store of value, their greater adoption by companies would say otherwise. Several industry luminaries share Square’s Jack Dorsey’s stance that cryptocurrencies like BTC help protect against inflation and currency devaluation.
Final thoughts
re are many things that we are still learning about cryptocurrencies. However, one thing about which there is no doubt is that they are divided. Proponents face strong objections from crypto skeptics who view them as a scandalous, even fictitious creation. His opponents have openly shown what they believe to be his shortcomings and urged the public to avoid them.
However, things did not turn out that way. Despite its constant negative campaigns against cryptocurrencies, the latter has continued to thrive. refore, it is not unreasonable to imagine that some of the critics ended up promoting cryptocurrencies. Let’s wait and see how this duel will turn out in the long term.
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Adam is an outgoing boy who likes adventures and discovering new things. Despite her boring life, she loves writing about cryptocurrencies and exploring what blockchain technology can do for the next digital world where all adventures will be virtual.
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