Will Crypto Crash?

Why Crypto has Value?

by DailyCryptoInfo 247 Views

Will Crypto Crash?

Why Crypto has Value?

by DailyCryptoInfo 247 Views

Its very difficult to identify the the market crash so being visitant is is the key here if you want to hedge your cryptos from crash. Here are some key things I found which you can consider:

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First the market will appear really healthy and stable with pretty much everything gaining well. Then you will start to see some coins jump for no reason (whale signs). Like no updates coming, no news etc. Why would the price go up so suddenly? People get Fomo (fear of missing out) and jump on board.

You will see this on all the popular coins like LTC, ETH (though it can be harder to pump this one) Neo etc. Before the most recent crash you will see it on ALL coins like we did.

Everyone will start to get FOMO and buy in. Because the market is so healthy. As BTC approaches that mark you suspect it will crash on you still start to see media stories about it crashing. You will start to see facebook posts about it crashing to $3000 before going to $7000. Streams and streams of hyped up stories.

Then it crashes. There will always be crashes. Because it causes fear which is what is required for this to work.

In any case, the crypto market's upward momentum that started mid-August 2017 has been brought to a screeching halt. The crypto world is still eagerly awaiting SEC's decision on a few proposed Bitcoin ETFs, which should come in late September, A positive ending to that could finally give the crypto market the kick in the butt that it needs, while a negative one would likely drive the prices even lower.

Reasons that could cause a crash in crypto makrtets

Scalability issues

Energy consumption will hinder the scalability issues of Bitcoin, however the other issue that arises with POW mining is that with the increase in cost associated with mining BTC it is less economical to mine Bitcoin. This would limit the distributed nodes (miners) globally and allow a larger percentage of control to the dominant mining pools / farms.

This would lead to a more centralised blockchain, where they can change the rules of BTC as they please.

The supply of Bitcoin is finite, capped at 21 million. Eventually (currently predicted for 2140) Bitcoin's supply will run out. Once this happens, miners will no longer receive rewards for completing blocks but instead will be given fees. The fees will be drastically high in relative terms, and people will stop using the blockchain.

Also, if miners decide that this is uneconomical for them to process the transactions and use their computing power elsewhere the speed of transactions for Bitcoin will drastically slow down, rendering one of the fundamental values of a Bitcoin (speed) useless.

The unknown future

Bitcoin is not a superior blockchain, there are hundreds of projects that are faster, cheaper and more valuable than Bitcoin. Bitcoin has market dominance because it is one of the first and most topical cryptocurrency (did you know that the price of BTC has a direct correlation to the amount of google searches). Here are a few things that could really end Bitcoin’s dominant era:

Blue chip company coming into the markets

This is more so for all cryptocurrencies, but Bitcoin in particular. It’s not a matter of if but a matter of when a blue-chip company such as Facebook, Amazon or Google decides to implement their own cryptocurrency, they will dominate the market.

The consumer's trust is already with these big companies, and they have the power and capital to influence the entire market.

Another possibility is a potential ‘world coin’ which global governments will all agree on using, this may seem unrealistic but it is definitely not impossible and many benefits would arise from having such a currency.

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Quantum computing

Bitcoin is said to be Quantum resistant, on the whitepaper it mentions that:

‘To compensate for increasing hardware speed and varying interest in running nodes over time, the proof-of-work difficulty is determined by a moving average targeting an average number of blocks per hour. If they're generated too fast, the difficulty increases.’

This may seem quantum resistant but it is important to understand that the difficulty is changed every 10 minutes and this is more than enough time for QC to mine all of Bitcoin’s remaining coins.

The other issued that QC represents is that there is a possibility of QC calculating people’s private keys for their BTC wallet. I do not know the technical details of how this is done, but from what I have read this is possible.

Bitcoin bubble

My last point for this section is that Bitcoin is not being bought as a store of value or a currency by most people, for most people Bitcoin is a speculative investment hoping to make a fortune on something they really don’t know much about.

Once the bubble reaches its peak, and people start panic selling, Bitcoin will inevitably crash with that. After all, Bitcoin’s price is determined by demand vs supply.

In the light of a fair argument, I would like to point out that Bitcoin can change to tackle these issues and substantially increase its long-term survival. Bitcoin has a massive passionate community behind it and this reason why Bitcoin has grown to where it is today.

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