Bitcoin cannot do without criticism of famous people even a day. This time, the former CEO of Goldman Sachs, Lloyd Blankfein, questioned the prospects for cryptocurrency.
In an interview on CNBC, he stated that the cryptocurrency is unlikely to survive under pressure from many financial regulators. At the same time, we are not talking about the complete collapse of the Satoshi Nakamoto project, but rather about a strong slowdown in the growth rate of the BTC price and the development of the cryptocurrency. Let’s understand the situation in more detail.
Note that Bitcoin is indeed often criticized, but there are exceptions. For example, yesterday we learned the point of view of the head of SkyBridge Capital and the former director of communications for the White House, Anthony Scaramucci. He stated that investing in the first cryptocurrency is as safe as buying gold or bonds.
We checked the actual data: this morning BTC is trading at $ 31,819, which is 1.5 percent higher than a day ago. The volume of cryptocurrency trading over the past 24 hours has exceeded the level of $ 75 billion.
What will happen to Bitcoin?
Here is one of Blankfein’s quotes from an interview in which he shared his own point of view on what is happening. The cue is from Decrypt.
Bitcoin development could work. But in reality, in the end, the currency should do only a few things. It is supposed to be a medium of exchange and store of value. Bitcoin is a store of value that can change in value by 10 percent per day. But if you lose the private key code, that is, a universal combination for accessing the contents of a cryptocurrency address – an editor’s note or a piece of paper with a secret combination, your coins will be lost forever. If someone takes it away from you, how will you know? So this element of a store of capital is a little tricky.
In this case, the expert notes the main disadvantage of the cryptocurrency. In his opinion, this is serious volatility, that is, exposure to sharp changes in value. As Blankfein hints at, a store of value shouldn’t jump in value every day – both up and down.
For the sake of fairness, we note that this happens with classic investment instruments. The most striking example in the past few days is the stock of the Texas-based company GameStop. Just five days ago, they cost $ 37, and now their rate reaches $ 148. At the same time, a sharp increase was accompanied by falls, which means that Bitcoin is not the only asset with such behavior.
Here is a transcript of a conversation with an expert. We recommend that you read it if you understand English by ear.
«If I were a regulator I would be kind of hyperventilating at the success of it at the moment, and I’d be arming myself to deal with it,» says @LloydBlankfein on #bitcoin
– Squawk Box (@SquawkCNBC) January 25, 2021
The market to some extent confirms the words of the banker. Earlier this month, Bitcoin lost about one-fifth of its value overnight. These are truly volatile investments – at least for a short time, however, any asset cannot show long-term growth without falling.
Therefore, we believe that abrupt changes in the value of the first cryptocurrency should be treated with understanding. They happen due to the openness of the Bitcoin market, which means that in some case, sharp crashes create the opportunity for sharp ups, as advanced investors are interested in assets at lower prices.
Recall that in March last year, due to the stock market collapse caused by the coronavirus pandemic, BTC fell from about $ 8,000 to $ 4,000. However, all these short-term leaps are unimportant if we consider the profitability of the cryptocurrency on a larger scale – just last year, its price increased more than five times from March values.
On the medium of exchange issue, Blankfein suggested that Bitcoin’s apparent anonymity poses a problem for regulators seeking to curb money laundering and illegal activity. The expert continues.
You don’t know if you are paying the North Koreans or the terrorists or the Revolutionary Guards.
This is partly true – Bitcoin can indeed be used to fund criminal activities, but the system itself is not anonymous. Since every transaction is publicly recorded on the blockchain, cash remains a much better option for criminals who want to maintain their anonymity. In addition, as we already know, tracking transactions on the Bitcoin network is quite simple.
In the end, Blankfein said that too strict regulatory rules would kill in Bitcoin everything that crypto enthusiasts «pray» for: independence, anonymity – albeit imaginary, as well as freedom of movement of value.
We believe that further cryptocurrency adoption could indeed be delayed by increased scrutiny from governments and regulators. However, Bitcoin is not a one-day phenomenon, but a bright innovation that will not go anywhere. In addition to investing in cryptocurrency, a huge number of global companies have joined and have invested hundreds of millions of dollars in BTC. And if this does not save Bitcoin from the possible impact of regulators, then at least it will seriously improve the reputation of the cryptocurrency in the eyes of people unfamiliar with the industry.
