Despite the turbulent days that were experienced during the year 2020 by the pandemic that made the planet “hit the brakes” and contracted the economy of almost all countries, a series of events that have occurred this new year, makes cryptocurrencies looks incredibly good for everyone in general. Not only because of Joe’s Biden arrival to the White House (it is known as crypto enthusiast), but also because of other clues that I have been able to observe through my daily research, of present and past events, to know or ‘predict’ a little future event. I would like my readers to take my lines as hypotheses and deep personal thoughts, that although it is true, I may be wrong in many of them, they represent hours of research that I will cite, each one, with its respective source.
Why is the price of Bitcoin - and cryptocurrencies in general - rising? What are the reasons that motivate it?
Although it is true that many people around the world have lost complete confidence in the pre-established international monetary system (FIAT), it is not possible to deny the fact that the massive adoption of cryptocurrencies –especially in countries with emerging economies– has had a considerable impact on the price that today seems not to have a ceiling above $ 30k USD, and that a few months ago it was between 5-10k.
Professionals, entrepreneurs and enthusiasts receive salaries and payments around the world through cryptocurrencies, being this procedure beneficial for all parties: both for the issuer of the payment (by allowing them to bypass unnecessary controls and taxes), but also for the recipient of the payment because the money (or the value of it) does not depreciate as the days go by, giving them the opportunity that conventional money has taken away from many: save to achieve financial freedom, or simply to fulfill their dreams and projects.
In recent months, we have seen great entrepreneurs such as Elon Musk, Bill Gates, among others –as well as celebrities such as Paris Hilton, Snoop Dogg, Gwyneth Patrol– and sports stars such as Lionel Messi and Mike Tyson, have invested part of their fortunes in cryptocurrency projects (more than all Bitcoin and others with a certain 'usability' such as Fan Token promoted by Messi), contributing to the development of trust in such projects and in turn, inciting new investors eager to fill their wallets with prosperity, that which today does not seem to grant conventional money.
What are the other signs that have made you think that cryptocurrencies will be worth a lot of money - and are they here to stay?
Previously –also now–, some governments of the world –mostly from countries with great wealth– exchanged or kept part of their reserves in fiat money for gold, silver and other precious metals in order to counteract the rampant –and inevitable– inflation of fiat currencies. Some countries maintain high public spending (government-sponsored jobs) to obtain political favors and other perks, forcing them to indiscriminately print banknotes to cover internal debts, causing an inflationary spiral that could last for years. The economy can always go as bad as it is allowed. There is no tipping point when it comes to inflation and contraction of GDPs.
Today many governments, such as Venezuela, are motivating people to adopt cryptocurrencies due to the excessive inflation described above and in order to counteract the sanctions imposed by the European Community and the United States that end up affecting everyone, without distinction. This, in turn, has forced the people to look for ways to get cryptocurrencies online, whether through remote jobs, mining, the popular 'shitposting' on Discord, making memes, among dozens of other trades. It could be said that the local currency (Sovereign Bolívar) has almost disappeared physically. Bills are scarce (banks only give the daily equivalent of $ 1 USD) and this has migrated the economy by 90%.
Paraguay is another South American nation that projected cryptocurrencies adoption on a large scale. This is influenced by many reasons: the use of clean electricity and its low costs have motivated the construction of the largest mining farm in South America: Golden Goose farm, in alliance with BitFury, where thousands of miners have been installed. in 18,000m2 provisionally, having as main goal to cover a mining area of 200,000m2 (25 times bigger than a soccer stadium), consolidating itself as the largest mining center in the world.
Why is it better - in this century - to save in Bitcoin than in gold or other precious metals?
Bitcoin is a cryptocurrency with an excessively low circulation (21m of which remain around 2.7m to be mined in a period of five or six years), this means that, when it is finished mining, it could become such an asset. valuable like any other metal or gemstone, by unit, and even by Satoshi. Bitcoin is the pioneer –although there are other and better projects in relation to scalability and usability– and that gives it greater value, not to mention the energy expenditure and environmental impact that come together when mining a complete Bitcoin (100,000,000 Satoshi). Bitcoin is considered ‘digital gold’ for precisely that reason.
Today it is recommended that all people avoid saving their money in fiat currency, but, on the contrary, if they have to allow themselves to save, go to a trusted Exchange and exchange their money for Bitcoin or other cryptocurrencies with high capital (to minimize risks of sudden settlements) or in projects with daily use, avoiding high gas fees.
Personally, I see a very bright future this year in reference to cryptocurrencies and it fills me with happiness to be able to share this ‘economic miracle’.
Lawyer, IT, writer, and everything else that I am, and I am not. @paraguanads on Twitter.