Many people idealize cryptocurrencies by assigning them too high a status. HODLers sell houses and borrow cash to buy Bitcoin in hopes of getting rich by 2022. While the idea behind Bitcoin, Ethereum, IOTA, XTZ and many other coins and tokens is excellent, and the world of digital currencies is likely to continue to expand, blockchain technology to evolve, high hopes and expectations must be weighed accordingly. Below is the list of the three reasons why a cryptocurrency is nothing more than a digital asset.
Cryptocurrency Fact 1: Institutions Trading Cryptocurrencies
Have you wondered why Bitcoin price is rising? Institutions trade cryptocurrencies. The process is represented in the same way as in the stock and commodities markets. Great players in the field determine the outcome. There is very little influence from average Joes, crypto enthusiasts. Wall Street rules the game.
Cryptocurrency Fact 2: Banks Use Crypto
If you got stuck in 2017, and you still believe it’s a “bank vs. crypto” game, wake up. Distributed ledgers are now actively used by financial institutions. JPMorgan and Goldman Sachs have their coins used for “liquidity on demand”.
Cryptocurrency Fact 3: Governments Control Crypto
In the beginning, cryptocurrencies attracted early adopters by providing a level of independence. Many people viewed digital currencies as a unique way to have control over their own money. Today’s reality is far from Satoshi’s original concept.
First and foremost, cryptocurrencies are illiquid. You cannot do your shopping with crypto. Digital coins are stores of value and not digital money. One still has to exchange cryptocurrencies for fiat money in order to buy a product or service. In addition, all service providers that exchange digital coins for cash are controlled by the government. In the US, the IRS knows exactly how much money you make with crypto.
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