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Cryptocurrency Needs To Die: Why Some People Hates Blockchain

Do you want to know why some people hate blockchain and why they say cryptocurrency needs to die?

After years of unrelenting excitement around Bitcoin and other cryptocurrencies such as Ethereum, Solana, Dogecoin, LUNA, and others, we are now witnessing their full implosion.

The euphoria was fueled mostly by skyrocketing values of all major cryptocurrencies. In 20 months, Bitcoin rose from around USD 4,000 to USD 64,000, a sixteenfold increase.

Other cryptocurrencies had even greater price gains within the same time frame, with Ethereum increasing 50 times, Solana increasing 500 times, and LUNA increasing 1,000 times.

These cryptocurrencies are now collapsing. Bitcoin has plunged by 55%, Ethereum by more than 60%, Solana by 85%, and LUNA has dropped to zero.

So, how can one make sense of these intricate and enigmatic entities, whose combined values have risen to billions of dollars and are being heralded as the future of currency in the digital age?

Are they just high-risk Ponzi schemes? Or do they have a genuine function in a world where digital transactions are becoming more common?

Let’s start with the rationale for having cryptocurrency. In principle, they are meant to enable electronic payments without the use of a middleman, i.e. peer-to-peer currency transactions.

The issue with electronically transferring money between two parties is determining the balances after the transaction. To begin, the party transferring the money must have the necessary amount.

After the transaction is completed, the money should be taken from the sending party’s balance and added to the receiving party’s balance.

We have had functional digital currency for decades, and it works fairly well, handling hundreds of thousands of transactions each second. That role is served by debit and credit cards, wire transfers, UPI, and digital wallets. However, all of these rely on central intermediaries, in most instances banks, to determine and change balances.

So, what’s the issue with such middlemen? Following the 2008 financial crisis, the Western banking system crumbled. Western central banks used quantitative easing to print vast amounts of money to resuscitate and sustain the banking industry and the economy as a whole.

As a result, many people lost faith in the big banks, and there was concern that the money creation might devalue the major nations’ fiat currencies.

The cryptocurrency was intended to address these issues by facilitating digital transactions without the need of intermediate institutions, therefore eliminating the necessity for banks, at least in the imaginations of its proponents.

The problem of currency depreciation was “solved” by restricting the number of cryptocurrencies (Bitcoin is restricted to 21 million coins eternally) and abolishing the function of central banks in money production.

So, how do these currencies come into being? It was proposed that these currencies be minted entirely algorithmically via a process known as “digital mining.” As is evident, this aim is extremely difficult from a political sense.

The state’s function and authority over its currency and money supply are being sought to be abolished and replaced with private companies. Furthermore, “digital mining” needs sophisticated computers and massive amounts of electricity to power them.

As a result, those with more powerful computers and the capacity to acquire virtually extremely huge amounts of electricity would have a monopoly on money production, thereby replacing the State.

The motivating impetus for cryptocurrencies is this libertarian dream, with many of its major proponents adhering to libertarianism. Libertarianism is an extreme right-wing political doctrine in the United States that rejects the function of the state save in preserving law and order and defending private property.

Let us return to the subject of how Bitcoin and other cryptocurrencies work without central middlemen. They deal with the issue of confirming and maintaining balances by making them public yet anonymous.

So, in the crypto realm, you are no longer “you.” There is no KYC in this system, unlike with typical banking systems. Instead, you are represented as a pseudonym by a series of extremely lengthy random numbers created by machines.

To preserve anonymity, the numbers are generated at random. And a ledger of everyone’s balances is made public, but only under these pseudonyms. The term “blockchain” refers to this public ledger.

When two parties conduct a transaction, the blockchain is checked and updated to execute the required credit and debit balances. But, because the blockchain is public and there are no central middlemen, how can it verify that no transactions are forged? Or simply put funds into their accounts?

This is when the concept of “mining” comes into play. Cryptographic issues are used to validate the transactions (basically complex mathematical problems using computers).

The nature of these problems necessitates a significant amount of computational time and resources to address. However, once solved, anybody may check the solution.

Miners are incentivized to do so by compensating them with crypto coins for successfully solving the cryptographic verification issue, so producing or “mining” new coins.

As a result, massive amounts of processing power, electricity, and time must be invested to authenticate transactions and generate new currencies. The Bitcoin network alone is estimated to consume as much electricity as a mid-sized country.

And, in comparison to credit card networks, which handle tens of thousands of transactions every second, they can only process four to seven transactions per second.

So, in these times of global warming, we have allegedly developed a future system that wastes a tonne of power and is orders of magnitude slower than systems that have existed for decades.

Another difficulty is that because there are no trusted intermediates, bitcoin transactions that are committed by error, fraud, or theft via cyber assaults cannot be reversed. There are no authorities or ombudspersons to whom you may complain!

Because of these issues, bitcoins cannot be utilized to conduct online transactions. Furthermore, as we have seen, their prices vary drastically, rendering them ineffective as either a store of value or a means of trade.

They don’t even protect against inflation. As we have witnessed throughout past periods of strong inflation, cryptocurrencies have declined precipitously in nominal terms, let alone in real terms.

One of the primaries claimed reasons for its creation was to protect against inflation induced by central banks’ enormous money printing.

Many testimonies exist of vulnerable people from high-inflation nations, such as Argentina, Nigeria, and Pakistan, who put their life savings in stablecoins (cryptocurrencies marketed as being tied to the dollar) to hedge against inflation, only to lose everything.

So, what can cryptocurrencies achieve? Because of the anonymity provided by the usage of pseudonyms, they may be used for criminal purposes such as demanding ransom following hacking assaults (ransomware attacks), as well as money laundering and tax avoidance.

Ponzi schemes are another type of thing that is commonly utilized. These scams, like other Ponzi schemes, are financial frauds that provide huge returns to beginning investors while stealing cash from new participants.

They will surely fail when they run out of fresh, naive investors, and hence of new funding. Because governments and central banks throughout the world have been slow to address these “currency,” they have stayed beyond the scope of financial, banking, and securities legislation that protect individuals from Ponzi and other such predatory schemes.

This has created enormous potential for various types of financial institutions, including hedge funds and venture capitalists, to pour billions of dollars into this arena to harvest extraordinary gains through financial speculation and Ponzi schemes.

One such plan resulted in the Terra Foundation’s cryptocurrencies-LUNA and TerraUSD-going bankrupt last month, wiping out more than USD 50 billion.

Despite this, these scams are not only permitted to continue, but are actively promoted by celebrities such as Kim Kardashian and actor Matt Damon, as well as tech billionaires such as Elon Musk, and Twitter founder Jack Dorsey, and other online influencers.

These influencers are either paid large sums to advertise these cryptocurrencies or are granted early access and cash out when the cryptocurrencies become popular and skyrocket in value.

Cryptocurrencies are like financial system malignancies. They serve a little function, use vast quantities of resources such as energy and processing power, and have facilitated a wide range of unlawful operations.

They’ve built a multi-trillion-dollar sector that allows big financial companies like hedge funds to engage in predatory behavior, sucking people’s life savings into Ponzi schemes. Governments throughout the world must become aware of and address these threats.

China has taken the lead in this respect, outlawing all cryptocurrency mining and transactions. After discussing banning them, the Indian government appears to have changed its mind and is now aiming to regulate and tax them as legitimate financial products. This cancer should not be controlled, but rather eradicated.

While it has banned cryptocurrencies, China has also established e-Yuan or the Digital Yuan, a “Central Bank Digital Currency,” to fulfill the legitimate demands of its booming digital transaction area. Central Bank Digital Currencies (CBDC) are not the same as cryptocurrencies.

CBDCs, unlike cryptocurrencies, is heavily backed by the government, with the central bank acting as an intermediary, and can expand to thousands of transactions per second without the requirement for massively inefficient digital mining. Cryptocurrencies, on the other hand, must perish!