A lot of people idealize cryptocurrencies by assigning them overly high status. HODLers sell houses and borrow cash to purchase Bitcoin with hopes of becoming 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 will likely continue expanding, pushing the blockchain technology to evolve, high hopes and expectations have to be weighted out accordingly. Below is the list of the three reasons why a cryptocurrency is nothing more than a digital asset.
Cryptocurrency Fact 1: Institutions Trade Crypto
Have you wondered why the Bitcoin price is growing? Institutions are trading cryptocurrencies. The process is depicted in the same fashion as it appears in the stock and commodity markets. Large players in the field determine the outcome. There is very little influence that comes 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 that it’s a “banks vs. crypto” game, wake up. Distributed ledgers are now actively used by financial institutions. JPMorgan and Goldman Sachs have their coins that are used for “liquidity on demand” purposes.
Cryptocurrency Fact 3: Governments Control Crypto
In the beginning, cryptocurrencies attracted early adopters by offering a level of independence. Many folks viewed digital currencies as a unique way of having control over their own money. Nowaday’s reality is far away from the original concept offered by Satoshi.
First and foremost, cryptocurrencies are illiquid. You can’t buy groceries with crypto. Digital coins are store-of-value and not digital cash. One still has to exchange cryptocurrencies for fiat money to be able to purchase a product or a service. Additionally, all the service providers that exchange digital coins for cash are controlled by the government. In the U.S., IRS knows precisely how much money you are making with crypto.