Mirror Mirror On The Wall
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Following this short snippet will be a revisitation of what
bitcoin is in particular and what we can expect from it despite the doomsaying
and panic that has been taking the internet by storm.
Here is the snippet below:
Alarm Bells Are Ringing
–
Taken From Forbes: ‘January Crypto Market’
“Bitcoin and
other major cryptocurrencies finished off a disastrous 2022 on a quiet note in
December, a month marked by low volatility and little price movement in the
crypto market.
Markets continue to follow the drama surrounding the collapse of
crypto exchange FTX, including the December arrest and extradition of FTX
founder Sam Bankman-Fried. Meanwhile, FTX’s downfall has triggered renewed
calls for heightened regulation of the crypto space.
Looking ahead to 2023, crypto industry experts expect more
difficulties ahead for investors as rising interest rates continue to weigh on
risk asset prices.
December Crypto Market
Performance
FTX’s bankruptcy sent Bitcoin
tumbling to new two-year lows under $15,600 in November, but Bitcoin prices
stabilized in December.
Bitcoin prices increased 1% in
December, finishing 2022 above $16,500. Ethereum (ETH) prices dropped another
1.4% in December to close out the year at $1,199. Bitcoin prices dropped nearly
65% in 2022, its worst annual performance since its 73% decline in 2018.
Ethereum prices dropped 67.7% in 2022.
Rising interest rates triggered
crypto winter in 2022, producing a wave of bankruptcies in the crypto industry and
sending the prices of most popular cryptocurrencies tumbling. Among the 10
largest cryptocurrencies by market capitalization, Tron (TRON) was the best
performer with a 27% decline. Polkadot (DOT) took the hardest hit with an 83.6%
price decline on the year.
The total market capitalization
of the global cryptocurrency market peaked at over $2.9 trillion in November
2021. As of the end of 2022, that market cap now stands at just $798 billion.
FTX Fallout Continues
The chaos in the cryptocurrency
market came to a climax in November when crypto exchange FTX, which was once
worth $32 billion, officially filed for bankruptcy protection. CEO
Bankman-Fried resigned on Nov. 11, and FTX bankruptcy proceedings began on Nov.
22 in federal court in Delaware.
On Dec. 12, Bahamas authorities
arrested Bankman-Fried at the request of the U.S. government just one day
before he was scheduled to testify in front of the House Financial Services
Committee.
On Dec. 13, the U.S. Securities
and Exchange Commission (SEC) filed a civil fraud lawsuit against Bankman-Fried
and alleged he illegally used FTX customer funds to support his hedge fund,
Alameda Research. That same day, the U.S. attorney’s office for the Southern
District of New York charged Bankman-Fried with eight counts of criminal fraud.
Bankman-Fried was transferred
to U.S. custody on Dec. 21 after a judge approved his extradition.
Caroline Ellison, former CEO of
Alameda Research, and Gary Wang, former chief technology officer of Alameda,
both pled guilty to criminal charges in December and are reportedly now
cooperating with federal investigations of FTX.
GlobalBlock analyst Marcus
Sotiriou says the egregious behavior of FTX insiders may actually help preserve
crypto’s reputation among the general public.
“It is astounding to see how
fast things have folded, as just over a month ago hardly anyone knew about the
fraudulent activities. I think this will benefit public perception of the
crypto industry, as people can be fully assured that this collapse is due to
fraud as opposed to an inherent problem with crypto,” Sotiriou says.
Bankman-Fried was released on a
$250 million bond package on Dec. 23, and his next trial date is scheduled for
Jan. 3.” (Forbes
‘January Crypto Market’)
My Response – An Open Case
Bitcoin, the world's first decentralized digital currency,
has been making waves in the financial world since its creation in 2009.
Despite its relatively short history, it has already gone through several major
market cycles and has proven to be a volatile yet resilient asset. In this blog
post, we will explore the future of Bitcoin and its potential impact on the
global financial system.
First and foremost, it's important to understand the
underlying technology that powers Bitcoin: blockchain. Blockchain is a
decentralized digital ledger that records all transactions in a secure and
transparent way. It is the backbone of Bitcoin and other cryptocurrencies, and
it has the potential to disrupt a wide range of industries beyond just finance.
Some Advantages of Bitcoin
One of the most significant potential impacts of Bitcoin and
blockchain technology is the democratization of finance. By allowing
individuals to have more control over their own money, Bitcoin and other
cryptocurrencies could potentially reduce the power of centralized institutions
such as banks and governments. This could lead to greater financial inclusion
for people in underbanked or unbanked regions, as well as provide more privacy
and security for individuals' financial transactions.
Another major potential impact of Bitcoin is its ability to
act as a hedge against inflation. Traditional fiat currencies, such as the US
dollar, are subject to inflationary pressures due to the way they are created and
managed. In contrast, the total supply of Bitcoin is limited to 21 million
coins, which means that it is immune to the same inflationary pressures. This
could make it an attractive store of value for people in countries with high
inflation rates, such as Venezuela or Zimbabwe.
In terms of adoption, Bitcoin has already come a long way
since its creation. It is now accepted as a form of payment by a growing number
of merchants, and institutional investors are starting to take notice as well.
In the future, we could see even more mainstream adoption of Bitcoin as a form
of payment, as well as an increasing number of financial products and services
built on top of the technology.
The Caveat
However, it's worth noting that there are also some
significant challenges facing the future of Bitcoin. One of the biggest is scalability;
the current infrastructure is not able to handle the same level of transactions
as traditional payment systems such as Visa. Additionally, there are concerns
about the environmental impact of Bitcoin mining, which requires significant
amounts of energy. These issues will need to be addressed in order for Bitcoin
to truly reach its full potential.
Conclusion: Hindsight Remains 20/20
In conclusion, the future of Bitcoin is uncertain, but it
has the potential to be a disruptive force in the global financial system. The
democratization of finance and its ability to act as a hedge against inflation
are just a couple of the ways in which Bitcoin could change the financial
landscape. However, scalability and environmental concerns are also significant
challenges that need to be addressed. Only time will tell how Bitcoin will
develop, but it's certainly a technology worth keeping an eye on.
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