Mark Zuckerberg has apparently helped Bitcoin increase over $ 10,000 again, a price that it first passed in 2017 as part of an epic speculative bubble that didn't come long after.
Last week, Facebook Inc. revealed The founder's social networking cryptocurrency, Libra, is a corporate version of Bitcoin that includes regulation and is backed by fiat money like dollars or euros. (Bitcoin not and not.)
Regardless of the sharp differences between the two digital tokens, the symbolic gathering of Zuckerberg and the Winklevoss twins – whose career after Facebook has been about pulling Bitcoin into daylight for mainstream finance – has created a story where crypto has "made it." If Zuckerberg promises it and doesn't bury it, it should be right.
However, for those who have lived through three hype cycles over five years, it is hard to believe the idea that the Bitcoin price – which is up 100% since April – has increased by 200% since February. But still 50% down from December 2017 – any intrinsic value reflects better than one or two years ago. Much like the last time the currency hit $ 10,000, there is nothing that prevents it from being ravaged higher before it crashes.
What has changed since 2017? Much about the market is still skimmed and regulators are investigating potential price manipulation with concern that much of the reported trading volumes are false or exaggerated. Token such as Tether, which plays a major role in tracking Bitcoin trading, is firmly in the investigator's cross hair.
For those who support Bitcoin as a peer-to-peer payment mechanism that cuts out banks, there's not much to cheer either. The virtual currency is still slow, cumbersome and expensive. It handles about five transactions per Second, versus about 1,700 on the Visa network. In times of high demand, the capacity problem becomes sharp; in April, transaction fees increased by approx. 200 percent. Solutions like increasing block size and off-chain transactions have only helped a bit.
Bitcoin is also no longer useful for retailers. Price volatility and high fees were already a rejection of the dabbling in 2017. Two years later, companies testing crypto, like AT & T Inc., still prefer not to handle Bitcoin itself, but to use a third party to convert it to dollars .
Thus, the "digital gold" argument – or, Bitcoin is so bad at payments, follows that it should only be HODL & ds. Probably every millennium needs crypto as a hedge against inflation and geopolitical risk: the central banks keep interest rates low, the war in the Middle East is increasing, and the EU will lose one of its biggest members.
But this thinking requires people to believe in Bitcoin as a value store – a stretch for most – and for its price to reflect it. The three-year price overview of the currency gives some comfort.
What is left is exactly what has always been there: A symbol whose price goes through the roof during times of exclamation due to artificially imposed deficiency. Bitcoin's rules dictate that there will only be 21 million of them, and the difficulties and benefits of mining new ones will adjust along the way. Provided people always want something and think they are worth more than the Pokemon cards under the bed, the potential for price fluctuations is unlimited. It's a speculative paradise.
Instead of blaming Zuckerberg, we must address the real problems that burn people's desire for a golden ticket. For many thousands of years, money is not making money, the pension seems to be a dream and owning a house is out of reach. It allows people like the Bitcoin icon Charlie Shrem to tweet: "5 BTC is all you need, HODL for 15-20 years, and you'll never have to work again."
Why blame Zuckerberg? Blame Satoshi, Bitcoins creator or politicians who have not worked out how to control speculative asset bubbles everywhere, let alone cryptos. For once Facebook is not the bad guy.
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Lionel Laurent is a Bloomberg Opinion columnist covering Brussels. He previously worked at Reuters and Forbes.
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