US President "Donald Trump" signed an executive order to create a strategic Bitcoin reserve. After which the debate started again whether cryptocurrency is on the way to becoming the traditional currency or future asset?
Trump's ally "Elon Musk" has also been very optimistic about cryptocurrency and blockchain and has his own plans. This is also a big reason that after this step of the US government, a period of speculation and rumors started about cryptocurrency. Bitcoin's graph was also seen touching new heights. Before this, has to know the nature and simple mechanism of cryptocurrency. Cryptocurrency is completely a digital currency. The idea of ​​digital currency was first given by American cryptographer "David Chaum" in 1983. Cryptography was a technique to make message transmission more secure. In 2008, a pseudonymous person or group of persons "Satoshi Nakamoto" invented blockchain. "Satoshi Nakamoto" introduced world's first crypto currency Bitcoin in 2009. they used blockchain for ledgering the Bitcoin. Blockchain is a very secure, reliable and transparent ledgering technique. Since then, the value of Bitcoin has continuously touched new heights and along with it, many other crypto currencies have also become a part of the crypto exchange. However, they have never received any recognition as traditional currency from any established financial institution or any major economy.
Why crypto attracts investors
Bitcoin started in 2009 at an initial price of $.10 and currently its value is more than $83000. Apart from bitcoin, Binance Coin has also increased from a value of $.10 in 2017 to $629 today. Solana which was at $.6 in 2020 is at $129 today. XRP has also registered huge growth. Currently the total value of the cryptocurrency market is $2.72 trillion. This growth rate of crypto currency has been attracting people to invest. The basis of the cryptocurrency ledger is blockchain technology, which makes its ledger and transactions completely immutable and makes it extremely secure and transparent. Due to which there is no risk of any kind of fraud in this system. The privacy of the holder of crypto currency remains completely intact because it is still not an asset or traditional currency recognized by any nation. Its value or flow is not controlled by the any national government, due to which it is completely decentralized. Due to all these reasons, the privacy of its holders is also ensured. This was the main reason that attracted people the most to invest in crypto.
Are cryptocurrencies good & secure as investment?
But the matter does not end here.Being decentralized and deregulated by national governments, the system becomes extremely independent. More than 13000 cryptocurrencies have been launched till date but currently only 8000 are transacting in the market. More than 35% of cryptocurrencies have been died mainly due to lack of investment. This is a figure which shows the investment risk in cryptocurrency. There are many cryptocurrencies which have negative growth rate. The period from 2021 to 2024 is known as the "Crypto Crush" because most of the cryptocurrencies were recording negative growth during this period and investors were losing money. During this period, Bahamas-based cryptocurrency exchange “FTX” also been bankrupt in November 2022.
The value of cryptocurrency depends on its demand. And the main legitimate factor in increasing its demand is the tendency of investors and market trends.Due to its decentralized system, the launch of new cryptocurrencies keeps happening, due to which its flow has increased uncontrollably. Due to the excessive investment options on cryptocurrency exchange, its demand has also been greatly affected and except for some special cryptocurrencies, the growth rate of most has been poor. It is difficult to estimate the demand in the crypto market.
Crypto as a threat to the global economy
Although the governments of some countries have now made some regulations regarding crypto investment, but still no country controls it. Crypto is freely transacted at the global level through the Internet. Due to which it is impossible for any government to control it. Its decentralized system ensures the privacy of the holders in it and peer to peer transactions. And this is the reason why crypto has become an indispensable medium for illegal transactions and black money diposition. Black money is being invested heavily in cryptocurrency. According to “Coingecko”, during demonetization in India in 2016, black money was invested in Bitcoin from India, due to which the value of Bitcoin increased from 731 $ in December 2016 to 1180 $ by March 2017.
Although it is very difficult to estimate how much black money is invested in cryptocurrency. But it is causing great loss of tax and damage to the economy of countries.
Crypto exchange, favorite of terrorists
Being unregulated and decentralized, crypto has become a medium of international illegal international money transactions. Various terrorist organizations of the world are investing their money in cryptocurrency and they are also doing their transactions in the form of cryptocurrency. Terrorist organizations like “Hamas, Al-Qaeda, Jam'at al Tawhid wa'al-Jihad, and al-Nusrah Front” are now accepting donations in the form of cryptocurrency. Apart from this, in the cybercrime, online fraudsters are also collecting ransom in the form of cryptocurrency. The biggest reason for this is the anonymity of the holder on the crypto exchange and the inability to track the transaction. If terrorist organizations or international criminals transact in the form of any currency then it will be easy to track them and transactions in the form of hard cash become very complicated. Whereas it is very easy to transact any cryptocurrency from anywhere in the world because it is digital and confidential as well.
Trump's obsession for Bitcoin
The US has 21 million Bitcoins seized from various terrorist organizations and international criminals. In this way, US President Donald Trump wants to convert them into a good investment. At the same time, America will have another option apart from gold reserves in the form of crypto reserve and it is first time in the world. And this topic does not end here. Cryptocurrency is now being used in illegal activities, so the US government will be able to convert the cryptocurrency seized from these criminals and terrorists into an investment by making it a part of its reserve.
Still, with this decision, it cannot be said that US government is recognizing cryptocurrency as an official currency in any form. However, this decision of US President Donald Trump has also started facing criticism. "François Villeroy de Galhau", the governor of "Banque de France" and a member of the "European Central Bank's Governing Council" recognize the support of crypto currency by the US President as a big mistake.
But with this decision of America, Bitcoin is definitely on its way to becoming an official investment option.
