The 10 Biggest Myths About Cryptocurrencies - Part 3

In the series "The 10 Biggest Myths About Cryptocurrencies", let's take a closer look at the 10 most widely used claims about cryptocurrencies and their opportunities and risks. In doing so, we will daily explore a new myth and check it for accuracy.

Myth 3: The cryptocurrency price rises are a mere blistering

The blistering blame, especially regarding Bitcoin and its development over the past year, has made it important for cryptocurrencies to be heard by many of the influential business leaders and decision-makers in the financial industry. Again and again it is to be heard from this direction, it is a great fraud, which is designed to achieve the highest possible return in a short period of time before the crypto market collapses again.

The loudest was Jamie Dimon, the CEO of JPMorgen, who called the Bitcoin, the figurehead of all cryptocurrencies, publicity as a "fraud" - freely translatable to fraud.

As a speculative bubble in macroeconomics a market situation with unrealistically or disproportionately high prices for a particular good or a particular class of goods called. As a reference, the Dutch tulip bubble in the 17th century or the dot.com bubble of the early 2000s are increasingly being mentioned again. To call blistering current developments in the crypto market implies that cryptocurrencies are trading well above their fundamentally justified price.

Looking more closely at the price development in the crypto markets, it can not be denied that the tokens traded there show a tendency to steady growth in addition to high volatility - the curves are relatively often upwards in the majority. However, the sometimes steep ascent does not necessarily mean that there is no real value behind the crypto facade.

Rather, the concrete equivalent of cryptocurrencies can not always be precisely determined. In addition, the crypto market is extremely diverse and includes different types of tokens that need to be valued differently. For example, the utility token of a particular platform has an application value resulting from the function of the token in the network in which it is circulating. In addition, it should be remembered that the two largest cryptocurrencies Bitcoin and Ether and the Altcoins based on them are deflationary because they have set a maximum number of tokens.

For cryptocurrencies such as Bitcoin, which primarily assume a currency and value preservation function, the value stands or falls with their distribution and use. If Bitcoin is being used by more and more people to pay for goods and services in Bitcoin or as a digital substitute for gold, its economic relevance also increases. If this mainstream adaptation increases so strongly, a strong price rise is justified, vice versa.

So it can be said about this myth that the price explosion in the markets is sometimes disproportionate and that certain tokens are certainly traded above their intrinsic value. In particular, in the case of the tokens emitted by substance-free ICOs, blistering can not be dismissed out of hand. However, it would be wrong to project this bubble formation 1: 1 on bitcoin and ethers, since its economics goes far beyond the funding of ICOs.

Also, it must not be forgotten that high production costs (mining) are needed, for example, to generate a bitcoin. An uncontrolled increase in money as in Fiat currency is therefore not possible. Each newly mined Bitcoin starts with production costs of often several thousand euros. An initial situation or investment, which is not given with the euro and the US dollar.

The current strong price increases are therefore mainly due to an increased mainstream adaptation and institutional interest. That it comes to exaggeration in one direction or another, is perfectly normal. In addition to rallies in the future, we will also experience severe price falls in the future. After all, cryptocurrencies are ultimately "just" a new asset class that can protect themselves from greed and panic or blistering and blistering just as little as stocks and other securities.