Cryptocurrency madness

The week before last, out of the blue I was bombarded with simultaneous questions about bitcoin by friends and 'Breaking the Code of History' readers, some on behalf of their children. They all announced that they were proudly mining coins and what did I think?

Naturally, I looked at the price history shown below; the price was 7500 at the time. I responded that it was a bubble and most likely the bitcoin price had made a blow off high following which the price would decline significantly back to the 3500 level.

Not a prognosis that was particularly welcome! As cryptocurrencies come and go, the potential retracement of bitcoin would not be unique (or would it?), so the bigger question is how to view the context and future of cryptocurrencies.

Firstly, blockchain technology is a fascinating development in the tracking of any item or mechanism, but it is not beyond being hacked. In a time where quantum computers have arrived, anything can be hacked with brute force, so I doubt the integrity of this form of money.

Secondly, this form of currency is not a passive concept, but rather requires huge amounts of energy to create and maintain. The unverified statistic that it takes the energy of Denmark to maintain the current issuance of cryptocurrencies is a shocking concept.

Lastly and most importantly, we live in an age where the central banks of the Western nations have been printing money to survive. History has shown that this strategy is often associated with a declining system before it collapses. As such, money printing is not a growthful or sustainable strategy and it never lasts for long, and when the bubble ends, it always does so in a financial catastrophe. In its essence, the mining of a cryptocurrency has devolved the printing of money from the central banks to the individual. This thought should alarm anyone who reads this, as all bubbles end with that last person getting into a fad before a reversal of the trend. Surely, ‘individuals printing money’ has to be defined as the last person in the chain?

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