Discover the reasons behind the market drop on the main Cryptocurrencies and what’s going to happen next.
The idea behind the digital money can be traced back to 1980s – 1990s, but they all failed; however, it wasn’t until 2008 – 2009 that it became a reality. Since then, this very controversial virtual money has had many ups and downs. Not many are willing to fully accept its existence, reason are many: it’s not regulated by the government, it can’t be track which has led to believe that it’s a suitable alternative for criminal organizations and last but not least is not accepted in many commercial entities around the world.
What is Cryptocurrency?
How about starting from the basics. In simple words, it’s virtual money. Cryptocurrencies exist only in the digital realm; they are digital assets that use encryption technology for security purposes. As “fiat” money, cryptocurrency is also used to purchase products and services. The most popular cryptocurrencies today are Bitcoin, follow by Ethereum; but there are plenty more like: Binance Coin, Tether, Cardano, Polkadot, XRP, Uniswap, Litecoin, THETA3 and Dogecoin. We are sure that the list will continue to grow as virtual currency becomes more accepted in the years to come.
Is it worth it to invest in the Crypto market?
Early this year, the future of the digital currency market seemed promising. Bitcoin set an unprecedented record in the market cap by surpassing the $1 trillion in March 2021. However, investors that have been around for a long time know how volatile this type of currency is, as well as, it’s abrupt market changes in short periods of time.
So, when Bitcoin, Ethereum and Dogecoin the most popular and widely accepted virtual currencies suddenly had a major crash during mid-May, new investors started to panic and wonder if it was worthwhile to keep pursuing this venture. Reasons for this sudden drop can be tracked down to many, but the main ones are environmental concerns, and others are law policies yet to be established in this market.
For many years, China has been the optimal place for Bitcoin mining; the business has been so profitable that investors have built many Bitcoin farms in Sichuan providence. China sees cryptocurrency as a threat due to its decentralized nature. This has upset the Chinese government for many years, so, on June 18th, authorities ordered the crypto-mining farms to cease all operations. As expected, China’s crackdown resulted in crypto prices to go down even further.
Even though Tesla’s CEO has been one of the most filial supporters of virtual money, his decision of suspending Bitcoin payments also had a big impact in the crypto market. It is known that Bitcoin mining requires a great amount of resources to come to be, especially cooling and energy; the multimillionaire is concerned about the environmental impact of this practice.
But certainly there are other interests behind all these changes. Why is China banning cryptocurrency now and not before? Well, the Chinese government is planning to be the first country to launch a government control digital currency that will be called, e-yuan. And although Elon Musk’s favorite virtual currency used to be Bitcoin, his eyes are now set on Dogecoin, which according to Forbes magazine he likes to call “the people’s crypto”.
What’s next?
No need to worry, while there might be a few bumps down the road, cryptocurrencies and blockchain technology will continue to grow in popularity and thrive in the near future. It wasn’t so long ago, around 2018 when both Bitcoin and Ethereum had a 80% to 90% drop respectively, on the market value. Then in a dramatic turn of events, both of their prices started to increase exponentially.
It’s a fact that in order for digital currencies to succeed, it needs full support from merchants and other financial entities. In spite of all current obstacles, Bitcoin mining won’t stop. China’s barred will just encourage miners to relocate somewhere else, and as a result, it will open up new markets for virtual money in places yet to be known. In the long run, I’m sure many merchants and other entities will come to terms with virtual currencies, allowing transactions that will boost their full advantages.
Cryptocurrencies are indeed a high-risk investment; there is no guarantee when its market value will increase or drop for that matter. However, Cryptocurrencies are full of long-term potential. It will take years for it to become a mainstream currency, but regardless of its market swings, experts agree that it has a bright future ahead.
The recent drop might be intimidating, but the good news is that if you are planning to invest in this market, now is the time since its prices are low. Be wise when investing though, keep in mind that cryptocurrency isn’t for everyone. As more companies discover uses for crypto and more users accept them as a way to simplify their lives, they will remain a central point of conversation in technology.
Cryptocurrencies and blockchain technology will continue as a top performing digital asset and here at Whitelabel ITSolutions within our state-of-the-art data center, you’ll enjoy all of the cooling and power resources you need to expand your mining capabilities. Whitelabel ITSolutions offer all the essentials in order to grow your crypto-mining operations.
