Bitcoin is a topic that is causing disruption and disagreement in equal measure. So is every other blockchain-based trading entity, from Dogecoin to Non-Fungible Tokens (NFTs), which sound faintly like something you found at the boggy end of your garden.
The reason that they are – arguably – irresponsible to promote is that influential people such as Elon Musk can manipulate their value disproportionately.
Mind you, pyramid and PONZI schemes are nothing new if you equate cryptocurrencies with them. People have been jailed for promoting those, and Musk, through some of his recent pronouncement on Dogecoin and Bitcoin, has almost certainly lost some people a lot of money.
Then there is the issue of the amount of electricity needed to mine Bitcoin and other blockchain-based ‘assets.’ Bitcoin alone guzzles the same amount of electricity as Argentina, and while you will hear the argument about clean, green energy, a decent proportion will most certainly not be green. Quite the opposite.
There are also ways around the electricity expense incurred in mining Bitcoin.
The volatility issue is obvious. It is so influenced by Governments cracking down on exchanges and Elon Musk and others deciding to take Bitcoin as payment, then reversing direction, that you should have a licence even to buy any. Then, of course, there is the small issue of not being able to sell without your bulletproof password, which some early investors have lost, along with their fortune.
The proliferation of virtual things that you can now trade, alongside Bitcoin and others, is eye wateringly large and strange. The new ‘fad’, NFTs are one such example, again promoted by Musk, Jack Dorsey and others.
It is great that they protect artists’ rights and create direct relationships, but it also creates artificial value and artificial markets and benefits the promoters more than the artists themselves.
And Bitcoin, blockchain, NFTs and everything other virtual thing can be hacked.
People with the right skills can sell NFTs they do not own, and as Martin Perry says, “because the act of minting an NFT is what establishes the record in the blockchain, there’s not a clear option for recourse if someone’s already using stolen artwork when they get to the point of attachment.”
Bitcoin and some other cryptocurrencies are here to stay. Whether NFTs are is another matter. However, the roller coaster ride has influenced governments to change how they think about money, and we will see ‘centralised’ cryptocurrencies emerge quite soon.
Which rather defeats the purpose, while leaving a lot of people vulnerable to losing real money.