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The Politics Behind Cryptocurrencies Market Turbulence – What Are the Root Causes?

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The Politics Behind Cryptocurrencies Markets Turbulence Last Year – What Are the Root Causes? This article explores the political context behind Bitcoin, Ethereum, Litecoin, and XRP. Unlike gold and silver, cryptocurrencies are not hedges against anything and are used for ransom attacks. In addition to their aforementioned risks, cryptocurrencies are expensive to mine, which is why so many people are wary of trading them.

Trading in cryptocurrencies is a mass-market product

While there are many reasons why cryptocurrency is a good mass-market product, it also has some significant drawbacks. Most consumers have no idea what a blockchain is or how to trade it. Hence, the mass-market appeal of cryptocurrencies is not clear. Additionally, there is a risk of misuse, which could impede the growth of the industry. As a result, it is important to educate and empower new consumers before they invest in cryptocurrency.

The fundamentals of cryptocurrency trading are simple: making money by buying and selling cryptocurrencies with the intention of profit. Traders purchase cryptocurrencies with the goal of making a profit by predicting their price movement in the future. For example, if a thousand Bitcoin token was worth $40,000, a one percent gain means a 10% profit. The prices of cryptocurrencies are determined by supply and demand, and their value changes on a second-by-second basis.

They are not a hedge against anything

There’s a popular myth that cryptocurrencies are a hedge against inflation, but that’s just not true. Cryptocurrencies were thought to be a safer form of money than fiat money, largely due to their decentralisation, limited supply, and immunity from political pressure. The problem with fiat money is that it is created by governments and is not a hedge against inflation. Gold, on the other hand, is a traditional hedge against inflation, and today’s prices are at PS1,500 per ounce.

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Bitcoin is touted as a great inflation hedge because the supply is capped at 21 million. The limited supply creates a sense of scarcity as demand increases. However, the current volatility and uncertainty is swamping the underlying value of bitcoin. In addition, while there’s a myth that Bitcoin is a hedge against inflation, the reality is that it’s not. Even traditional economists aren’t as vocal as crypto critics.

They are used as part of ransom attacks

Cryptocurrencies are digital payments. There is no central authority that issues them, but companies like Bitcoin and Ethereum have created their own forms of currency. These can be bought and sold just like regular money. But they can also be used as ransom. And hackers are using them in ransom attacks to extort companies and governments for large sums of money. This type of attack can halt supply chains in the eastern U.S. for a week.

The main value of cryptocurrency in a ransomware attack lies in the transparency of cryptocurrency exchanges. Hackers can keep a close eye on the public blockchain to see if their victims have paid and if they can automate the process of giving them back their files. That makes cryptocurrency the most unreliable place to store ransom money, and the worst place to keep it. The open, transparent nature of Bitcoin blockchain transactions makes it nearly impossible for hackers to conceal and hide the fact that they have victims. The open nature of Bitcoin blockchain transactions means that the global community is watching these transactions, making it easy to trace ransom money.

They are expensive to mine

As a result of the growing popularity of Bitcoin, it’s important to know why crypto currencies are expensive to mine. A recent study by the University of Cambridge found that the cost of electricity to mine a single Bitcoin is more expensive than coal. That’s why even countries with the lowest electricity costs to mine a single coin, like Iran, are experiencing power outages. This issue is particularly significant for cryptocurrency miners in countries such as Kosovo, where the government has temporarily banned mining of its native currency.

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Unlike traditional mining, cryptocurrency mining requires specialized hardware, such as application-specific integrated circuits or GPUs. These GPUs are very expensive, consuming large amounts of electricity and limiting miners’ profitability. Besides, the reward amount of a single block is cut in half roughly every four years, or about 210,000 blocks. In April 2022, a single bitcoin will only be worth around $40,000.

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