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Oct 19, 2021
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Crypto illusions of a new world order

The conventional wisdom that cryptocurrencies are a revolution in the financial world that will overturn all previous notions of how wealth is acquired is surprisingly short-sighted. The experience of thirty years of existence of the same bitcoin makes it possible to predict its “bubbling” fate. What about, you ask, 220 million crypto wallets around the world? After all, this is a third of the population of the same USA. In Russia, there are also more than 17 million such wallets, according to the site of cryptomaniacs IXBT.com. And in general, at the beginning of its appearance in 2009, only $ 1 was given for a thousand bitcoins, after two years its cost was already 50 American cents. And over the past year, the price of bitcoin has grown from $ 10,128 to $ 55,555. Isn’t this a revolution? Alas and ah. The real revolution took place on August 15, 1971, when US President Richard Nixon announced that the dollar would no longer be exchanged for physical gold, as required by the Bretton Woods system of organizing monetary relations and trade settlements, which had been in effect since July 22, 1944. It regulated world currency conditions in relation to gold, one troy ounce of which was worth 35 US dollars. That is, the United States was obliged to accept dollars in exchange for gold in case someone wanted to return American dollars to America. Charles de Gaulle was the first to do this in 1965. The Germans, Japanese, Canadians and representatives of other countries followed the French, as a result of which the US gold reserves were depleted. Nixon untied the dollar, after which the green, deprived of gold backing, could be printed without looking back at Fort Knox. The White House never looked back. How is Bitcoin different from the untethered dollar? The fact that it does not even exist on paper. As Project Syndicate writes, money, including cryptocurrencies, depends only on trust. Everything else – banks, securities, liabilities, futures, options, interest, margins – exists only because both buyers and sellers believe that they will always receive goods and services in exchange for money. This is not a very rational belief, but it is ingrained over the centuries. As for bitcoins, arguing that they are just a game of confidence or a speculative bubble, as many economists emphasize, is to ignore their popularity. At the same time, the publication believes, “although it is obvious that cryptocurrencies will remain here forever, it remains to be seen what economic role they will play.” Now, while cryptocurrencies lack the stable institutional foundations necessary to build trust in them, sharp fluctuations in the value of bitcoins and other cryptocurrencies expose their fragility and volatility. Why has an unsecured phantom (bitcoin) turned out to be a popular financial instrument? There are five factors that made him a “revolutionary”. First of all, propaganda. There is an entire industry dedicated to inspiring people that they can find a gold mine by investing in bitcoin. Money is invested in cryptocurrency because millions of people in the US and around the world think they can make significant profits from it. The next factor is criminal activity, which allows the service of bitcoins bypassing financial control. A complex decentralized system functions without any oversight or government involvement. The demand for cryptocurrencies in general and bitcoin in particular is firmly entrenched in the criminal world. Criminal activity is believed to account for nearly half of Bitcoin transactions. The difference between the price of the par value and the cost of its production makes an almost one hundred percent profit. Probably, this explains the fact that the list of cryptocurrencies has exceeded one and a half thousand. This is followed by the factor of high-tech “optimism” inherent in IT specialists: they fight with the state system in order to free the individual “I” from its bonds. Finally, the prosaic, ineradicable desire to get rich swiftly in a situation where the real economy is shrinking. However, it is obvious that neither economic nor social problems of society will be solved by people who make money from speculation with cryptocurrency. The Chinese were the first to realize all this. A month ago, the People’s Bank of China banned all trading and issuance of tokens and derivatives for cryptocurrencies, as well as the operation of foreign cryptocurrency exchanges in the PRC. Cryptocurrency mining is also prohibited. “What the world’s largest banks and governments feared has come true. China has taken an unprecedented step towards cryptocurrencies and blockchain technology and is launching an official coin,” the website of Flashfinance2021 reported. YuanPay Group at the price listed on their official website. Chinese Finance Minister Liu Kun has announced that the starting price of the coin will be only $ 0.01! ” And on the same day, Bitcoin lost 5 percent of its value. In the new world “crypto-order” one of the main advantages is considered to be the security of transactions. So: on the first day of October, the American crypto exchange Coinbase was hacked and lost cryptocurrency from the accounts of at least 6 thousand of its users … But Coinbase operates in more than 100 countries, Bitcoin, Ethereum and other cryptocurrencies are traded on its platform. We think the illusion of crypto security is not the last one that is destined to die. Photo: REUTERS / Eric Gaillard

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