Cryptocurrency, or crypto for short, is a digital form of money that operates on a decentralized network of computers.
Crypto enthusiasts believe that crypto can revolutionize the way we exchange value, store wealth, and access financial services.
But is crypto dead? Has the hype faded away? Is it still worth investing in 2023?
In this article, we will explore the current state and future prospects of the crypto market, focusing on the most popular and influential cryptocurrencies: Bitcoin and Ethereum.
We will also discuss the main challenges and risks that crypto faces, as well as the potential opportunities and rewards for investors.
Bitcoin and Ethereum are Dead
Bitcoin and Ethereum are the two largest cryptocurrencies by market capitalization and are more established than many other crypto options.
However, they have also faced significant challenges and setbacks in recent years, leading some to question their viability and value.
One of the main criticisms of Bitcoin is that it consumes too much energy and contributes to environmental degradation.
According to the Cambridge Bitcoin Electricity Consumption Index, Bitcoin’s annual electricity consumption is estimated to be around 130 terawatt-hours (TWh), which is more than the entire country of Argentina.
This is because Bitcoin relies on a proof-of-work consensus mechanism, which requires miners to solve complex mathematical problems to validate transactions and earn rewards.
This process is very computationally intensive and requires a lot of electricity.
Ethereum also uses a proof-of-work system, but it is in the process of transitioning to a proof-of-stake model, which is expected to reduce its energy consumption by 99%.
Proof-of-stake is a more efficient and secure way of achieving consensus, as it does not depend on mining power, but on the amount of coins that validators stake to participate in the network.
However, this transition has been delayed several times and is not expected to be completed until late 2023 or early 20243.
Another challenge that both Bitcoin and Ethereum face is scalability.
Scalability refers to the ability of a network to handle a large number of transactions per second (TPS) without compromising speed or security.
Bitcoin can only process about 7 TPS, while Ethereum can handle about 15 TPS4. This is far below the capacity of traditional payment systems like Visa, which can process up to 65,000 TPS5.
As a result, both networks suffer from congestion, high fees, and long confirmation times during periods of high demand.
To address this issue, both Bitcoin and Ethereum have been developing various solutions, such as layer-2 protocols, sidechains, and sharding.
Layer-2 protocols are secondary networks that run on top of the main chain and allow users to conduct transactions off-chain with lower costs and faster speeds.
Examples of layer-2 protocols include Lightning Network for Bitcoin and Polygon for Ethereum.
Sidechains are independent blockchains that are connected to the main chain via bridges and allow users to transfer assets between different chains.
Examples of sidechains include Liquid Network for Bitcoin and xDai for Ethereum.
Sharding is a technique that splits the network into smaller units called shards and distributes the workload among them.
This increases the overall throughput and performance of the network. Ethereum plans to implement sharding as part of its transition to proof-of-stake.
Is Crypto Over?
Despite these challenges, crypto is not over. In fact, crypto has shown remarkable resilience and innovation in the face of adversity.
The crypto market has recovered from several crashes and corrections in its history and has always bounced back stronger than before.
For instance, after reaching an all-time high of nearly $20,000 in December 2017, Bitcoin plunged by more than 80% in 2018.
However, it surpassed its previous peak in late 2020 and reached a new record of over $64,000 in April 2021.
Similarly, after reaching an all-time high of over $1,400 in January 2018, Ethereum dropped by more than 90% in 2018.
However, it surpassed its previous peak in January 2021 and reached a new record of over $4,300 in May 2021.
The crypto market has also witnessed remarkable innovation and development in recent years. One of the most notable trends is the rise of decentralized finance (DeFi), which aims to provide open and accessible financial services without intermediaries or central authorities.
DeFi applications allow users to lend, borrow, trade, save, invest, insure, and more using smart contracts and crypto assets.
- Some examples of DeFi platforms include MakerDAO, Compound, Uniswap, Aave, Synthetix, and Yearn. finance, Curve, Balancer, SushiSwap, and many more. According to DeFi Pulse, the total value locked (TVL) in DeFi protocols has grown from less than $1 billion in January 2020 to over $60 billion in July 2021.
Another notable trend is the emergence of non-fungible tokens (NFTs), which are unique and indivisible digital assets that represent ownership of various forms of digital and physical goods, such as art, music, games, collectibles, sports, and more.
NFTs use blockchain technology to verify their authenticity and provenance and allow users to create, buy, sell, and trade them on various platforms.
- Some examples of NFT platforms include OpenSea, Rarible, SuperRare, Nifty Gateway, NBA Top Shot, CryptoPunks, CryptoKitties, Axie Infinity, and many more.
According to NonFungible.com, the total sales volume of NFTs has grown from less than $100 million in 2019 to over $2.5 billion in the first half of 2021.
Bitcoin Price
The price of Bitcoin is determined by the interaction of supply and demand in the market.
The supply of Bitcoin is limited by its protocol, which caps the total number of coins that can ever be created at 21 million.
As of July 2021, there are about 18.8 million bitcoins in circulation, and about 900 new bitcoins are created every day through mining10.
The demand for Bitcoin is influenced by various factors, such as adoption, innovation, regulation, sentiment, media attention, and events.
The price of Bitcoin is also affected by its volatility, which measures the degree of variation in its price over time.
Bitcoin is known to be highly volatile, as it can experience significant price swings in short periods of time.
According to CoinMarketCap, the current price of Bitcoin as of July 12, 2021, is $33,590.64 USD, with a 24-hour trading volume of $23,779,032,722 USD.
Bitcoin is down 2.87% in the last 24 hours. The current CoinMarketCap ranking is #1, with a live market cap of $628,787,752,492 USD. It has a circulating supply of 18,742,875 BTC coins and a max. supply of 21,000,000 BTC coins11.
Crypto News
The crypto space is constantly evolving and generating news and events that can affect the market and the industry. Here are some of the latest crypto news headlines as of July 12, 2021:
- El Salvador became the first country to adopt Bitcoin as legal tender. On June 9, 2021, El Salvador’s Congress passed a bill that makes Bitcoin an official currency alongside the US dollar. The bill states that every economic agent must accept Bitcoin as payment for goods or services offered in the country. The bill also grants tax exemptions for capital gains and income from Bitcoin transactions. The bill aims to boost financial inclusion, economic growth, and innovation in the country.
- China cracks down on crypto mining and trading. In May and June 2021, China intensified its efforts to curb crypto activities in the country. Several provinces issued bans or restrictions on crypto mining operations due to environmental and energy concerns. Several banks and payment platforms also suspended or terminated services related to crypto transactions due to regulatory pressure. The crackdown caused a significant drop in Bitcoin’s hash rate, which measures the computing power of the network. Tesla suspends Bitcoin payments and sparks environmental debate. On May 12, 2021, Tesla
- CEO Elon Musk announced that the electric car maker would no longer accept Bitcoin as payment for its vehicles due to environmental concerns. Musk cited the increasing use of fossil fuels for Bitcoin mining and transactions as a reason for the decision. The announcement triggered a backlash from the crypto community and a debate on the environmental impact of crypto.
- MicroStrategy raises $500 million to buy more Bitcoin. On June 14, 2021, MicroStrategy, a business intelligence company and one of the largest corporate holders of Bitcoin announced that it had completed a $500 million offering of senior secured notes due 2028. The company said that it intends to use the net proceeds from the sale of the notes to acquire additional bitcoins.
- Binance faces regulatory scrutiny around the world. Binance, one of the largest and most popular crypto exchanges in the world, has been facing regulatory challenges in several jurisdictions in recent months. The exchange has received warnings or notices from regulators in the UK, Japan, Canada, Thailand, Cayman Islands, Singapore, Germany, Italy, Poland, Lithuania, and Hong Kong for operating without proper licenses or authorizations16.
Is Cryptocurrency Safe?
Cryptocurrency is a relatively new and unregulated form of money that comes with various risks and challenges. Some of the main risks associated with cryptocurrency include:
- Volatility: Cryptocurrency prices can fluctuate significantly in short periods of time due to various factors such as supply and demand, innovation, regulation, sentiment, media attention, and events. This can result in large gains or losses for investors and traders.
- Hacking: Cryptocurrency transactions are recorded and verified on a distributed ledger called a blockchain, which is supposed to be secure and immutable. However, hackers can still target the users, wallets, exchanges, or platforms that interact with the blockchain, and steal or manipulate their funds or data. For example, in 2014, Mt. Gox, the largest Bitcoin exchange at the time, was hacked and lost 850,000 bitcoins worth $450 million. In 2016, DAO, a decentralized autonomous organization built on Ethereum, was hacked and drained of 3.6 million ether worth $50 million.
- Fraud: Cryptocurrency is also vulnerable to fraud and scams, as there are many dishonest actors who try to exploit the lack of regulation and oversight in the crypto space. Some of the common types of fraud and scams include phishing, fake ICOs, Ponzi schemes, pump-and-dump schemes, and ransomware. For example, in 2017, OneCoin, a purported cryptocurrency project, was exposed as a $4 billion global Ponzi scheme that defrauded millions of investors. In 2020, Twitter accounts of prominent figures such as Barack Obama, Elon Musk, and Bill Gates were hacked and used to promote a Bitcoin giveaway scam that collected over $100,000 from unsuspecting victims.
- Regulation: Cryptocurrency is subject to varying degrees of regulation and legal uncertainty in different countries and regions. Some jurisdictions have adopted a friendly or neutral stance towards crypto, while others have imposed strict or prohibitive rules on its use and trade. The regulatory environment can affect the availability, accessibility, and legitimacy of crypto services and platforms, as well as the tax implications and legal status of crypto transactions and holdings. For example, in 2013, China banned financial institutions from dealing with Bitcoin, and in 2017, it banned ICOs and crypto exchanges in the country. In 2018, India banned banks from servicing crypto-related businesses, and in 2021, it proposed a bill that would criminalize the possession, issuance, mining, trading, and transfer of crypto assets.
Is Bitcoin a Good Investment?
Bitcoin is the first and most popular cryptocurrency in the world.
It has been praised as a revolutionary innovation that can challenge the traditional financial system and empower individuals and communities.
It has also been criticized as a speculative bubble that can burst at any moment and cause massive losses for investors. So, is Bitcoin a good investment?
The answer depends on several factors, such as your risk appetite, time horizon, investment goals, and market knowledge.
Bitcoin is a high-risk, high-reward investment that can offer significant returns or losses depending on the market conditions and your strategy.
Bitcoin is also a volatile and unpredictable asset that can experience rapid price movements due to various factors such as supply and demand, innovation, regulation, sentiment, media attention, and events.
Therefore, before investing in Bitcoin, you should do your own research and analysis, understand the risks and benefits involved, diversify your portfolio, set realistic expectations, and follow sound investment principles. You should also only invest what you can afford to lose, and be prepared for the possibility of losing your entire investment.
Will Crypto Recover?
Crypto is a dynamic and resilient industry that has survived and thrived despite numerous challenges and setbacks. Crypto has proven its ability to recover from crashes and corrections, adapt to changing market conditions, innovate new solutions and products, attract new users and investors, and create new opportunities and value.
Therefore, it is likely that crypto will recover from its current slump, as it has done many times before. However, the recovery may not be immediate or smooth, as there are still many uncertainties and risks that can affect the market. The recovery may also not be uniform or consistent, as different cryptocurrencies may perform differently depending on their fundamentals, features, use cases, adoption, competition, regulation, etc.
The future of crypto is not guaranteed or predetermined. It depends on various factors such as technology, economics, politics, society, culture, etc. It also depends on the actions and decisions of various stakeholders such as developers, users, investors, regulators, media, etc. Ultimately, it depends on you. You have the power to shape the future of crypto by participating in its development, adoption, innovation, education, advocacy, etc.
Bitcoin Price USD
The price of Bitcoin in US dollars (USD) is one of the most widely used indicators of its value and performance. The price of Bitcoin in USD is determined by the interaction of supply