For the press
4:30 p. m. May 19, 2021 CDT
Even through Bitcoin standards, Wednesday is pretty wild.
The value of the notorious volatile virtual currency fell nearly 30% at a time after the China Banking Association warned member banks of the dangers related to virtual currencies. The decline was reduced to less than 10% in the afternoon, but Bitcoin had still lost. about $70 billion in market costs in 24 hours.
Bitcoin has lost about 38% since April 13, when it peaked at more than $64,800, according to Coindesk.
China’s caution is just the latest headwind: Before Wednesday, Tesla’s resolution not to settle for virtual currency as a means of payment for cars, after saying it would, and whispers in Washington about tighter regulation of virtual currencies had put pressure on Bitcoin. still 31% more in 2021 and almost 300% compared to a year ago.
Here’s a review of Bitcoin and virtual currencies in general:
Bitcoin is a virtual currency that is not tied to a bank or government and allows users to spend cash anonymously. Coins are created through users who “exploit” them by borrowing computer strength to determine other users’ transactions. They get Bitcoins in return. Coins can also be bought and sold on exchanges with U. S. dollars and other currencies. Some corporations settle for Bitcoin as a means of payment and several monetary establishments allow it in their customers’ wallets, but the overall settlement is still limited.
Bitcoins are necessarily lines of PC code that are digitally signed every time they move from one owner to another. Transactions can be made anonymously, making the coin popular with libertarians as well as tech enthusiasts, speculators and criminals.
Bitcoins will need to be stored in a virtual wallet, either online through an exchange like Coinbase, or offline in specialized hard drive software. According to Coinbase, there are around 18. 7 million Bitcoins in flux and only 21 million will exist one day. The explanation for why this is not clear, and everyone can guess where all the Bitcoins are.
On Wednesday, a posting on the China Banking Association’s website said money establishments deserve to “resolutely refrain” from offering services that employ virtual currencies because of their volatility.
Virtually all cryptocurrencies fell after the trading group’s statement.
Bitcoin closed at $38,390 and retreated in trading after hours. Most cryptocurrencies lost between 7% and 22% of their shares and Coinbase shares fell 5. 4%.
It is not uncommon for the price of Bitcoin to be replaced by several thousand dollars in a short period of time, fluctuations totaling around $20,000 in a day are extreme. On the last trading day of 2020, Bitcoin closed just under $30,000. In mid-April,, he flirted with $65,000.
Yes, and quite large. Musk announced in February that his electric car company Tesla had invested $1. 5 billion in Bitcoin. In March, Tesla began accepting Bitcoin as a means of payment. These actions contributed to the increase in the value of Bitcoin, and Musk also promoted the virtual currency Dogecoin, which also rose in value.
However, Musk reversed the value in a short time, claiming last week that Tesla would avoid accepting Bitcoin due to the potential environmental damage it can result from bitcoin mining. The announcement cut Bitcoin below $50,000 and set the tone for Bitcoin’s recent big decline. maximum cryptocurrencies.
Several Bitcoin enthusiasts have rejected Musk’s reasoning. Billionaire Mark Cuban said gold mining is more harmful to the surrounding area than Bitcoin extraction.
A 2019 exam conducted through the Technical University of Munich and the Massachusetts Institute of Technology revealed that the Bitcoin network generates an amount of CO2 similar to that of a giant western city or an entire emerging country like Sri Lanka. last year, the University of Cambridge estimated that, on average, 39% of “proof-of-work” cryptocurrency mining runs on renewables, basically hydropower.
Digital payments company Square and its CEO Jack Dorsey, also CEO of Twitter, have been big supporters of Bitcoin. Overtock. com also accepts Bitcoin, and in February, BNY Mellon, the oldest bank in the U. S. U. S. , He said it would come with virtual currencies. in which he supplies customers. And Mastercard said it would begin supporting “selected crypto currencies” on its network.
Bitcoin is popular enough that more than 300,000 transactions usually occur over the course of an average day, according to bitcoin wallet site blockchain. info. However, its popularity is low compared to money and credit cards.
Yes, very much. Tracking the value of Bitcoin is evidently less difficult than looking at its value, which is why so many institutions, experts and investors are skeptical about it and about cryptocurrencies in general. Digital currencies were thought to update paper money, but this has not done so. Federal Reserve Chairman Jerome Powell said the central bank prefers to call cryptocurrencies “cryptoassets” because their volatility undermines their ability to buy value, a fundamental service as a currency.
While some banks and monetary corporations are just starting out, others are staying away.
Regulators aren’t too worried about an imaginable collapse of virtual currencies that drags down the rest of the monetary formula or the economy.
Even with the recent big sale, virtual currencies have a market price of around $1. 72 trillion, according to the website coinmarketplaceplaceplacecap. com, but that pales in comparison to the $46,900 million inventory market, the $41,300 million residential real estate market and the Treasury market. around $21 billion at the beginning of the year.
The European Central Bank said Wednesday that the threat of cryptocurrencies affecting the stability of the monetary formula seems “limited at this time. “This is largely because they are still not used much for tickets and the establishments under their jurisdiction are still bad. exposed to cryptographic instruments.
Earlier this month, the Federal Reserve said a survey of contacts in the market revealed that roughly one in five cryptocurrencies had been cited as a possible surprise for the formula over the next 12 to 18 months. no mention of cryptocurrencies.
Officials in Washington have talked about regulating virtual currencies and considerations about a tougher hand have played a role in the recent price drop.
Gary Gensler, who took over as chairman of the Securities and Exchange Commission last month, said cryptocurrency markets would gain advantages from increased scrutiny for investors.
At a hearing before the House Financial Services Committee earlier this month, Gensler said neither the SEC nor the Commodity Futures Trading Commission, which he led in the past, had a “regulatory framework” for trading on cryptocurrency exchanges. They deserve to fix it in the end because “there is no cover that opposes fraud or manipulation. “
It’s a mystery. Bitcoin was introduced in 2009 through a user or organization of other people operating under the name of Satoshi Nakamoto. Bitcoin then followed a small handful of enthusiasts. Nakamoto abandoned the card when Bitcoin began to attract attention. the currency follows its own internal logic.
The Associated Press