Bitcoin’s market cap hit new highs at around $28 billion as of May 9, but that hasn’t stopped regulators and central banks from sounding the alarm about the cryptocurrency. In fact, Germany’s central bank – the Deutsche Bundesbank – is warning against Bitcoin.
As reported in the EconoTimes, the bank calls Bitcoin a “speculative object,” and not a good place to hold value. The Bundesbank expressed further concern that Bitcoin is not issued by a central bank, but by unidentified actors.
As a consumer, this doesn’t sound very good to me. Yes, Bitcoin’s value has been rising, but what are the underlying fundamentals? To what extend is this rising value driven by legitimate consumers? Or is much of the demand for Bitcoin driven by bad actors?
It is well established that Bitcoin is a criminal’s dream – transactions online are anonymous and not traced by a central authority, making it the perfect way to conduct transactions online for things like drugs, human trafficking and prostitution.
So when you tell me Bitcoin is hitting new highs, I get nervous, because there’s little way to tell how much of the value lies in criminal activity.
Law enforcement goes into investigation with Bitcoin
Law enforcement is starting to catch on as well. Recently, the Florida legislature passed a bill that would include Bitcoin in its list of currencies that would be considered used for money laundering. I would expect more governments around the world to catch on sooner rather than later, which would put a crimp in demand for Bitcoin.
I am a cryptocurrency fan, and I do believe it is the way of the future. But I don’t think the Bitcoin model will ultimately emerge as the winner of the current crypto wars. Rather, it will be those cryptocurrencies that are transparent, that will win the day. That is why I would stick with options like OneCoin, because it is already transparent, tracks customer transactions and is run by an identifiable and known central entity.
In the world of cryptos, the old adage remains – buyer beware.