SPECULATION HARMING CRYPTO CURRENCIES

On the face of it, speculation in crypto currencies might seem like an awesome factor. After all, it was price speculation on BITCOIN that propelled the price of the crypto to amazing heights. So how can we say that, price speculation harms crypto currencies. 

The problem with many crypto currency projects including BITCOIN is that, they have no substance or worthy objective. We all know that BITCOIN was conceptualized, to facilitate peer-to-peer payments without any intervention, from the banking system. The wild price fluctuation in the price of BITCOIN in the last 12 months, has little to do with money transfers, it was driven solely by speculation. 

The crypto markets are now in a vibrant mode, buyers who can still afford BITCOIN at stiff prices, are spending big money. Most crypto debutants are looking at the thousand odd crypto currencies that have now been implemented. Most of them follow the BITCOIN business model floating blockchain projects, with nothing besides a digital currency. 

While price movement is not a worry, reckless speculation that brings violent price changes is a serious problems. Buyers with a large share of a crypto, can cause significant price swings in their favor. In this situation, there would be winners and losers – we would hear only about the winners. 

Wild speculation can result in wide losses, this especially because of the growing interest in crypto currencies. Governments are quick to warn their people to stay away from crypto currencies. Some of them have even stated that, crypto related scams and frauds might be tough to identify and prosecute. 

So what can the crypto community do to deliver value and yet, stay away from mindless price speculation. It all begins with a worthy project, one that provides products or services that will benefit a specific industry. If the project includes a blockchain platform where buying and selling can happen, the crypto currency could be used as a mode of payment. You then have actual usage of the crypto and this, will have a positive effect on the price of the crypto. While there will be a small component of price speculation, actual usage of the crypto currency, will define the price and value. 

Given the speed at which the number of crypto currencies and the interest in cryptos is growing, self-regulation might not be the best option. What we need is a concerted effort by governments, to work on regulations that can harness the benefits of cryptos while keeping the negative effects at bay. Once this happens, we could move to the phase where governments could discuss ways to formulate polices that had a wider global reach. 

For now, we can surely say that uncontrolled price speculation in crypto currencies and volatility that is not backed by true value or usage is harming cryptos.