A shark is floating in a tank of formaldehyde that sells for a minimum of $8 million. The work called “The Physical Impossibility of Death in the Mind of Someone Living” by artist Damien Hirst was billionaire Steven Steven Cohen paid to take it home.
Although not everyone agrees that this work is art, Steven Cohen believes so. The value of 8 million USD proves it.
Back to the main topic: Bitcoin. It’s like a shark in a pool of formaldehyde. Someone used to pay a bunch of Bitcoins just to buy a pizza, but some people sell their entire business just to own a few Bitcoins. That’s what happened and at its peak, Bitcoin was worth $65,000.
The fanaticism of Bitcoin supporters is the main reason driving the price of the digital currency so high, especially when its value in payments is still controversial. More than just a work of art, Bitcoin is even something of a religion.
The turbulence with the price of Bitcoin over the past few days has proven it is nothing like a currency. However, advocates can compare Bitcoin to the contemporary art market. Cryptocurrencies and contemporary art are very similar commodities.
The monstrous volatility of cryptocurrencies is no longer surprising to skeptics. Its value can never be as meaningful as gold, stocks, bonds, and the dollar, which have always been backed by the goods and services of the American economy.
Cryptocurrencies are subject to drastic price fluctuations stemming from speculators’ beliefs, but at some point, it needs to stabilize around the value of the business or organization they represent.
Believers believe that Bitcoin has value because it is scarce (although it is always very easy to create new digital currencies). However, it must be remembered that anything worthless can fall in price dramatically regardless of whether they are scarce or not.
However, Bitcoin or cryptocurrencies can never become a currency especially when the criminal market easily exploits it. The value of cryptocurrencies mainly comes from speculation and the thrill of owning something that is scarce and can rise in price. However, it also makes them vulnerable to volatility.
As we have seen, any move from “sharks” like Elon Musk will cause Bitcoin to be excited or sell-off. In one day, Bitcoin sometimes lost 31% but recovered up to 33% just by the words of the “shark.”
No one knows what cryptocurrencies will look like in the next 10 years. However, risk and unpredictability may not be to the advantage of Bitcoin and similar products. Presumably, cryptocurrencies need hands behind to make sure they don’t rise and fall too hot to survive.