One of the most important things that Bitcoin is Better says about its value is that no one can make more of it than what is already in circulation. An executive at a cryptocurrency exchange made the shocking claim that some exchanges can move the market by making and selling Bitcoin that doesn’t exist on the blockchain but does in their system.
The executive said that someone who wanted to dump the market could go to an offshore exchange that doesn’t do financial audits and ask for $100 million in Bitcoin in exchange for $10 million in Tether (USDT) as collateral. At the offshore exchange, money is not checked, so this is possible.
Bitcoins are only made on their system. They are not part of the chain of blocks that make up Bitcoin. The customer or an internal market-making team then sells the equivalent of $100 million worth of bitcoins, which brings down the price of bitcoin on all exchanges.
The executive also said that people don’t use cryptocurrencies as much as they can because they are afraid that they could be used to hide money. The CEO thinks these worries will go away if there are more rules and more people follow them. He said:
It has a lot in common with other investing methods, but it is still fairly new. So, I think we can learn a lot from the stock market, where laws have been tested for longer.
Zhdanov finished his explanation by saying that hackers and other bad people are more likely to attack cryptocurrency than banks now because cryptocurrency has more security flaws than banks. If you want more people to use digital assets, said the CEO, you can’t say enough about how important security is.
Over the past week, the value of Bitcoin and other cryptocurrencies has been going down. This was like when the Federal Reserve raised interest rates by a quarter of a point, and the markets went down.
Some financial experts think Bitcoin is very volatile, but in November 2017, it hit its all-time high price of $68,000. Part of this was that more places started to accept it as a way to pay, like PayPal, Etsy, and Whole Foods.
Glassnode says that the world’s largest and most popular cryptocurrency has lost 49.5% of its value since its high point in November. As of Tuesday afternoon, the price was between $31,600 and $31,800.
Even though some of the biggest names in finance are starting to use Bitcoin, its price keeps decreasing. Fidelity Investments said last month that bitcoin would soon be able to be used in 401(k) accounts.
Before the problem this week, on August 14, Bitcoin was worth about $25,000. In June, when the price of Bitcoin was the lowest it had ever been, this was a big change. This week, though, Bitcoin has been having trouble.
For those who need to remember, on June 18, the price of bitcoin dropped to $17,708, which was its lowest point in the last 52 weeks. It was said that some crypto companies were having trouble getting money. To trade stable coins check Bitcoin smart.
A few days before Bitcoin’s lowest price, the cryptocurrency lender Celsius stopped customer withdrawals, citing “extreme market conditions.” Customers can no longer take money out of their accounts or send money to other people as of June 13.
The price of bitcoin will probably keep dropping suddenly in the near future, at least until the world economy shows signs of getting better. This could happen if the central banks of the United States and Europe put out more stimulus packages.
Eric Thies, a trader in cryptocurrencies and a technical analyst, told Cointelegraph that major geopolitical conflicts and risks have been affecting the market recently, even though investors have only been paying attention to the coronavirus pandemic.
Saudi Arabia and Russia can’t agree on how much oil should cost, for example. The sudden, unexpected drop in the price of oil added to the uncertainty, anxiety, and instability that investors were already feeling on the global markets.