The global financial world happens to be very dynamic and ever-fluctuating. A number of economic and social events are taking place around the world, which has severe consequences. The same can be said for the decisions and policies adopted by the different governments of the world.
Many financial instruments and innovative products have been introduced to meet the ever rising demand of investors and finance enthusiasts. In recent years, the financial world has witnessed the rise of a new digital form of currency; cryptocurrency.
In simple words, cryptocurrency is a digital asset, which acts like fiat money, and uses cryptography to secure its transactions, to control the creation of additional units (of currency), and to verify the transfer of assets. One of the leading cryptocurrencies, Bitcoin, has witnessed an unprecedented growth in the recent years, and especially in late 2017, the growth of Bitcoin had shaken the world.
A number of economists, investors and people well versed in the markets have termed the rise of Bitcoin as the next big ‘bubble’. The entire cryptocurrency market has been termed as being very volatile.
But this isn’t true.
Cryptocurrencies have the potential to be the next medium of exchange. But, they’re also considered to be a form of investment for those who believe in these digital currencies. Due to an increase in interest in cryptocurrencies, there have been a lot of conspiracy theories floating around. Let’s take a look at some of them.
Theory 1: Graphics cards manufacturers are behind the rise of cryptocurrency
There have been theories that graphics card makers are the reason for the tremendous growth. The computing power of graphics cards aid in cryptocurrency mining. The rise in Bitcoin has indirectly led to an increase in the value of other cryptocurrencies such as Ethereum, Litecoin, Ripple, etc. and these are some cryptocurrencies which are profitably mined using graphics cards.
If you think about it from that perspective, by marketing graphics cards to mine cryptocurrencies, the graphics card manufacturers are able to double their prices and profits and are able to convince people to buy the cards to mine cryptocurrency. Due to the rising value of cryptocurrency and prospective possibility of making profits out of it, people end up buying more graphics cards.
According to some theorists, graphics card manufacturers are purposefully trying to make some cryptocurrencies minable only through the use of graphic cards. This has led to the theory exclaiming that graphics card manufacturers are taking advantage of the general public, who just want to take a shot at these marvellous coins.
Theory 2: Another Ponzi scheme
There have been theories that the entire cryptocurrency market is a Ponzi scheme, created by hackers to make money for themselves and leave the public devoid of money. By manipulating the demand of cryptocurrencies, the blockchain companies all around the world are trying to profit from the ever-fluctuating prices of cryptocurrencies, and fool the public into investing in cryptocurrencies like Bitcoin, Ethereum, etc.
Even financial organizations have described cryptocurrencies as virtual currencies (VCs) which do not have any intrinsic value and are not backed by any kind of assets. It was quoted that the price of Bitcoin and other altcoins is entirely a matter of speculation resulting in spurt and volatility in their prices. Cryptocurrency and ICO scams such as Onecoin, LCF Coins, Centurion Coins, Earth Coin and S-Coin have become the prominent examples of the type of virtual currency scams which the general public continues to be a prey to.
Theory 3: Coalition of huge investors and news channels
It’s being said that the entire Bitcoin and cryptocurrency market is a coalition of prominent investors and news channels who seek to manipulate the prices of Bitcoin and other cryptocurrencies. It’s been observed that everytime a news channel or popular blogs make a positive mention of any cryptocurrency, its value booms.
For example, the famous American Sitcom TV show, ‘The Big Bang Theory’ had an entire episode named “The Bitcoin Entanglement” in its eleventh season, and this episode was based on Bitcoin. At the time of this episode airing, Bitcoin was worth almost $10,000 USD each. After the episode aired, the price of Bitcoin surged up. This shows that the media can have a huge influence on the prices of cryptocurrencies and they can control the fluctuations of prices of the cryptocurrencies.
However, the real reason is that people often buy, when they hear such news with a positive outlook. This creates a demand for the currency and the price begins to surge to accommodate the increasing number of buyers since the number of Bitcoins is limited at any given point in time.
Now, I hope you can guess the reason why the price of Bitcoin is speculated to fly to the moon once the last Bitcoin is mined.
Anyway, as the theory describes, the coalition of investors and news channels are a huge example of how the general public can be duped into investing in cryptocurrencies by the media and investors, and how big a conspiracy it is. Bitcoin and other cryptocurrencies are very risky and do not yield any income. Moreover, a person has to sell it to realise any value.
So, are these conspiracy theories legit?
Like gold and other currencies, crypto can be transferred peer-to-peer. Bitcoin has been dominant and is attempting to defeat the purpose of the traditional role of banks. The introduction of the concept of cryptocurrencies threatens the banking model of providing loans and funding from the central bank, as banks are no longer necessary to intermediate funds and there is no central bank to ensure that the prices of cryptocurrencies are stable.Perhaps, the banks are hiring people on the internet to spread these conspiracy theories. Click To Tweet
Remember, if you’re a newbie investor, just be aware of what you’re getting yourselves into; only invest what you’re willing to risk and maybe lose. But, you never know, it can even go the other way and make you rich.
Ultimately, the choice is yours to make.
Till then, happy investing! Have you heard of any cryptocurrency conspiracy theories that are convincingly believable? Share in the comment section below.
Featured Image by Corey Reifinger