What are the implications of Bitcoin on the rules of the global capitalist system?

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date of publication:
June 13, 2021 12:05 GMT

Update date: June 13, 2021 13:45 GMT

A British report sheds light on the future and prospects of cryptocurrencies, which are being proposed by some as an alternative to traditional currencies, and whether they can change the rules of play in the global capitalist system.

The report, published by the Social Worker magazine, stated that “until recently, Bitcoin and its sister currencies were promoted as the future of money, and some even argued that these currencies are the future of capitalism itself, and its proponents said that it is free from the control of states and their banks, and therefore poses a devastating challenge to the system.”

But now it seems that the massive crash of the cryptocurrency market has wiped out many of these expectations, the value of bitcoin has fallen by more than 50% since last March, as the cryptocurrency lady experienced its largest decline in recent weeks, and most cryptocurrencies marched Others are on the same downward trajectory.

She added: “It appears that the driver behind the significant devaluation was an announcement by the American business and billionaire Elon Musk, founder and CEO of (Tesla), who wrote a tweet on Twitter last month in which he said that the company will not accept Bitcoin payments in its transactions yet. Now, he justifies that with environmental concerns.”

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fears and anxiety

Tesla was soon followed by a statement from the Central Bank of China saying that they were tightening regulations banning financial institutions from providing services related to digital money, and the bank said that “virtual currencies are not backed by any real value.”

Tesla’s clear environmental concern stems from the way cryptocurrencies need massive computing power to create, trade and confirm their legitimacy, a process called “mining.”

Cryptocurrencies work using a decentralized technology called “blockchain” in recording transactions, and then huge banks of high-powered computer servers, stored in giant warehouses, were needed to process them with their high exchange value.

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Some estimates suggest that Bitcoin mining alone uses more energy than the entire country of Argentina, but Musk’s environmental concern is unlikely to be his main driver, as he is the owner of SpaceX, a company that wants to use massive amounts of electricity. of fossil fuels so that humans can colonize Mars.

The most likely explanation for Musk’s stance on Bitcoin is the way in which the value of cryptocurrencies are subject to huge fluctuations as a result of investment patterns.

Collapse

When global stock markets collapsed in March of last year, many investors fled, fearing that the coronavirus epidemic would hit most publicly listed companies hard.

With profits expected to fall, stock prices were sure to fall as well, so millionaires had to think of other places to store their money.

Banks were offering very low interest rates, government bonds were unlikely to yield a high enough yield, and some of that surplus money ended up in cryptocurrencies and helped drive their prices to previously unknown heights.

Lots of small investors took advantage of the hype and invested their savings in Bitcoin and its competitors, including Dogecoin and Ethereum, in the belief that its value would only rise.

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The magazine reported that by last March, the value of Bitcoin had risen by nearly 800% over the year, but contrary to the beliefs of crypto evangelists, the value of Bitcoin and its competitors are being manipulated.

Prominent IT entrepreneur Michael Saylor teamed up with Musk to try to centralize the market, forming a “Bitcoin Mining Council” with leading coin miners, and Elon Musk has invested more than £1 billion in Bitcoin. This huge investment allows him to easily manipulate the market, and the transfer of funds from Bitcoin causes its value to fall.

It is indicated here that about 40% of cryptocurrencies are owned by a small group of wealthier investors.

The total value of large cryptocurrencies is more than a trillion pounds, and that sounds like a huge amount of money until you know that the global market for stocks, not to mention currencies and tradable bonds, totaled 67 trillion pounds,

Far from being a more democratic form of exchange and exchange that can bypass the powerful, recent weeks have shown that cryptocurrencies are just a game in the hands of the rich.





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