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Why are central banks really afraid of bitcoin?

Central banks do not cherish love for bitcoins and other cryptocurrencies. The legitimacy of cryptocurrency and decentralized technologies is still in question, especially from banks. Central banks feel the need to create a central offices that would give the cryptocurrency real value.

The value of bitcoin – Many people and institutions do not want to recognize the value of bitcoin. The decentralized form of money, which is not produced or controlled centrally, creates many different problems. Moreover, the question arises whether this form of money can have any material value. Despite the fact that bitcoin has a market value, it as a rule, quite often fluctuates.

For central banks, this is a clear indicator that bitcoin is too volatile, because over the past nine years there have been many ups and downs of the price of cryptocurrency. Every year before the next increase in the price of bitcoin, its cost is falling. During the course of 2018, this bearish trend became apparent when the price of bitcoin fell by almost two-thirds.

Compared to gold, bitcoin is much more volatile, however, although gold is still a worthwhile investment, it still loses some attraction when it comes to investment.

Some people also attribute this label and bitcoin, but it is clearly too volatile for this. Nevertheless, compared to last year, the cost of bitcoin increased. June 19, 2017, its price was about 2500 dollars.

“Necessity” for the central offices – One of the frequently discussed topics is the lack of centralization in bitcoin. In particular, there is no central developer, company, bank or government responsible for maintaining the world digital currency. Finance is for banks, we have no choice but to trust them with our money. On the other hand, bitcoin is unreliable, therefore it poses a threat to banks that earn on the finances of others.

In fact, some experts go too far, claiming that bitcoin represents an existential threat to central banks, and even call it “The Napster of Money”. In addition, bitcoin is an alternative to traditional banking. This does not mean guaranteed success, but this is an interesting concept. One should not lose sight of the one-sided nature of bitcoin.

All this creates a very interesting future for the Cryptocurrency. “Changing the guard” in the sphere of finance will happen sooner or later. Nobody knows whether the cryptocurrencies will succeed in this respect or they will remain only investment mechanisms for speculators.

bitcoinsUntil the bitcoin technology ripens, it can not be used as a traditional currency. Fortunately, everything is changing for the better thanks to the Lightning Network. Now there are faster blockchains and cryptocurrencies, against which banking technologies seem outdated. Source: rucrypto.com

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