Cryptocurrency Overtakes the Power of the U.S. Dollar
As inflation hits markets across the globe from computer chips to steel, lumber and food, the cryptocurrency craze is no exception. Investor speculation on digital currencies are showing signs of fear that we may be facing a massive bubble that could burst at any time.
This week, according to an article from futurism.com, cryptocurrencies have hit an all time high valuation of 2.25 trillion dollars. That alone surpasses the total amount of all U.S. print dollars and hard coin currency in circulation across the entire globe combined. U.S. dollars amount to around 2 trillion dollars in circulation, a number that cryptocurrencies matched in late April according to an article from the Wall Street Journal.
In merely a year of time, current market graphs show that cryptocurrencies total valuation has skyrocketed from a quarter of a trillion dollars to the 2.25 trillion dollar mark.
While the most popular cryptocurrency, Bitcoin, has doubled its value in a matter of months, the second place currency of Ethereum broke $4,000 dollars for the first time. Since this weekend, values have slightly dropped from these highs, but the upward trend still remains for the moment.
Another rising cryptocurrency, Dogecoin, had a swing through the weekend as well. It actually plummeted downward as Elon Musk appeared on Saturday Night Live. Investors in Dogecoin had high hopes that a mere mention of the currency from Elon might bring the value of the coin to the much desired dollar mark. Instead, prices fell down to half that as confidence in the coin dissolved during the show and into Mothers Day through the weekend.
During a skit on Saturday Night Live, the actors joked about the cryptocurrency. They laughed while admitting that Dogecoin is “just a hustle”.
Without hard resource backing, what happens if the bubble pops and cryptocurrency markets collapse? You may be close to being able to buy a Tesla with crypto, but you cannot pay your bills or get groceries from the store or gas for your car with crypto without trading it for dollars. When the foundation for a money is a seemingly imaginary construct, what happens if confidence is lost?
Without confidence, there can be no value. Without value, could the entire crypto market become worthless?
Investors continue to play the cryptocurrency game for the moment. But as real world demand increases for hard materials and basic necessities, we will have to wait and see if confidence in crypto continues to drive gains forward into the future. A potential collapse could be just right around the corner.