It is hard for people to admit wrong, especially when the fault costs a lot of money. Bitcoin is becoming another case study for mass miscalculation that costed over $750 billion. The allure of riches backed by innovative, alternative, functional, digital currency proved too seductive for people to ignore. And that includes people of all education, occupation, and financial status. It attracted big money; venture capital, corporations, institutional investors, banks, and governments. Countries like Switzerland, Belarus, Sweeden, Malta, the Bahamas, Gibraltar, Singapore, Japan, and China (Hong Kong), all jumped at the opportunity to claim the title of the crypto capital of the world. Everyone expected greatness in their own way but in the end, we all got it wrong.
At the peak of hype and value, the average investor expected to make a fortune by buying and selling crypto. But when the market turned, buyers held on waiting for reprieve while prices disintegrated in front of their eyes. Looking back now, retail investors got it wrong in their belief that the price fall was only a correction and not a precipitated drop. In retrospect, the correct course of action was to sell and rebuy at bottom price levels.
Corporations got it wrong in assuming that the blockchain is the cure to all operational inefficiencies. CEOs and decision makers in general assumed that decentralized ledger technology (DLT) would be an easy and cheap transition. And in the process, value would continue to rise and generate profit. Both assumptions were incorrect. Now, a number of companies are downsizing and reassessing their long term crypto strategies.
Governments got it wrong in believing Cryptocurrencies are an economic elixir. Counties embroiled in economic and political crisis turned to crypto as an inflation-proof currency. However, price volatility adds further instability to their fragile economy. For example, Venezuela set aside 50,000 barrels of oil to back the value of their “Petro”. It is unlikely that this alone will incentivize its use at national or international levels.
Governments also got it wrong in thinking they can regulate crypto. They fail to understand the nature of digital assets and their characteristics. To simplify legislation, the SEC loosely deemed them all as securities. India, South Korea and Japan struggle, while China banned them altogether.
In 2010 major banks did not take Bitcoin seriously. They considered cryptocurrencies a fad or cult application with no real use case. However, in 2017, when Bitcoin became popular and its potential utility was realized, the banks scrambled. They attacked Bitcoin in quick succession calling it a scam and a threat. Besides underestimating it, the banks got it wrong in believing that crypto is dead. Crypto technology far outperforms the current financial system in speed and cost. And it would be a costly error for the banks to dismiss Bitcoin once more.
The overvaluation of Bitcoin and all subsequent crypto currencies set in motion a set of miscalculations that ended in the present market collapse. Crypto unveiled a new form of human interaction and organizational efficiency that applies to most industries. It offers unprecedented financial freedom with a global reach. Unfortunately, rather than letting Bitcoin grow through organic adoption and value, it was labeled as digital gold. A term it never meant to bear. This led to everyone believing that crypto was something that must be owned and stored. When in reality, it is just an expedited process to transfer digital assets and securely store information.