This analysis is prepared by Paulius Stankevicius who is the CEO and Founder of Stankevicius Group. Stankevicius Group is deeply analyzing the digital asset market as the group is launching their own digital asset bank in 2021.
No matter which side of the current financial system you side with, the fact of the matter is, both sides of the coin have shortcomings that need to be addressed. There may be nothing more telling that a system is broken, than the current turf war that is taking place between Wall Street and the Reddit subgroup r/WallStreetBets. One definition of a market is a system with enough buyers and sellers that it builds in efficiencies that create a perceived true value of an asset. So how is it that hedge funds and other large capital holders are able to manipulate the markets to their advantage? This market is not efficient if the little guy always loses, and the past couple of weeks have revealed how inefficient the stock market can truly be.
When we talk about issues with the global financial system, fiat currency is one of the first things that are usually mentioned. What is the problem with cash? Well, it is very much a controlled form of currency, which ultimately places much of the economy’s power with central banks and the government. A federal reserve can control the value of a currency as well by choosing to print more or less of it, which of course leads to economic instruments like inflation. This can cause an economy to be artificially propped up by a large influx of capital, something similar to what we continue to see as a fallout of the COVID-19 pandemic. The United States Federal Reserve has chosen to continue to print money to hold up the stock market, which of course leads to a devaluing of the American Dollar which has seen some of its lowest rates in years.
So that seems pretty straightforward, we should be shifting towards a non-regulated and decentralized currency. If the government can’t control it, then it should solve all of our problems, right? Well, not exactly. The problem with cryptocurrencies, as we know them, are fairly obvious to those who understand their complexities. First and foremost is the act of convincing society to accept them as legitimate forms of currency. While this has certainly improved over the years, currencies like Bitcoin are still banned in many countries around the world. On top of that, there is only a small percentage of retailers that are willing to accept Bitcoin as payment, so its actual tangible value is still up for debate. Another interesting point is that yes, Bitcoin and other cryptocurrencies have stored value, but only if you equate it to a fiat currency. Cryptocurrencies are also inherently risky, as, without a true governing body, sudden crashes are just as likely to happen as sudden surges. Until widespread or universal acceptance of cryptocurrencies happens, it is difficult to even classify them as a currency that can be used in exchange for goods and services.
