The Crypto Obituary: Devoted Coins Survived by “The Real Thing”
By John Rothans, Chief Numismatist @ U.S. Money Reserve
Economists are now comparing bitcoin’s valuation tumble to the infamous dot-com nosedive of the late 1990s, with Bloomberg even labeling it a “bloodbath.” The king of the cryptos has dropped about 70 percent from its December high because of a combination of increased regulations and a rash of cyber-heists.
But bitcoin is not the only digital currency that’s crumbling. Ethereum is down 66 percent since January. XRP is down 87 percent, and Litecoin has slipped more than 78 percent since December as values have plummeted across the cryptocurrency landscape. In a single weekend last month, virtual monies lost over $42 billion. Over 800 digital currencies have now been declared “dead,” and there have been so many coin deaths that multiple websites are now solely dedicated to compiling cryptocurrency obituaries.
So what happened? Within the cryptocurrency community, there has been nothing short of an Initial Coin Offering (ICO) contagion. According to CNBC, almost $4 billion was raised via digital ICOs last year. In 2018, that number has already tripled. Let’s not forget that an ICO is a means of raising capital whereby digital tokens are issued via blockchain to fund future business development. But the current lack of regulation results in an associated lack of transparency, and the big-dollar hype has left the ICO system vulnerable to manipulation and misrepresentation.
Some ICOs, like MintCoin, WorldCoin, and Paycoin either crashed, burned, or simply never came to fruition. Others like Visacoin, NeonCoin, and SureCoin were scams that pinched millions of dollars from unsuspecting investors. Familiar stories of disappearing programmers, money laundering, and foreign Ponzi schemes have been popping up in cryptocurrency chat rooms across the internet. According to Bitcoin News, some $9 million a day is lost to cryptocurrency scams. That’s about $3.25 billion a year.
To be sure, no one is suggesting that blockchain does not have a place in modern society. Despite his dramatic crackdown on bitcoin trading and his complete ban of cryptocurrency websites, even Chinese President Xi Jinping calls the digital ledger technology a “breakthrough.” Beyond bitcoin, the benefits of blockchain extend to supply chain management, payment processing, recordkeeping, and anything that lends itself to automation or decentralization.
Still — for all the billions of dollars they hold, cryptocurrencies are fraught with uncertainty. A feature article in TechCrunch recently read, “Cryptocurrencies have an Everything Problem.” Indeed, they have been plagued by skyrocketing fees, chronic hacks, prolonged wait times, government crackdowns, mass regulations, heavy energy consumption, and premature death.
The antithesis of all this, of course, is the real coin market — meaning physical coins that you can touch, hold, and store in a tangible place. A one-ounce American Silver Eagle Coin, for instance, is issued by the United States Mint and carries a 99.9-percent pure silver guarantee.
Unlike the virtual currencies of today, silver has been around since ancient times and was vital to earlier civilizations. It was not only a means of trade and coinage, but also used for adornment, jewelry, tableware, and food storage.
Today, silver has positive market demand both as a financial asset and an industrial metal since it has thousands of uses in manufacturing, electronics, medicine, water purification, dentistry, printing, photography, and solar energy. Global demand has also been steadily rising for silver jewelry, particularly in the U.S., India, and China.
The last time I checked, you can’t wear bitcoin around your neck. Nor can you use it to start a car, take a photograph, or light a town. And unlike some governments have done with cryptocurrencies, no government has ever banned silver or shut down its trade — nor has any scammer ever hacked it or “ponzied” it.
This makes references to “cold storage,” “wallets,” and “mining” in the cryptocurrency dictionary all the more revealing — virtual coins are desperately trying to mimic real ones. But to quote Coca-Cola’s celebrated 1969 slogan, bullion coins are “the real thing.” And right now you can buy almost 400 solid American Silver Eagles for the price of a single, and virtual, bitcoin.
