The value of Bitcoin continues to plunge. At its high in November 2021 its unit worth reached USD 69,000 but has since declined by 67% to a value of less than $20,000

In general terms, crypto currencies high point market valuation has fallen from USD 3 trillion to around USD 950 billion and there is no reason to believe that this lemming like run to the precipice of financial disaster will not continue.

Around the globe, small investors have good reason to rue the day when they were convinced by expert propagandists and celebrity Influencers to participate in Ponzi style schemes which run a frenetic course 24/7 with virtually no regulatory body to combat fraud. In the USA alone regulators say that nearly 50,000 citizens have reported losing the equivalent of one billion dollars during the past year due mainly to market manipulation by the big players such as Elon Musk, Ron Paul , John McAfee and other fervent devotees of the Libertarian Movement. They were aided in this by the supposed good repute of the highly active investment departments created for dealing in crypto assets by Black Rock, Goldman Sachs, Morgan Stanley, PayPal and the Three Arrows hedge funds.

Bitcoin´s volatility and the speculative nature of its transactions make it particularly vulnerable to criminal deception and market manipulation by the mighty magnates known in crypto jargon as “whales”. At the end of 2021 . of twenty million accounts just two thousand held 42% of total wealth. In an infamous intervention, Elon Musk announced a USD 1.5 billion investment in Bitcoin to facilitate the purchase of Tesla vehicles using crypto currency thus causing an immediate surge in value . This was was drastically reduced when, a few days later, he reversed his decision thus causing great losses to the many small gamblers who had been lured into parting with their savings .

Fourteen years ago a group of bright eyed Millennials, known collectively as Satoshi Nakamoto, introduced a structured scheme for the introduction of digital currency which was intended to reduce the costs of money transfers by cutting out private banking systems and, consequently, the control exercised by central banks. To achieve this seemingly laudable object, a complex technical system was invented whereby digital money could be produced by specialist computers being linked at “mining farms” . These have been severely criticised environmentally for their colossal consumption of electricity, the consequent generation of CO2 and a short life due to heat and wastage of materials. Only in this way could the creation of secure blockchains be achieved with each unit being used to record up to two thousand transactions with guaranteed anonymity for the participants. Six new blocks are produced and registered every hour thus creating values of Bitcoin until the finite limit of 21 million units is reached.

By contrast, Ethereum can be mined using a normal PC but requires a very powerful graphics card which has limited production so, in the face of high demand, operating costs have spiralled upwards. This also applies to other stable-coins which have been in high demand until, like shooting stars, they fall to earth.

The initial success of Bitcoin soon resulted in fierce competition and the formation of an enthusiastic crypto-community which supported a growth of commercial advisors with little knowledge of this innovative digital industry. Many were aged between 15 and 25 and enthralled by the new horizons for the future financial cyber world which promised early enrichment in return for expertise. This idealism was soon countered by the encroachment of global criminal organisations which rivalled SPECTRE in their range of sophism and fraudulent activity but without any James Bond to aid the IMF in challenging the many false trading platforms engaged in money laundering, price manipulation and the flooding of markets with insider trading and false statistics.

Last year China banned all its financial institutions from dealing in western style crypto currencies and forcefully closed the “mining farms” which had sprouted near major cities. It is reported that both India and Russia may soon follow suit. But this is probably only a prelude to the formation of their own blockchain markets which would create a very powerful eastern bloc capable of countering sanctions and other punitive moves. Already we have seen a growth from 5% in May to 40% in June for the import by India through porous frontiers of Russian energy products and their re-export to western countries.

Oligarchs world-wide have chosen to benefit from the secrecy and tax evasion of holding part of their ill-gotten gains in Crypto. This may have contributed to the failure on 12 June of the cryptobank Celsius which triggered the current adverse effects on liquidity. Finblox, Bancor and Voyager platforms, had been offering 12% return on crypto deposits, before clamping down severely on limits for daily withdrawals blaming exposure to hedge funds such as Three Arrows Capital which has been in difficulty with the repayment of short term loans.

In Portugal, references are inevitably made in the same breath to Golden Visas and Crypto Assets. Presently, property transactions must be recorded by notaries in Euros but there is currently a ludicrous proposal to admit digital currencies to transfer deeds so that foreign purchasers will benefit from avoidance of Capital Gains Tax and other benefits of anonymity.

There can be no doubt that the creation and management of crypto assets is here to stay but , as yet, there does not appear to be any effective way in which governance can regulate clandestine activities for the protection of citizens; especially when so many governments are dictatorships or composed of mafia elements. But this spectre of financial delinquency must be tackled soon and firmly if we are to avoid another disaster similar to that of 2008 . Come back on-stage 007!

The opinions expressed in this article are those of the author and do not reflect the opinons of The Portugal News, their parent company or any affiliated companies.