If a government releases a true cryptocurrency, that they have limited control over, would it be like hiring their own replacement? Governments love to control money, so what happens when there's a form of money they can't control?
Should someone sell their bitcoins after investing at the peak and losing 90% of their dollar value?
Kurt is joined by Chris Guida to discuss these questions.
Scroll down to watch and listen to this episode of Cryptonomics.
Will a government release their own cryptocurrency in 2019?
The Venezuelan government released the Petro in 2019... Sort of. Cryptocompare.com says they have no data about what the current price is, and Coin Market Cap doesn't list it at all. It seems that it was a state-sponsored scam.
Dash has more adoption than any other crypto in Venezuela, including the Petro. So far we can say that people want free market crypto, not government crypto.
In a way this question misses the point. Cryptocurrencies are already finding adoption in one way or another - used in commerce or as fund-raising tools for new companies - in the world's largest nation: the Internet. It doesn't need a formal declaration to have legitimacy. Real-world use is its own statement of legitimacy.
Governments probably won't embrace crypto for many years, and when they do it might be reluctantly. Just as periodicals were slow to adopt the Itnernet - they didn't want to give credence to a system which one day might make them obsolete.
The role of many states revolves around managing the money supply - the creation of new money, its allocation, and its extraction from the people. As people move towards freer money, states will have more existential crises.
Should I sell my bitcoin after losing 90%?
If Chris were in the situation of losing so much of his dollar value on bitcoin, he would hold and keep buying. His reasoning is that he has researched the project thoroughly, and believes in its long term success. Short-term fluctuations aren't all that important, as we've seen bubbles in bitcoin previously, peaking twice in 2013 at $240 and $1000.
The other factors that people can consider are, have they put in more than they can afford to lose? Did they buy crypto on credit, and now they can't afford to pay their bills? Cryptocurrency is a very volatile asset, and every individual can consider the amount of risk they want to assume. If it's painful to even imagine the holdings going to zero, selling some might be a good option. It's important to remember: it's easy to think you have a high risk tolerance when you think it's not going to go down.
You can listen to the episode on Anchor and other podcasting services here: Cryptonomics - State Sponsored Crypto? With Chris Guida. Or watch on YouTube below: