- The Bank of Finland document is titled “The great illusion of digital currencies.”
- Aleski Grym notes that it is not possible to have a currency without a centralized control.
- Bitcoin price path of least resistance is to the downside.
The current declines affecting virtually the cryptocurrencies are only adding sorrow to a gloomy market. The first quarter of 2018 saw digital assets free fall from the highs traded in December 2017 and January 2018. Bitcoin trade marginally below $20,000, however, attempts to recover have been rendered unsuccessful since then. The second quarter was not any different, while the third quarter has begun with fresh overarching declines. Bitcoin is currently fighting for a support above $6,700 and like FXStreet editor Eren notes, $6,000 is well insight.
In the meantime, a recent paper written by Aleski Grym, the Head of Digitization at the Bank of Finland, refers to virtual currencies as fallacy. He notes that it is not possible to have a currency without a centralized control, the same time, avoiding intermediaries does not help either. The document is titled “The great illusion of digital currencies.” The document is meant to bring back clarity to the public which has been overshadowed by the rise of social media along with the internet. After review various literatures on money, Grym concludes that, “What is common to most definitions in the literature is that money is defined based on what it does and not what it is.” He argues according to Finance Magnates that:
“A blockchain is essentially a record-keeping mechanism, which is the role filled by banks in the fiat money system. Bitcoin was built to avoid banks, and so uses a peer-to-peer system where instead of accountants we have miners. Data is not actually sent from sender to recipient, but from sender to the ledger.”
Bitcoin price recently broke out of the descending channel, but the upside was capped below $6,800. The digital asset lacked the momentum to recoil further up towards $7,000, instead, it fell in the Bears trap spiraling past support areas at $6,600 and $6,400. Continued selling pressure pushed the price below $6,300 support, besides the sellers have remained in control since the opening of the session on Thursday 12. Maintaining the support above $6,100 is vital to avoid declines towards $6,000 in the short-term. However, at the moment, the path of least resistance is to the downside.
BTC/USD 4-hour chart
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