Jung Min-ho has worked as a staff writer at The Korea Times since 2012, mostly covering social and political issues. He currently belongs to the Politics & City Desk where he covers topics such as health, labor and human rights. Prior to joining the team, he was responsible for covering North Korea and sports. His article about a biosecurity breach of Middle East respiratory syndrome won him an award from the Korea Science Journalists Association in 2016. He is also the co-author of the book, "Medical Pioneers of Korea" (2019). He served as the head of the international relations committee at the Journalists Association of Korea from 2021 to 2023.
'Cryptocurrency fantasy is over'
Will bitcoin ever bounce back? gettyimagesbank
By Jung Min-ho
By Jung Min-ho
Atulya Sarin
The price of bitcoin, the world's most popular cryptocurrency, was next to zero in 2009 but soared to near $20,000 at the end of 2017, only to crash back to the mid-$3,000 level this year. What's next?
Three experts contacted by The Korea Times said they believe the future of cryptocurrencies is bleak and the value of most “coins” will most likely go back to where they started ― zero.
“Bitcoin is no longer a new technology ― it has been around for a decade ― and still there is no use case for it,” Atulya Sarin, a finance professor at Santa Clara University in the United States, said. “Primarily all we do with bitcoin is that we trade it. That is awfully similar to tulips and Beanie Babies in their heydays ― and we all know what happened to them. So it is a not a question of if, but more a question of when bitcoin will go to zero.”
Kevin Dowd
Kevin Dowd, a finance and economics professor in the Business School at Durham University in the United Kingdom, also reckons most cryptocurrencies are in a bubble.
“Many are scams, others are already dead,” he said. “I believe bitcoin will eventually go to zero and so too will many bitcoin look-alikes. So the question is, what will survive? Ripple looks dodgy, so I don't think that will last either.”
Bitcoin has had a wild ride since its birth on Jan. 3, 2009. It was created as “alternative money” that would avoid government regulations and offer individual liberty in the financial industry.
Many economists warned of the great risks of bitcoin and its copycats, but many welcomed them with open arms. Its value skyrocketed ― sometimes gaining $2,500 in just a single day ― to, at one point, stand at almost $20,000.
But scammers soon poured into the market, regulators started to intervene and a growing number of investors began to lose hope in cryptocurrencies. On Jan. 31, bitcoin was worth $3,497 a coin, according to Coin Market Cap, a popular data source for price changes in crypto assets.
Andrew Sheng
Many people now are wondering whether bitcoin will ever bounce back. But Andrew Sheng, a distinguished fellow at the University of Hong Kong's Asia Global Institute and former chairman of the Hong Kong Securities and Futures Commission, is skeptical about the prospects.
“Cryptocurrencies operate on the belief that the currency can be created through technology, such as blockchain that is uncrackable, and therefore the currency is limited in production, has value and its value is determined by the belief that using the currency would avoid third-party knowledge of the transaction, especially taxation, foreign exchange controls and anti-money laundering,” he said.
“In practice, even if it is difficult, there is no system that is not crackable. Second, who is to judge that what is promised (such as undecipherable by another party) is true. In other words, who verifies that the software promised is truly blockchain, other than the claim of the supplier?”
Under such circumstances, he noted, many cyber currencies are scams designed only to fool gullible investors.
Sheng thinks some cryptocurrencies may survive, but inevitably, if there are major scams or investor losses, they will be subject to regulation.
“The world is experiencing a fantasy with cryptocurrencies and very soon reality will set in and the valuation will fall back to a stable level,” he said. “Where that level is, no one knows. For ordinary retail investors, I would not recommend investing your pension savings in such cryptocurrencies. The value of the holdings depends on finding the next buyer. In a falling market, there may be fewer and fewer buyers … So, buyers beware. The state cannot protect individuals from their own greed.”