“It’s human nature to think, ‘I’m making money, therefore I’m really smart and this thing will keep going up’,” he said. “They were right, but not as right as they thought they were.”
He said he still believes bitcoin will prove itself as a sort of next-generation gold, but it will take time for investors to gain confidence in its safety.
The wild, at times precipitous, swings in the assets’ values have increasingly caught Washington’s attention, intensifying questions over how the emerging technology should be regulated. The attention from regulators and lawmakers has spurred the industry to assemble an army of lobbyists fighting to fend off tougher scrutiny, even as it’s unclear what regulation would even begin to look like.
The most recent price plunge comes as the Federal Reserve is taking its own steps weighing whether to launch a US digital currency, akin to electronic cash that would be backed by the central bank. On Thursday, the Fed released a long-awaited report exploring its options. For months, crypto experts, economists and lawmakers alike have been eager for any insight into the Fed’s closely held thinking.
The report reached no conclusive answers, instead wading into the pros and cons of any decisions. That’s in keeping with the Fed’s slow movement on issues around digital currencies, even as other central banks experiment with their own versions. The Fed has made clear that, rather than race to beat its competitors, it will be patient and deliberate, and Fed officials routinely caution that any action would ultimately depend on approval from lawmakers in Congress.
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The crypto crash came as the stock market saw its worst week since the start of the coronavirus pandemic. Just about every sector of the stock market sold off, with technology companies like Apple and Netflix taking massive blows. The drop offered a sobering reckoning for investors after the markets closed out 2021 in joyful fashion, despite the fact that so many other parts of the economy remain compromised by the ongoing pandemic, soaring inflation and instability in the job market.
Even so, popular interest in cryptocurrency has exploded in recent years. Nearly 30,000 bitcoin ATMs have popped up nationally in the last few years, and even major sports stadiums are now being renamed for cryptocurrency exchanges. Just this week, New York City’s new mayor, Eric Adams, announced that he would convert his first paycheck into two cryptocurrencies. Adams’s office said the paycheck will be deposited with Coinbase, an online platform used for buying cryptocurrency, and then converted into Ethereum and bitcoin.
But even crypto’s most enthusiastic supporters are up against the day-to-day reality that the digital systems only go so far. Users would be hard-pressed to rely on bitcoin to pay for a meal a restaurant, a movie ticket or a quick run to the convenience store.
Washington Post
