• Bitcoin drops below USD 7,000 as Monday traders take some profits in Asia
  • An economist sees the current economic situation beneficial for Bitcoin, likening its value to that of prison cigarettes in the future
  • Bitfinex pays 68 cents to move USD 1 billion in Bitcoin

 

Bitcoin took a slight tumble on early Monday morning as Asian profiteers shaved off some trades to book in weekend profits, taking Bitcoin down from above USD 7,000 to its current levels around USD 6,700 at 9:26 a.m. UTC (CoinDesk).

Bitcoin bulls won’t be worried, though, and an interview with Monash University economist John Vaz, confirms that the long-term outlook for the world’s most used cryptocurrency is still positive. The academic said that how states respond during this global crisis will affect how Bitcoin performs but for its own part, it still has to focus on mainstream recognition, acceptance and adoption. He does believe, though, that if the crisis deepens, then Bitcoin could see a more widely accepted role as money commodity, so much so it could be viewed the way cigarettes are in prison.

For now, Vaz says that Bitcoin’s drop isn’t surprising and that it is merely reflecting similar crises in liquidity that other markets worldwide are suffering. In times of need, regular people liquidate assets, and Bitcoin was not safe from this effect as all markets suffer from this level of downturn, and that only traditionally-recognized safe haven assets like gold will survive short-term price decline in the short term.

He slams the US dollar as “probably the most poorly managed asset”, explaining:

“The bizarre thing is that the U.S. dollar is seen as a safe haven and it’s probably the most poorly managed asset […] given some of the expenditure that’s going on in the U.S. — huge unfunded tax cuts given to corporate sector and so on, large defense spending, and now even larger spending for economic stimulus. So how will that be dealt with?”

And this awful mismanagement, Vaz says, is in fact the chance for crypto to show fiat up as “an alternative currency with some stability and protection from the basement”. In fact, he agrees with an oft-held theory that it was these same shortcoming of economic policies that pushed the creators of Bitcoin to launch their ideas into the public. And soon, he believes that some governments will look to shield their sovereign currencies from further devaluing and implement stricter money controls, making crypto look even more attractive for those seeking to circumvent state controls over money.

Meanwhile, fundamentals for Bitcoin look ever stronger even in the current climate, as proven by Bitfinex, who has just used Bitcoin to securely move USD 1 billion worth of Bitcoin in a single transaction, paying a mere 68 cents as a transaction fee.

Bitfinex is one of the largest crypto exchanges in the world and is also the company behind popular stablecoin Tether (USDT). Just before the weekend, Twitter user Krisma noticed that someone had just moved 146,500 BTC in a single transaction. To which, Bitfinex CTO Paolo Ardoino owned up and took claim of the transaction, saying that it was just a refilling of the exchange’s hot wallet (funds used to quickly make transactions with user requests), while the remainder was sent back to the cold wallet.

While the amount in question is noteworthy for its significant value, this transaction demonstrates just how useful the Bitcoin network is in sending money: it can be used to send virtually any amount of Bitcoin, at a fraction of the cost it would take to send by a traditional method, and at a fraction of the speed (an average of 10 minutes).

More significantly, the mere 68 cents used to pay the miner’s fee for the transaction was even “too much”. They would have been able to pay 7 cents and still got the transaction confirmed with a slight delay.

Last September was the last time we saw this much money moved in a single transaction, when someone transferred 94,504 BTC and hugely overpaid with a USD 700 fee.

The record transfer in Bitcoin remains the 500,000 BTC transaction made on 16 November 2011 that cost a cool USD 1.32 million at the time. Today, that is worth USD 3.5 billion.

 

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