The cryptocurrency market always has a way of speculation that you wouldn’t expect.
I’m sure you’ve all heard of or seen “The Squid Game”, which was a big hit some time ago. The main character, who owes a huge amount of money, takes part in an inhumane “reality show” where hundreds of people kill each other and the main character survives alone to win all the prize money.
Earlier this month, the cryptocurrency market also played host to such a “squid game”.
At the end of October, a cryptocurrency called “Squid Coin” was launched, which was used by the developers as the currency for the computer game “Squid Game”. Just like in the TV show, the game allows people to compete against each other in a virtual world, with the winner receiving squid coins from other players.
Sound interesting? The market thought so too, and the cryptocurrency, which was launched at just $0.0123, went up an insane 230,000 times to $2,861.80 in a week after it went live for trading on October 26. In other words, if you bought some Squidcoin for $100 in the first place, you’d be a millionaire just a week later.
But how can the money be made that easily? The investors didn’t become rich, but they became the biggest loser in the cryptocurrency market.
After skyrocketing 230,000 times, the openers decisively ran off with investors’ money, swallowing up to $3.38 million in ill-gotten gains. As the trading collapsed, Squidcoin dropped from over $2,000 to nothing in a second.
It was a real “squid game”, with the developers making a fortune and leaving a trail of investors' corpses in disarray.
In the unregulated world of cryptocurrencies, human greed is magnified, and as the RBA warns, it is the speculative nature of people that allow these scams to succeed repeatedly.
Squidcoin is just one of the thousands of cryptocurrencies that rub off on a hot name and are handling people’s psychology in a ruthless way. They are never absent in the world of cryptocurrencies.
Be rational on crypto
Recently the RBA has repeatedly stressed that regulation of cryptocurrencies is not just rhetoric. The creation of stablecoins has begun to challenge the sovereignty of national currencies. A stablecoin is a centralized asset-backed token whose value is tied to the asset behind it. This gives it the same attributes as real-world currency, but the lack of regulation has made illegal transactions such as money laundering more frequent — after all, holding a stablecoins in your hand is the equivalent of holding cash, much better than bitcoin, which jolts back and forth.
Soon, national laws and regulations will be tightening up on cryptocurrencies, and under thorough regulation, the cryptocurrency market will be able to operate in a healthy manner.
As investors, we need to be rational. No matter if we are in the real world or virtual world, there’s always a rule. When somebody wins, the others lose.
