Is the amount of Bitcoin in the market more than necessary? This is a hot topic attracting attention in the cryptocurrency community. 'Paper Bitcoin' – a term describing Bitcoin not backed by real BTC on the Blockchain – is causing much controversy. While some experts, including Bitcoin pioneer Adam Back, dismiss this view, not everyone agrees. The article below analyzes in detail 'paper Bitcoin', the reasons for the controversy surrounding it, and its impact on current Bitcoin price volatility, providing you with the most comprehensive and accurate view of the current cryptocurrency market.
What is Paper Bitcoin and why is it controversial?
The term Paper Bitcoin refers to types of Bitcoin not actually held on the Blockchain. This could be futures contracts, synthetic assets, or options contracts providing exposure to Bitcoin without owning real BTC.
A segment of the cryptocurrency community is concerned that the amount of 'paper Bitcoin' is spreading in the market, creating price distortions and hindering Bitcoin's upward momentum despite strong demand from large institutional investors.
This issue directly affects Bitcoin prices because if the majority of transactions are on 'paper', without real BTC, the price will be difficult to sustain, undermining the necessary transparency and reliability in the cryptocurrency market.
Adam Back's perspective on Paper Bitcoin
Adam Back – the founder of Hashcash and an important figure in Bitcoin's history – disagrees with the notion of a large existence of 'paper Bitcoin'. On social media, he argues that this idea is overly exaggerated, while large investors are actually holding real BTC.
He asserts that transactions purchasing Bitcoin worth billions of USD are not 'selling paper' but are indeed transferring ownership of Bitcoin through reputable storage wallets. This indicates that the actual amount of Bitcoin is still held in the system, providing transparency and safety for the market.
Adam Back also emphasized that hiding a large amount of fake or 'paper' Bitcoin is impossible. If this cryptocurrency actually exists, signs of it would certainly have emerged and clearly affected the market.
Counterarguments about Paper Bitcoin
In contrast, Lawrence Lepard – a well-known investment manager – provides other evidence from market data to support the existence of 'paper Bitcoin'. He points to open futures positions valued at tens of billions of USD, especially on major exchanges.
Lepard reported that Binance is recording a perpetual futures contract value of up to $12 billion, while the global total could reach about $30 billion according to analytical tools. This is a 'synthetic' cryptocurrency amount not held on the Blockchain but still significantly impacting market prices and liquidity.
He emphasized that the rapid increase in futures positions demonstrates that 'paper Bitcoin' is becoming an undeniable factor in analyzing current Bitcoin price volatility.
The importance of the debate about Paper Bitcoin
This debate is not only academic but also has a significant impact on how Bitcoin prices are understood and predicted in the market. If 'paper Bitcoin' constitutes a large proportion, the actual demand for Bitcoin on the Blockchain may be misjudged, creating a gap between real value and listed prices.
Conversely, if the amount of cryptocurrency on 'paper' is negligible, then the current price volatility could be due to other factors such as investor sentiment, macroeconomic conditions, or regulatory policies.
Currently, the community remains divided in opinion and has yet to reach a final conclusion. As Bitcoin continues to fluctuate around key milestones, the issue of the actual amount of real Bitcoin versus 'paper' will remain a hot topic requiring close monitoring.
Source: https://tintucbitcoin.com/adam-back-phan-bac-tranh-cai-bitcoin/
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