Read the passage given below and then answer the questions given below the passage. With the value of Bitcoin having fallen by around 70% since its peak late last year, the mother of all bubbles has now gone bust. More generally, cryptocurrencies have entered a not-so-cryptic apocalypse. The value
Read the passage given below and then answer the questions given below the passage.
With the value of Bitcoin having fallen by around 70% since its peak late last year, the mother of all bubbles has now gone bust. More generally, cryptocurrencies have entered a not-so-cryptic apocalypse. The value of leading coins such as Ether, EOS, Litecoin, and XRP have all fallen by over 80%, thousands of other digital currencies have plummeted by 90-99%, and the rest have been exposed as outright frauds. No one should be surprised by this. Four out of five initial coin offerings (ICOs) were scams, to begin with.
Faced with the public spectacle of a market bloodbath, boosters have fled to the last refuge of the crypto scoundrel: a defense of “blockchain”, the distributed-ledger software underpinning all cryptocurrencies. Blockchain has been heralded as a potential panacea for everything from poverty and famine to cancer. In fact, it is the most overhyped—and least useful—technology in human history. In practice, blockchain is nothing more than a glorified spreadsheet. But it has also become the byword for a libertarian ideology that treats all governments, central banks, traditional financial institutions, and real-world currencies as evil concentrations of power that must be destroyed. The ideal world of blockchain fundamentalists is one in which all economic activity and human interactions are subject to anarchist or libertarian decentralization. They would like the entirety of social and political life to end up on public ledgers that are supposedly “permissionless” (accessible to everyone) and “trustless” (not reliant on a credible intermediary such as a bank).
Yet, far from ushering in utopia, blockchain has given rise to a familiar form of economic hell. A few self-serving white men (there are hardly any women or minorities in the blockchain universe) pretending to be messiahs for the world’s impoverished, marginalized, and unbanked masses claim to have created billions of dollars of wealth out of nothing. But one needs to only consider the massive centralization of power among cryptocurrency “miners”, exchanges, developers, and wealth holders to see that blockchain is not about decentralization and democracy; it is about greed.
For example, a small group of companies—mostly located in such bastions of democracy as Russia, Georgia, and China—control between two-thirds and three-quarters of all crypto-mining activity, and all routinely jack up transaction costs to increase their fat profit margins. Apparently, blockchain fanatics would have us put our faith in an anonymous cartel subject to no rule of law, rather than trust central banks and regulated financial intermediaries. A similar pattern has emerged in cryptocurrency trading. Fully 99% of all transactions occur on centralized exchanges that are hacked on a regular basis. Unlike with real money, once your crypto wealth is hacked, it is gone forever.
Which of the following makes cryptocurrencies dangerous for investors?
1). They are subject to hacks which may result in permanent loss
2). They falsely project their ideologies at people
3). They see financial institutions and regulators as evil powers
4). They wish to promote a trustless and permissionless economy
1 answers
The question mentions ‘investors’, for whom, the only real danger would be the loss of their money. The other options cannot be termed dangerous and are not supported by the passage.
Therefore, the correct answer is option 1.