The moment of crisis as the moment of truth

If Bitcoin survives the current financial storm, our monetary system will be on the brink of a dramatic change or even a revolution.

We are at a turning point in history. The coming months will show how institutional investors will react in the medium term to the countless rescue packages after the corona virus crisis. One thing is certain: states and central banks have been put under pressure to find solutions. In addition, his efforts seem exhausted from the start. S.If investors lose confidence in the measures taken, the consequences would be much more dramatic than a short-term stock market crash.

No one can predict what our future monetary system will look like today, but the history of money has sometimes been marked by radical changes in the system. Today’s historical interventions in the free market are unsurpassed, particularly in view of their size, and are undoubtedly regarded as such in retrospect the beginning of the end of our current monetary system with its fiat currencies “made out of nothing”.

The moment of crisis as the moment of truth
The moment of crisis as the moment of truth

Is Bitcoin (BTC) “digital gold” and a “safe haven currency”? Yes, now more than ever.

Bitcoin was founded in 2008 in response to the financial crisis. The current chaos in the global financial markets is the first important test of its ability to assert itself as an alternative and new kind of asset. However, if liquidity is needed like now, everything is sold, especially risky assets. John Bollinger, the creator of the so-called Bollinger Band, a technical indicator of price developments, rightly noticed this In times of crisis, investors will “sell everything they can sell”and only after the assets have been converted into cash is there a crisis-proof investment in assets that are made, for example, in gold.

Run away to “hard money”

Unlike state currency control agencies, which have tried to secure “a continually functioning market” by pumping “avalanches” of money (and not just since the outbreak of the corona virus), The price of Bitcoin is regulated without the intervention of a broker and is based solely on supply and demand. The number of bitcoins that can be created is also limited – 21 million – and this means that unlike the traditional fiat currency, new bitcoins cannot be printed arbitrarily.

New bitcoins are issued in the same way as other goods, e.g. B. gold, “mined”, but through a complex and clearly defined process. Nobody can change the number of newly generated bitcoins.

It will be a clear advantage for our traditional monetary system to have alternatives that we can fall back on in the likely event of hyperinflation. “Creative instruments” such as helicopter money and similar interventionist measures are not possible in the same way with Bitcoin, and neither governments nor (central) banks or other institutions are able to manipulate and / or change this new type of decentralized Assets.

Since the hegemonic power of the United States also weakened, The subject of the reserve currency will be on the table at some point. Already today, Bitcoin and other cryptocurrencies are expected to compete with the digital currencies issued by the state governments.

Is Bitcoin a “Global Digital Currency”? That may sound like science fiction, but in reality it is not so unfounded.

In the meantime, institutional investors have started to pull crypto assets. However, in times of crisis, they often withdraw their capital quickly from risk investments, and Bitcoin continues to be classified as such by the majority.

Personally, I am convinced that Bitcoin as well as other digital assets You can only benefit from the current developments and their dramatic long-term consequences.

The views, thoughts and opinions expressed here are solely those of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.

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