In the current economic crisis due to the pandemic, Bitcoin has the potential to take us on a different path that leads towards freedom and sovereignty over our own finances. Rescuing us from a devastating destiny like those experienced in past crises.
We currently find ourselves at a historical crossroads. All the geopolitical, monetary and financial events that will inevitably occur as a result of this pandemic will change the world as we know it.
It is true that this always tends to be said during crises. But, as before World War II, the economic depression of 1929 changed the global landscape forever. And no one could predict the debacle that circumstances, monetary devaluation and world leaders would lead us to at that time.
Let's hope this time is different. I have hope. The reason is that Bitcoin exists today. The best hard money available to all humanity. Some will think I'm exaggerating. But let's think that all power disputes are not only territorial, or over the control of natural resources, but also revolve around monetary and financial control. Bitcoin has the potential to establish a neutral framework in the field of money and, therefore, to stop the hegemony of one nation over all others.
COVID-19, promoter of the current economic crisis
We already know the catalyst for this crisis, COVID-19. The pandemic has brought to light what all economists have been predicting in recent months. A continuation of the crisis of 2008. One that never ended.
The financial system as it had functioned from 1944-1971, and then until 2008, went bankrupt and it was decided to take a path of asset purchases and monetary issuance by the central banks, as “last resorts to sustain the debt.” An example that is being repeated now with the FED, or the ECB, is the BoJ Bank of Japan. The latter already controls 80% of the country's financial assets. That is, who has the responsibility, control and supposed “legitimacy” of creating “the money” (currency) that we all have to earn with hard effort. This bank can issue whatever it pleases, without effort and without explanations, to buy with it assets of real value in the economy (companies, real estate, gold or who knows, Bitcoin very soon).
What it has been, and I understand, is like stealing from the taxpayer. And probably one of the biggest SCAMS (hoaxes) in history.
However, this crisis reveals much more than that of 2008. It is a social, institutional and economic model crisis as a whole.
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But what makes it different this time compared to other financial crises?
As you know, cycles of recession and economic expansion can be measured in the short term (5 to 8 years) and long term (75 – 100 years). Furthermore, the tools of central banks to stimulate the economy are mainly two: monetary emission and control of interest rates.
At the beginning of this monetary system, we started from extremely low interests, which gradually rose from 1945 until the breakup of the gold standard in 1971. Where the governor of the FED, Paul Volcker, had to retain confidence in the dollar (world reserve currency ) raising interest rates to 21.5% by December 1980.
Source: Federal Reserve System
Since then we have experienced cyclical crises of credit expansion and subsequent recessions in the form of bubbles. Which were always solved with a new rate cut, restricting access to new credit and from there, starting over.
The real estate crisis of 2008 left central banks with no margin. Those who have had to keep interest rates at 0% for almost 7 years, for the economy to continue operating. Many thought that the last recession was the turning point, that there were no tools left to stimulate the economy. Nothing could be further from the truth, today we are seeing negative interests, a true experiment that plays with the lives of millions of people.
This means, among other things, that if you have money in a bank deposit, until now you were paid interest for trusting that institution. From now on we will see how more and more banks will want to charge for having our money deposited in their accounts. It seems that the ponzi is coming to an end and that unfortunately it is going to leave a lot of destruction and injustice in its wake...
Still, all is not lost...
Bitcoin was born during those days of crisis, on October 31, 2008, with the publication of the White book at the hands of Satoshi Nakamoto. Finally, from that moment on, we all have a monetary alternative, independent of these “wizards” of the economy. Supported by cryptography and mathematics; A new financial system emerged that uses the world's largest human collaboration platform: the Internet.
Emergence of an independent, solid and reliable financial model
Some may ask, why now?
Fiat money has value by decree, it is not backed by anything real. The competent institutions create it; In the case of the Euro it is the ECB with the support of the 27 Member States. Unfortunately, these institutions are showing citizens that they are not capable of giving us the opportunities and confidence that we need to get out of a crisis like the current one. And not only that, but representatives and bureaucrats take advantage of their positions of power to lead lives of luxury and tell us what is right and wrong while corruption and mismanagement runs rampant.
The restriction of freedom is not only linked to confinement but also to sovereignty over our own wealth. We have no control over our money. It is the banks and governments themselves who, if they want, can freeze, confiscate or block our resources. Well, with Bitcoin that is not possible. We are the individuals who have full sovereignty and control over our finances and our economy.
Thus, what is in question here are two models:
A fragile model (Fiduciary) that protects an elite from their position of power and imposes monetary measures on us, whether we agree or not. A model that favors the accumulation of wealth and where a few make the decisions about where investments will be allocated in the form of debt that only they can grant (weapons, oil, large corporations and more).
Other independent, neutral, open, public model (Bitcoin), where each participant is equal to the others and that is not affected by crises. A model where we do not need intermediaries or entities to tell me what I can or cannot do with my wealth. A global access model, regardless of the country where it is born, where we know the issuance and share the traceability of the transactions.
Bitcoin in the current economic situation due to the COVID-19 crisis
COVID-19 has been an accelerator of what was to come... Perhaps the previous model would have lasted 10 more years. Now I honestly don't think it can sustain itself for even 2 more years.
At the same time, we are observing the behavior of the markets, both traditional and Bitcoin, on these dates.
For the first time in history we have seen how the star raw material of the 1973th century, oil, entered negative prices. This has consequences that are still difficult to measure. As you know since XNUMX, the petrodollar has been the world reference and the most important support for this currency. The fiduciary system is in uncharted territory and this monetary standard is clearly in crisis.
Another fact to consider is the approval and creation of debt for 14 trillion dollars since the beginning of the pandemic. These figures contrast with the inflation we see, it is practically non-existent or we are even entering deflation territory. The main reason is the velocity of money which is at historic lows. That is, the number of transactions generated with the economy practically frozen worldwide is zero.
The idea that printing more money will generate more wealth is completely wrong. The currency has no value in itself, it is the activity that is generated through exchanges that makes it meaningful. When all this money goes from being liquid to being invested in assets, we will see monstrous bubbles, which will probably lead to hyperinflation...
The virus is going to compress events that were going to take place in any case, the next financial crisis, the intensification of the trade war, the energy model and of course the adoption of Bitcoin.
We are at a crossroads, yes…. but also given the opportunity to build a freer, more connected society with greater economic inclusion throughout the planet. A new financial and monetary model for a generation that was losing hope.
Of course we will encounter resistance from the current powers and many parts of the population. It will take them a while to understand why Bitcoin is so special and so valuable. But the markets are there for one thing only, to discover the truth.
When that happens, many people who see Bitcoin as a mere investment will understand that what Bitcoin really offers is freedom.
Continue reading: Bitcoin is definitely the new digital cash
