Bitcoin Needs Catastrophe to Succeed
The current shifts in politics and economics will affect everybody regardless of their involvement with Bitcoin. Moreover, the current crisis presents an opportunity for Bitcoin to achieve what it was made to achieve—become money.
In this piece, ForkLog’s Nick Schteringard explains how the biggest economic and societal crises drive the most significant changes, and what it has to do with the first crypto.
At the end of January, when only China and the adjacent Asian countries were facing the virus outbreak, westerners were sometimes quite notably worried and cautious about anyone of Asian appearance. The media quickly condemned such behavior and called people to stay reasonable and not discriminate against others. Just like with the migrant crisis, the developed countries should help those in need, at least that was the idea.
Media were praising Chinese doctors and people in general, but especially a medical doctor Li Wenliang, who tried to warn people about the coronavirus back in December. The alarm was silenced by the authorities. Multiple articles referred to this case to illustrate human rights issues and the opacity of the Chinese government. Li Wenliang himself later died of the coronavirus.
Meanwhile, interconnected Europe with its open borders, millions of tourists, and thousands of flights each day was the perfect ground for the outbreak. Italy soon became the epicenter and it was not prepared.
Being wary of the potential domestic deficit, Germany blocked the export of medical goods. Brussels couldn’t help either. The EU countries were unilaterally closing their borders and the Schengen zone almost ceased to exist. Aleksandar Vucic, the president of Serbia, told a similar story and noted that European solidarity doesn’t exist.
— CGTN (@CGTNOfficial) March 17, 2020
Although, unlike many other countries, China is offering help to everybody, trying to re-establish its reputation.
A friend in need is a friend in deed. We'll do whatever we can to help other countries in fighting the COVID-19. https://t.co/vELFmc9Tky
— Zhang Jun (@ChinaAmbUN) March 16, 2020
Now, there are walls that nobody would expect to appear.
History shows that radical changes in the way our world ticks were occurring only after global cataclysms. The Great War destroyed dominating monarchies and the civil war in Russia led to the Soviet Union, determining the course of the following century. The Great Depression helped Nazis in Germany come into power. The Second World War led to the establishment of the UN and the modern world.
It is hard to say if the 2008 crisis was a cataclysm of this sort. Most likely it wasn’t. The system cracked, but it didn’t change all that much. While this crisis is associated with the introduction of Bitcoin, the first crypto didn’t manage to become the alternative money for over a decade of existence. It was turned into a commodity and an investment, integrated with the existing system and tied to the traditional money.
But the point is that Bitcoin wasn’t created to be traded against the U.S. dollar. It was created to solve the problem that emerged back in 1913 when the world went to war and started printing more money.
The cataclysm of the 20th century changed our understanding of money. Gold-backed monies tend to run out, which is equivalent to a defeat in a war. Printing solved the problem of short-term wars and let the world engage in a proper prolonged bloodbath.
After WWI, some especially smart economists substituted several concepts and made the tie to gold responsible for all the economic problems. This meant looking away from the Austrian School and towards spending and consuming, which are now at an uncontrollable scale.
In order to change the values of modern society, including its treatment of money and its function, there has to be a global cataclysm.
It is not clear if the tightened international relations and restriction of human rights will lead to a catastrophe. The situation may at least serve as a test to see how fast the planet and its inhabitants can be put on lockdown. Some may go further than tests.
Soon, some countries will introduce CBDCs with their own mints, now digital. Physical cash will be taken out of circulation and the governments will have total control over people’s financial lives.
If the quarantine resets the economy and gradually transforms into a new world order with stricter rules and borders, the resistance—fight for individualism and freedom—will go digital. Yet, the internet monopolized by Google and Facebook won’t let it happen. For this, new internet and new money will be crucial.
There has to be a catastrophe for Bitcoin to succeed.
Written by Nick Schteringard
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