Satoshi Nakamoto’s original Bitcoin whitepaper was published just as the world was reeling from the financial crisis of 2008, and there has always been some speculation that the crash was a motivation for this project.
In the decade since, Bitcoin has far exceeded expectations and has outperformed every single national currency. It has even outperformed gold and other precious metals. However, the utility that this technology provides, and the industry that is growing up around it are even more important than the valuation.
There are now thousands of cryptocurrencies and connected platforms, and while mass adoption may seem far off, this technology offers us an alternative to the financial systems that have failed us in the past.
In the few short years of its existence, cryptocurrency has already proven to be an extremely useful asset in times of financial crisis or bank runs. Bitcoin’s first major explosion in value came during a massive bank run. In March of 2013, the government in Cyprus announced that they would begin involuntarily taking money out of citizen’s bank accounts to pay for a bank bailout.
In those initial weeks where bank accounts in Cyprus were at risk, the price of Bitcoin jumped from around $20 at the end of February to over $100 in the middle of March. Correlation does not always equal causation, but this is a trend even noted by CNN at the time.
Crypto for Failing Economies
More recently, cryptocurrency has provided a safe haven for countries like Venezuela, where the economy is in the midst of a collapse, and the national currency is facing hyperinflation. As a result, cryptocurrency adoption in the region has been faster than almost anywhere else in the world.
Last month, Business Insider reported that Dash is especially popular for point of sale transactions in the country. Crypto has become so popular in the country that the government has announced that they will be running their new national currency on a petro-backed blockchain.
Cryptocurrency will become more and more relevant as the fiat currencies issued by governments continue to collapse, and as we have seen in states such as Venezuela, governments will attempt to co-opt the technology and implement their own blockchain currencies, which will likely not have the privacy features that crypto enthusiasts have come to expect.
Nonetheless, governments will in the long-term likely struggle to shut down crypto and will be forced to compete in the market for a change.
Ten years on from the last financial crash and with the enormous growth of the new crypto-economy, it is important to remember that blockchain technology beyond enriching speculators and creating new businesses, has the capability of greatly reducing corruption and human error in the financial industry.