For quite some time, the crypto community has been debating this topic. Almost indefinitely. Bitcoin’s history speaks for itself: it was conceived and launched in 2009, at the height of the subprime mortgage crisis, which was epitomised by the failure of Lehman Brothers.
Bitcoin was established as a peer-to-peer payment system that does not require banks or governments to issue or authorise it. Its worth is determined by market forces rather than gold reserves.
These four words explain why Bitcoin is so disruptive and why governments are afraid of it.
There’s more, though. Because of its decentralisation, Bitcoin is out of control. Banks can track a large movement of money in the form of dollars. But not if Bitcoin is involved. While exchanges have had to adjust to stronger KYC (Know Your Customer) and AML (Anti Money Laundering) rules over time, and the blockchain records every step of BTC transactions, it is still easier to move huge sums of money and discover alternate alternatives.
Bitcoin is financial autonomy. Just look at what is happening in Afghanistan. Since the Taliban returned to power, there has been a rush to banks to withdraw their money and flee. How to solve it? Simply by preventing people from withdrawing that money. This is what is happening. Those who had cryptocurrencies did not experience this limitation. To tell the truth, it is a very small segment of the population, which has been affected by the lack of an internet connection.
Bitcoin has been considered as a safer store of value in countries where inflation is rampant. This was the case in Zimbabwe, and it is still the case in places like Venezuela. Locals have learned to cope with currency depreciation by transferring their savings to cryptocurrency.
Bitcoin has also established itself as a safe haven asset. It has shown to be tenacious. When the world’s stock exchanges collapsed in the aftermath of Covid on March 13, 2020, Bitcoin plummeted below $4,000 as well. BTC is currently worth 20 times that after a year. No other asset has performed as well.
As a result, it is referred to as “digital gold,” and large corporations are beginning to treat it as a reserve on their balance sheets. Microstrategy’s path is expected to grow increasingly popular.
Indeed, the pandemic has given Bitcoin a second life, that of awareness. When all certainties were shattered, more and more people who did not know what would happen to their future turned to BTC. It happened to small investors in the US who turned to apps like Robinhood. But it also happened to the big guys who looked for a viable alternative to gold and other safe-haven assets.