"A pandemic; what Bitcoin needed."
Satoshi Nakamoto created Bitcoin with the idea that it would become an alternative currency from what we use today as fiat cash (USD, EURO, CLP); he developed a digital currency that would run on a decentralized network. Bitcoin opened up a whole new space in the digital platform that has also had an impact on our financial system, giving people a different option other than traditional cash and stocks. Up until now, we have seen how this digital currency has worked its way up in the financial market. Although Nakamoto´s intentions are not fully applied with Bitcoin, because the majority of people that use Bitcoin or that are interested in purchasing this asset is only in it for the investment of it. Bitcoin has opened up a market of numerous digital currencies known as Alt Coins, and these are traded on a 24/7 market. Yes, some use this asset to purchase goods and services, but for the most part, people just Trade or Hodl.
It seems to me that it has become second nature to convert this currency into money that is used daily by all citizens and in a decentralized manner. We have been more concerned with generating apps for the operation of the market and financial analysis of when to invest. However, I think one of the things that caught my attention the most about digital currency was the banking and government freedom that we could acquire, and that was the first time that I saw a possible battle between our current financial system and that of the future. But how to blame the crypto community for not trying to expand this coin? On the contrary, more efforts have been made to spread the use of this currency, such as educational channels, conferences, apps, and YouTubers.
However, it must be admitted that it is complicated to make a transition from traditional money to digital money. Some would say impediments like internet, technology, complicated to understand, etc. As much as numerous videos were seen on YouTube talking about the fall of the dollar, I think several were not quite sure when or how it would finally happen. Today we are faced with a global crisis. A crisis that is not only financial but is also a crisis for health departments. Covid-19 emerged in China a couple of months ago, and today March 20th, it has been exploited in many other countries, a virus that is currently referred to as a pandemic. This pandemic has turned governments upside down in trying to solve our current health problems and look into those that lie ahead.
Is this crisis what bitcoin needed to rise in the financial system? Maybe even motivate people to use it on a daily base?
Some say it can be. I believe it's a great opportunity; let's remember Bitcoin was created right after the 2008 crisis. Coincidence? I think not. Maybe Mr. Nakamoto or whoever invented Bitcoin had a hard time during the 2008 crisis and eventually led them to create something better, something for the people.
Truth or not, stock markets have gone down significantly; most governments assure that the current events will have a negative impact on the economy. We have seen how in different countries, they have cut down the payment of loans, mortgages, among others—meanwhile, the U.S government prints out more money for citizens and businesses. The U.S dollar in Chile has reached a historical all-time high.
The Economist declared that "the cost of living rises because the dollar rises or the impact of a series of goods that are consumed in Chile, but also of non-tradable goods such as bread, because bread is produced with machines that use energy And that imported energy, being more expensive, rises in price. That is called pass through, and that means how much of the rise in the exchange rate is transferred to internal prices to the CPI. "
Bitcoin can't be magically printed; it's based on supply and demand.
National coins depend on stability, and when a country seems unstable, the devaluation of a currency can be enormous. These crises also lead to lower or no investment in the country, and banks can begin to impose restrictions among its clients.
When situations get complicated in a country, crypto seems to appeal to many. Crypto provides the freedom that fiat currency (Euro, USD, CLP) does not. Digital currency is censorship-resistant, with no third-party regulator, programmable, and so many things that crypto provides as a currency fit for anyone in any country only needing access to the internet, a computer, or phone. This digital currency, unlike national currencies, it doesn't depend on the stableness of one country in particular because it works on a decentralized network. In essence, this allows crypto to exist based on supply and demand.
So is this the right moment for Bitcoin? I guess we will see soon. Meanwhile, the crypto market has gone down and then up again, just like a rollercoaster, but it's here to stay.
By: Carolina Pérez