Posted 11 months ago | by Ben Armstrong
Can Bitcoin Slash the 'Red Tape' in Global Markets?
In recent years, Bitcoin has become more and more popular globally, and there have been increased calls to regulate cryptocurrencies. These regulations have been an important factor in paving the way for greater adoption from different areas of the financial world, although many crypto purists have been critical of the moves toward greater regulation.
While some people still consider Bitcoin as an investment vehicle, in other parts of the world, Bitcoin has gained traction as a means of payment and savings. Especially in Latin America and parts of Africa and Asia, Bitcoin seems to be accepted and used widely as money.
People in advanced economies don't understand how unstable and corrupt money systems can be, although that may change over the next few years. Western central banks have become part of the political firmament, which is leading the West into a dangerous situation.
Bitcoin is Still a Free Market
Bitcoin has many advantages over corrupt, national currencies, especially in areas where the local central banks uses its power to support the political class. This was the case in India when PM Modi decided to remove a large amount of physical money from the economy, and it is looking more like these same kinds of political motivations are being used in the US and EU.
In emerging economies, people tend to switch to using Bitcoin instead of their local currency because they do not want to have any trouble from the local government in place they live. Additionally, BTC can be used globally, and their local currency may be worthless on the international market.
According to a recent report of Arcane Research, the volume of Bitcoin use in Kenya is exploding. From the end of 2019 to 2020, Bitcoin use in the country has risen sharply. This rise in usage has happened at a time when the global financial system became volatile, and many major asset classes crashed in value.
Nowhere to Run
Financial instruments like US government bonds are considered to be ultra-low risk, but as the last few months have shown, the US central bank is resorting to increasingly extreme policies to keep rates low, and the global markets awash with easy cash.
Of course, this easy money is only there for the money center banks and other equally well-connected investors. For the people in the street or the tens of millions of people that have lost their jobs (in the USA alone), the financial picture is bleak.
The risk now has far less to do with financial market stability, and more to do with social stability. A person was recently shot in Flint, Michigan when they told another person to wear a mask. When these kinds of incidents are isolated, they can be contained.
On a larger scale, any sort of social unrest has the ability to remove the existing political system from power, and call into question the value of some long-held assumptions about money, markets, and esoteric central bank philosophy.