Posted 2 years ago | by Ben Armstrong
COVID-19 Drives Crypto Awareness
The COVID-19 crisis has focused the global community on just how fragile our interconnected world is, and also how badly it needs to be reformed. Cryptocurrencies can be a big part of those reforms, and help to create a more stable international financial system.
COVID-19 Shines a Light on Shady Practices
Germany's state intelligence apparatus, the BND, has suggested that Chinese leader Xi told the WHO to spread misleading information about COVID-19 and to understate how quickly the virus can spread.
It is clear that the hugest levels of the global community have been corrupted by bad actors who have no conscious, and that public organizations, like the WHO, can't be trusted in the least.
If these reports from the BND are accurate, it would suggest that platforms that use it as a source to vet information are actually prone to disseminate misinformation. It is good to attempt to create an environment where reliable information exists, but doing that quickly isn't possible.
Cryptos Can Help With the Money Problem
The journey of cryptocurrencies through government policy is not an easy one, nor is it necessary.
At present, the government's COVID-19 bailout package has shown that Basel III and IV have done much to shift systemic risk from the banking system to the shadow banking system.
In the future, banks will tend to look for ways to actually offset risk, and not just jam it all into a black hole that regulators don't care to look at. This may not be possible, and other actions will need to be created.
As the real damage that has occurred over the last few months is better understood by investors, it is fair to speculate that the same kind of mistrust of authorities will manifest, and people will simply start looking for non-centralized alternatives to the banking system.
Much in the same way that people in broken economies like Venezuela are turning to cryptos, regardless of what the government mandates, regular people will likely be reluctant to trust the powers-that-be to craft yet another solution to a problem that only grows worse.
CBDCs Will be Derided
In March, before the global economy was shut down, the Bank of England made statements about the potential benefits of retail Central Bank Digital Currencies (CBDCs).
These retail CBDCs are capable of guaranteeing the functionality of integrated electronic payment systems (like the mega-banks and Visa). After that, the United States quickly put a digital dollar in the bailout bill.
While it is tempting to think that these CBDCs will be able to compete with cryptos, there are a few major problems with using them. The first issue is that fiat currency is already digital, so saying that a central bank will introduce a digital currency is like saying that a chicken will start laying eggs (it already lays eggs, and has been for quite some time).
Bitcoin et al. have been successful in part because they all sidestep the corrupt financial system, and allow people to trade freely across political borders without much oversight of any kind.
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