According to economic analysts, another financial crash is imminent, just over 10 years after the devastating recession of 2007-2008.
But what might be a death knell for the current financial system could be just the catalyst cryptocurrency needs to gain the support of the masses.
In his piece “Beware the mother of all credit bubbles”, Washington Post columnist Steven Pearlstein points out the precarious nature of today’s economy.
“It is giant corporations using cheap debt — and a one-time tax windfall — to take cash from their balance sheets and send it to shareholders in the form of increased dividends and, in particular, stock buybacks. As before, the cash-outs are helping to drive debt — corporate debt — to record levels.”
Cryptocurrency, or more accurately, Bitcoin, was created as a response to the economic crash of 2007-2008, which was triggered by the reckless behavior of banks and poor regulation.
But unlike 10 years ago, should there be another financial crash, cryptocurrency is now in a position where widespread adoption leans more toward realistic than fanciful. Whether it’s consumers, vendors or the employees of major banks themselves, the issues with today’s defunct economy are becoming more and more evident at all levels of society.
Many young people now own cryptocurrency and many others have heard of it. While the infrastructure may be lagging behind at present, the foundations are certainly in place. Apple co-founder, Steve Wozniak, agrees. He suggests that within the short space of 10 years, cryptocurrency has the potential to replace the bank issued fiat currency we use today.
Microsoft founder and billionaire, Bill Gates, recently conceded that another financial crisis is practically guaranteed.
Brexit and the election of Trump only confirm the rise of populism and signify a world that’s lurching to extremes as it loses faith in its governing institutions.
And that’s perhaps most evident in the financial sector. Take Deutsche Bank, the largest bank in Germany. It’s still experiencing financial difficulties and shows a trajectory that’s worryingly similar to Lehman Brothers, whose collapse triggered the financial crash in 2007-2008.
— Sapientia (@OccupyWisdom) 3 June 2018
Crypto vs. fiat
People have been quick to criticise cryptocurrency’s inability to process payments quickly and efficiently, with Bitcoin’s processing speed being a major example.
Yet, Visa whose technology can process over 20,000 payments a second, experienced significant technical issues earlier this month, showing that the electronic payment systems of today are by no means infallible.
Coins like EOS are tackling the scalability problem by providing networks that can process payments much more quickly. This race for processing supremacy and the huge sums of money involved (EOS raised 4 billion in its ICO) is exactly the kind of competition that spurs innovation.
Emerging payment solutions such as Bitpay indicate that those in the cryptocurrency space are serious about establishing the financial system of the future.
The recent crypto market downturn brought on as a result of a hacked Korean exchange, shows that the crypto market is still as volatile as ever. However, when the next recession does hit, Bitcoin’s price fluctuations will probably look like a safer bet than fiat. And that’s where things will really get interesting.