Bitcoin spearheading Cryptocurrencies – the way ahead and why you do not want to be left behind
“It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before the morning” Henry Ford
The words of Henry Ford have become increasingly significant in recent times as our global financial system, and therefore our economic stability, has been severely threatened. A new system of cryptocurrencies, starting with the Bitcoin market in 2009, emerged to offer a viable alternative to the crumbling structures of our traditional banking system.
Behind the squadrons of economic doomsday prophets, lies an economic reality that our traditional banking system is built on a very fragile foundation, which is upheld merely by our trust and confidence.
Since the Bretton Woods agreement after World War II, which forced U.S. allied countries to accept the U.S. dollar as a reserve rather than gold, and the termination of the gold standard in 1971 by the Nixon administration, we have been operating within a global fiat currency system. This has led to money being printed out of thin air by (in certain cases) privately owned central banks such as the Federal Reserve, holding no intrinsic value as it is not backed by anything of physical value.
The steady printing of money has historically led to increasing inflationary pressures as well as ever increasing debt as can be seen with the U.S. national debt approaching a historic record of $20 trillion. This has led to financial and economic bubbles such as the 2008 Subprime crisis. Results of these actions are economically devastating particularly in the middle and lower classes, as the architects of this disaster have already moved their assets into a safe place or may even benefit further from any financial destruction they have caused.
Politicians and bankers have done very little if anything to stop this trend and seem to still try to “print” themselves out of trouble and into a brighter future, possibly creating the foundation of a new financial crisis that has the potential to strike much harder than the previous one. Warning signals for these worrying developments include but are not limited to:
- Crumbling distressed banking institutions in Germany like Deutsche Bank that pose a systemic risk to the global banking system.
- Student loans in the U.S. that have spiralled out of control and face high risks of default.
- The continued war effort of the Trump administration expanding the national debt on the taxpayers’ back, while angering every major Eastern country that will likely be considering to cease trading with the US Dollar if seriously threatened.
Yet with all these troublesome developments, it is very hard to predict when another crisis will rock our traditional financial and economic system. In light of the current situation, it would be prudent to consider having at least one foot on dry land, plan for the future and have some valuables stored safely outside of the banking system such as cryptocurrencies.
The emergence of a new currency system
“Power to the people” has been used as a mantra in the past to fight against oppression and illegitimate authority and this neatly fits into the context of cryptocurrencies as well.
The hallmark of cryptocurrencies such as Bitcoin, Dash, Monero, Litecoin and others is that there is no central authority that can regulate the flow of currency or create currency; it is simply a system from the people for the people. This results in the value of cryptocurrencies being consumer driven and left completely and freely to be regulated by market forces. As a result, no central authority can seize or take your cryptocurrency from you as it is fully and completely owned by you. In countries in which people are increasingly mistrustful of how central banks and governments manage the economy, cryptocurrencies offer a sensible and attractive alternative.
Another benefit of cryptocurrencies like Bitcoin is that they are potentially more easily obtained than other fiat currencies. Buying Bitcoin and cashing in on Bitcoin can be done easily through Bitcoin dealers, Bitcoin exchanges and also in direct transactions via sites like Liberalcoins.com that also support local Bitcoin trading among a variety of other promising cryptocurrencies. This effectively brings everyone together that has access to a computer and internet connection and provides a global community for traders. Circumventing the banking system with cryptocurrencies, for example by transferring Bitcoins and paying with Bitcoins, especially outside of your home country, also results in much lower costs and transaction times.
There have been multiple recent examples of economies in distress like those of Greece, Cyprus and Argentina, where cryptocurrencies have made significant moves. Research suggests that in particular the price of Bitcoin has sharply increased when being faced with an issue of the money supply, increased levels of inflation or the introduction of capital controls. This gives the impression that certain cryptocurrencies are moving similar to commodities such as precious metals that act as a store of value in economic distress. Current examples show heightened activity for Bitcoin trading coming out of Venezuela where hyperinflation is destroying the country and people’s lives, giving a terrifying preview of what can happen to any fiat currency economy.
Amid the many benefits that cryptocurrencies offer, they also bring potential drawbacks and are certainly not at the point yet where they can fully replace our current monetary system. Most significantly, they are subject to high volatility of prices, which can either increase or diminish the value of your holdings drastically within a short period. While the price for 1 Bitcoin, as the most prominent example, increased steadily past the value of 1 ounce of gold in March 2017, it fell again drastically after reaching this historic milestone. Reason for the drop was the decision taken by the Securities and Exchange Commission (SEC) not to create a Bitcoin Exchange Traded Fund (ETF) as well as the Chinese regulators circulating guidelines for their local Bitcoin exchanges. In the case of the ETF decision, the Bitcoin price plummeted by 35% within the span of a day. Reasons for such drastic swings in value are likely to be that the Bitcoin market is unregulated and much smaller compared to global capital markets, with global developments influencing trader behaviour to look for the fastest way to buy Bitcoin or the fastest way to sell Bitcoin in times of major developments. Cryptocurrency exchanges such as Liberalcoins.com have started offering a solution to this dilemma by enabling individuals to purchase as well as trade between multiple cryptocurrencies. This is giving individuals the much needed flexibility to manage their cryptocurrency portfolio and hedge against cryptocurrencies that face a drop in value.
Another hurdle the industry and products are facing is that they are very tech-laden. While this intellectually stimulates tech-savvy people it may challenge individuals that have little interest in the tech and finance arena. As in general with highly speculative financial instruments, individuals should invest in products they understand and not more than they can afford to lose.
Despite the challenges cryptocurrencies present, our ability to thrive within our environment is dependent on adapting to given circumstances. With our world becoming increasingly digital and technology developing at a rapid pace, cryptocurrencies are certainly a sign of what is to come and the next step in our financial evolution.
Once you have come to the same conclusion I did, you are ready to go deeper down the rabbit hole and learn more about the technical details and how you can get involved, by following Liberalcoins.com, buying or trading a few coins and joining the cryptocurrency revolution.
Liberalcoins is a global cryptocurrency exchange that offers a safe, private and intuitive environment for individuals to connect and trade a wide variety of online currencies including Bitcoin, Dash, Monero and Litecoin. Adding to our exceptional security and privacy infrastructure we aim to be the best place to buy bitcoin, cheapest bitcoin exchange and home for all your additional cryptocurrency trades.
Users can perform transactions such as: purchase bitcoin online, find local bitcoin to buy, buy bitcoin anonymously, exchange Bitcoin for cash as well as with Dash, Monero and Litecoin.
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