The coronavirus pandemic has exposed a lot of weaknesses in how modern society functions. Unlike the previous years where most people were busy with their own things, this year has been quite different for the majority of the earth’s population. Many countries put strict restrictions on their own citizens, and many others decided to borrow some money from others.
While everything might recover anytime soon, there’s one thing that actually worries a lot of economists. As we all know, some major countries decided to print more of their own fiat currencies and distribute them to the people as economic boost packages. The Federal Reserve has printed trillions of dollars this year alone and everybody expect them to print even more for the upcoming second stimulus package. The Bank of England also decided to give out hundreds of billions of pounds to the market to help the economy. Everybody is doing the same thing.
But who is going to pay for all this free money? The central banks can easily talk about their plans to control future inflation, but they would not work as intended. If history has taught us anything (hint: 2018 financial crisis) the ones who would pay for this newly printed money would be us, the youngsters. We would pay through tax, inflation rate, and others, although all of these would only happen once we are back on track with the wide economic recovery.
Bitcoin’s Rise Is A Living Proof
Bitcoin has been rising this year. Since early March’s crash, it’s been doing very well. While many people tried to connect Bitcoin’s growth to the stock market, there were a couple of moments where Bitcoin has been moving independently out of the stock market. In mid of October, for example, where BTC successfully made a new high this year while stock market didn’t move much.
But whatever caused the rise of BTC this year, everybody would agree that it has risen partly because of what has been happening to our world. Without the pandemic, I highly doubt the crypto market would be this exciting.
Bitcoin’s slow growth in 2020 is living proof that many citizens from major countries don’t believe in fiat currencies anymore. I mean, they still hold them from time to time but nobody believes they would be good long-term investment anymore. People can still believe in real estate, stock market, physical metal, or others, but nobody believes in HODL-ing fiat currencies for long term investment.
Bitcoin, on the other hand, has been gaining worldwide attention as it’s already close to its all-time high. Many people started to see Bitcoin as a legitimate investment through its decentralization technology and deflationary mechanism. Considering the fact that BTC has provided even bigger return as compared to physical gold this year, perhaps its narrative as digital gold is going to come true soon.
Giving People What They Want
The great thing about Bitcoin is that there are people from both sides of the aisle that actually like its concept. There are leftwing and rightwing politicians who love the idea of Bitcoin and there are also all kinds of people who believe in different ideologies but they all see the potential of it.
Believing in Bitcoin is like giving people what they want. People don’t want their savings to be slowly losing value. People want to have some type of currency where the central banks don’t just keep printing out of random policies. Bitcoin and established altcoins fill that gap and this opens up a good conversation about how currencies should work.
Whether Bitcoin would be able to cement its position as a hedge against countries’ failures or not, that remains to be seen. But from what we have witnessed so far in 2020, it has been doing its job pretty well.