By Swann Collins, investor and consultant in global affairs – Contributor to Eurasia Business News, October 11, 2021
Cryptocurrencies and their soaring value growth do not leave anybody’s mind indifferent. The freedom they hold in themselves and that they generate has fuelled intense debates about their advantages and their risks. After more than a decade of existence, with Bitcoin, the most famous cryptocurrency, created in 2009 as a response to the global crisis of 2008, many can understand now how cryptocurrencies can help fighting against inequalities of opportunities and supporting liberal democracies. But why ?
Firstly, cryptocurrencies, when operated and used in a safe technical environment, are a way to save some purchasing power against inflation. How ? The future of the world is held by information systems, also called as digital systems. In a digital world, digital currencies will be frequently used, along with banknotes. A world without cryptocurrencies is no possible. In addition, Bitcoin, ethereum, litecoin, solana, and other cryptocurrencies are now used as hedge against inflation and the depreciation of “classic” currencies, amid intensive money printing by central banks in the Euro zone and in the United States. History has shown how inflation can be dangerous for liberal democracy and human rights.
Moreover, interest towards crypto is fuelled by the dynamics of an increasingly wide range of institutional investors and the growth of the blockchain industry, which offer strong solutions for security of operations between economic operators in the cyberspace.
Large investors, banks from Goldman Sachs, JP Morgan to Morgan Stanley, investment fund like SkyBridge Capital, fintech like Paypal or Square Inc. and industrial tech companies such as Tesla Inc have invested significant funds in Bitcoin or have started to offer access to crypto-funds. Cryptocurrencies are backed by financial institutions, exchanges, miners. The more actively the crypto-infrastructure develops, the faster Bitcoin and other cryptocurrencies rate will grow.
Thus, cryptocurrencies are a sustainable financial tool, that can grow in value and then generate income for holders. Crypto can reduce inequalities of opportunities in time of uncertainties and stability if rightfully used. With the right approach, cryptocurrencies can help people to leverage their financial resources. Until liberal democracies are weakened by massive money printing, rising inflation and real estate bubble, cryptocurrencies can bring some oxygen to struggling households.
Yes, the prices in the crypto market are unregulated and anyone in Bitcoin and ethereum can lose his investment. Unlike stocks, which are driven by industrial, business and accounting fundamentals, cryptos are fully market driven and depend on confidence and the mood of cryptoholders. However, large and speculative investment is not the initial philosophy of cryptocurrencies. Investing small amounts can be enough to get some gains without great risks. The cryptomarket is more mature now than it was ten years ago.
Secondly, one would say that all of it depends on who control their creation and regulation. The state central bank ? The financial private corporation ? The free market ? The users of the cryptoworld themselves ? This is a critical point for cryptocurrencies and there lay their main force. Cryptocurrencies are independent from states and governments. They are not create by central banks. They are not paper currencies. If they fall under state regulation, state authorities cannot ban them since in May 2021, the whole volume of investments in the cryptocurrencies worldwide has peaked at about $2.4 trillion, up from around $200 billion in 2019. The Bitcoin and Ethereum price, once combined, make up more than half of the $ 2 trillion crypto market. Therefore, banning independent cryptocurrencies would provoke a large financial crisis around the world and surely serious political unrests. Nobody can afford this.
Furthermore, the technology used to store bitcoin, ethereum, litecoin, solana and other cryptocurrencies do not depend on States and central banks. This a great point in the protection of political opponents, dissidents or journalists from assets freezing measures decided by state authorities as retaliations on their work for democracy. In this way, crypto can help in protecting liberal democracies and enforcing human rights.
FedCoin, EuroCoin, YuanCoin, should such things be created, that could be the very turn of history that pushes the world economy back into using real, physical, valuable, anonymous money: gold and silver.
At last, everyone should know that is okay to not invest in what you do not understand. The successful athlete, actor, businessman and politician Arnold Schwarzenegger avoids bitcoin, dogecoin, and other crypto, like Warren Buffet, the famous US investor. It is okay. Everyone has the right to choose where to invest in and when to avoid investing.
Read also : Bitcoin price above $54,000
On October 11, 2021, Bitcoin price reached $ 57.198 at 23:38 GMT+2.
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© Copyright 2021 – Swann Collins, investor and consultant in global affairs.