BTC it is considered the currency of criminals and is also recognized as a store of value by institutional investors. There is still some suspicion from regulators: although it can be used for money laundering or terrorist financing, there is another problem. An alternative currency means a loss of monetary sovereignty for states. Is this a justified concern? Can BTC really destroy the economy?
Can BTC destroy the economy?
The debate in the crypto-community has been raging for long time. BTC’s history speaks for itself: it was created and launched in 2009, at the height of the subprime mortgage crisis, symbolized by the bankruptcy of Lehman Brothers. It was created as a form of peer-to-peer money that banks do not need to issue or governments to authorize. Its value is determined by the market.
These few words are enough to understand why BTC is so crucial and why governments fear it.
But there is more. BTC is out of control precisely because of its decentralization. Banks can track massive money transfers in the form of dollars. But not in BTC. Sure, over the years, exchanges have had to comply with stricter KYC (Know Your Customer) and AML (Anti Money Laundering) regulations, and blockchain records every single step of BTC transactions, but it’s still easy to find alternative methods and transfer large amounts of money.
BTC is financial autonomy. See what’s happening in Afghanistan. Since the Taliban returned to power, many have gone to the banks to withdraw their money and flee. How to solve it? Simply by preventing people from withdrawing this money. And so it happened. Those who have had cryptocurrencies do not know this limitation.
In countries where inflation is rampant, BTC has been seen as a safer store of value. This was the case in Zimbabwe, but it is still the case in Venezuela, for example. The local population has learned to live with the devaluation of money by turning their savings into cryptocurrencies.
Between reality and utopia
What if everyone did it? It is utopian, not to mention a dystopian scenario, but the consequence would be the end of the country’s monetary sovereignty. The economy would then have to continue anyway, and what was happening with local money would simply be happening at BTC.
But at the moment it’s still sci -fi.
Today, the US dollar is considered the strongest currency in the world. What would happen if all trades made today with the USD were made with BTC? The dollar could experience a period of weakness that would pull the US economy down. And cascading the world economy.
This is also a utopian scenario. Governments do not underestimate this risk, otherwise it would not be clear why BTC, like stablecoins, is causing fear in the United States.
Why BTC cannot destroy economies
The case of El Salvador… BTC can safely coexist with other forms of money without compromising any sovereignty.
Salvador does not have its own currency and has only used the US dollar to date. It will be interesting to see how the population will respond to the integration of BTC into day-to-day transactions. BTC is now accepted everywhere: from shops to tax payments. However, there is no obligation to use it, only to accept it. This means you can safely proceed with your dollar payments.
The President of El Salvador saw BTC as an opportunity to save his people $ 400 million a year in money transfer fees. This is a lot for a country whose economy relies on money transfers.
BTC has also become a safe haven. It showed his resilience. When world stock markets collapsed after Covid on March 13, 2020, BTC also fell. A year later, BTC costs 20 times more. No other asset responded better. Therefore, it is described as digital gold and large companies are beginning to include it as a reserve in their balance sheets. The road paved by Microstrategy is becoming increasingly popular.
The pandemic gave BTC a second life.
Skeptics and comforters
The Italian writer Umberto Eco published a book on mass culture in 1964 with the famous title: Apocalittici e integrati. It tells of the division between those who are ready to accept change and those who “did better when it was worse.”
The same opposition can be seen in BTC. Despite the huge opportunities it brings, there are those who are afraid of it and would like to do without it. And then there are those who are ready to accept it.
To this day, BTC already seems inevitable. And if that’s the case, it might be worth putting down the ax and starting to coexist with it. With the right compromises.