Robert Steinadler, 14 days ago
Bitcoin was born as an idea in 2008 when its whitepaper got published. Only a few months later, on January 3, 2009, the so-called Genesis block was mined and the Bitcoin network started working. Only 14 years later the United States and the world may be facing a very similar situation to the one we saw between 2007 and 2009. Some banks have gotten into trouble, and there might be a contagion effect that kicks in. Many people believed that bailouts were out of the question after the failure of Lehman Brothers.
Bitcoin was invented to empower humanity to take control over money by offering a technology that cannot be corrupted. It is time to remember the virtue behind that idea.
When the first bailouts happened during the banking crisis in 2008, many people felt betrayed. Top bankers were given yearly bonuses after speculating boundlessly and ruining the lives of their customers. The question arose why we have to trust a middleman with our money who can do whatever he wants without taking any responsibility.
Promises were made by politicians in the U.S. as well as in Europe that new restrictions would prevent investment bankers from making the same mistakes. New rules for deposit insurance were brought to life to reinsure bank customers that their funds would be secure at any given time and that the banking system is stable. Especially retail customers were told that their money is safe in their bank accounts.
All of these measures were taken to prevent one thing: A panic that causes a giant bank run. Banks are running on a fractional reserve. Meaning that if all customers would demand their deposits back at the same time, there wouldn’t be enough cash in the bank to pay their deposits back.
This is exactly what the U.S. Treasury Department, the FDIC, and the Fed are trying to prevent at the moment. They published a joint statement that all depositors of the Silicon Valley Bank as well as Signature Bank would receive their money back. Another bailout is given to stop panic among customers and prevent contagion.
Bitcoin was invented in response to a severe banking crisis. Its technology cannot be corrupted and each participant has full control over their BTC. The supply of Bitcoin is capped at about 21 million BTC and the protocol ensures mathematically that this supply cannot be increased or reduced. No single entity in the world, not even the world's most powerful nations combined can stop the Bitcoin network from validating and processing transactions. With no interference from governments or authorities comes more responsibility for those who hold Bitcoin. The upside is that they can rest assured that nobody can intervene and do things to their money that are detrimental to their best interest.
It appears that many investors forgot about the qualities of Bitcoin and its original purpose. This is understandable given the fact that BTC reached an all-time high of over $69.000 in 2021. Who needs crisis protection when the ROI is so juicy, right?
The world is still far from facing the same turmoil it had to witness in 2008, but the failure of SVB could turn potentially into something bigger that would be difficult to control. Bitcoin is still here producing a new block every 10 minutes on average and processing transactions without any interruption. Its hash rate grew even during the bear market which proves that the network is healthy and stronger than ever before. Bitcoin is ready. The only remaining question is, which investors are ready for a change?
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