Bitcoin’s time as an internet currency for nerds may be well behind us. Today, the name Bitcoin is known by the young and the old, the rich looking to get richer and the poor looking for an opportunity to better their situations. For its creator, the enigmatic Satoshi Nakamoto, it was a peer-to-peer cash system that was created to counter the economic instability caused by poor the decision making of governments and the heads of the Fractional Reserve Banking systems in place today.
That was in 2009, on the back of major bailouts for ailing banks during the last global economic downturn, was when Bitcoin made its entry. Today, the threat of an economic downturn is looming again. This time it is accompanied by anti-government protests and other negatives such as global trade tensions and insecurity.
This begs the question. Could the current state of global economics and strained political stability provide the opportunity for Bitcoin to take centre stage of global trade? Based on the on IMF’s (International Monetary Fund) economic growth outlooks and an analysis of the current state of a large number of banks globally by Mc Kinsey & Co, and the seemingly ceaseless anti-government protests, this could very well be the case.
The IMF foresees Dark Times Ahead
On the 15th of October, the IMF decided to further downgrade its outlook of the health of global economics, in what they refer to as a “synchronized slow down”. The economic growth outlooks for 2019 was downgraded to 3%, which is the lowest growth since the last economic downturn about a decade ago.
“We estimate that the US-China trade tensions will cumulatively reduce the level of global GDP by 0.8 percent by 2020.”
“The weakness in growth is driven by a sharp deterioration in manufacturing activity and global trade, with higher tariffs and prolonged trade policy uncertainty damaging investment and demand for capital goods.” Reads the IMF blog post.
Further, the IMF sees economies like that of the US and China slowing down a little more through 2020. Should this situation as a whole persist, the dominance of the US dollar in global trade may be comprised by states looking to diversify away from their dependency on the greenback, China might have already started.
Mc Kinsey Not Confident About The Current State of Most Bank Worldwide
According to Bloomberg, a report from major consultancy firm Mc Kinsey &Co, the current state of more than half the world’s banks does inspire confidence as the threat of another global financial crisis looms.
“We believe we’re in the late economic cycle and banks need to make bold moves now because they are not in great shape”
“In the late cycle, nobody can afford to rest on their laurels.” Said Kausik Rajgobal, a senior partner at Mc Kinsey.
According to Mc Kinsey, the biggest risk that banks face comes from their own recalcitrance. The report points out major innovations from tech giants like Amazon, Google and China’s Ping An as credible threats to incumbent banks. A threat that is already eaten in to their valuations, which have fallen 15 to 20 percent since the beginning of 2018.
Protest Action Pumps
From Hong Kong to Chile, Iraq, Lebanon, Turkey, Venezuela and Barcelona, political unrest seems to trending right now. Another trend that follows closely behind the unrest is the halting of banking systems. In Venezuela and Chile, for example, cryptocurrencies have risen to the occasion.
The relatively new decentralised finance sector has used these shaky political situations as a theatre to display its ability to circumvent restrictions and absorb some of the effects of a crashing economy.
Mass adoption of cryptography secured currency depends more on acceptance from people on the ground than it does from any government or institution. Perhaps the current state of economic and political dismay might be the catalyst.
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