President Obama announced that the U.S. economy has had a leap in the last couple of months, but we all know that economies can face meltdowns when it is least expected. One thing is for sure though- if this happens, the value of one Bitcoin will leap up so much that getting back it down could turn out to be an impossible task.
In order to answer this question well, we first have to understand what the fall of an economy represents. While many consider that the value of the affected currency will drop, things are a bit more complicated. If you look back at 2008, anyone can easily take note of the fact that hundreds of thousands of jobs were lost, many couldn’t afford to eat, pay their bills and rent, thus losing their homes. An abrupt fall in the value of a currency will also lead to different problems, such as decreased trading and lower stock prices, which can then cause various businesses to become bankrupt and the world’s economy to take a hard hit all over again.
While the short-term results can be quite disastrous, once people understand how bad things can get, many will begin to look for alternatives. In the scenario which talks about the fall of the U.S. economy, most of those who hold major amounts of money in dollars will quickly begin to look for another currency to invest in.
Once this is done, chances are that many will decide to pick bitcoin thanks to the fact that regardless of its volatile state, the cryptocurrency is capable of holding a steady value, as it has been fluctuating around the $230 mark for quite a long period of time. Additionally, another reason that may explain the increasing demand for investing in Bitcoin after an economic disaster in the U.S. could be that altcoins are still nowhere close to being popular enough at this moment in time.
While there are a couple of other cryptocurrencies out there, chances are that bitcoin will represent the first choice for many not only because of its higher value when compared to other currencies, but also because Bitcoin is one of the few currencies that can be easily changed to other cryptocurrencies online. While exchanging to fiat is somehow still problematic at this moment in time, solutions will most likely be found once the coin becomes more popular. Bitcoin exchanges are also spurting up like snowdrops in spring nowadays, as more and more open their gates to customers from all around the world.
However, as an effort to avoid other loses, people may also be attracted by the idea of investing in commodities such as gold, silver or fine art. While these incur capital gains taxes because of their state, many consider them a safer way to store large sums of money.
Chances are that the economic crisis of 2008 can happen all over again as reports indicate that giant banks in the U.S. fought financial reforms. With this in mind, while the 2008 crisis still reverberates in our fragile economy, another one could be quite disastrous.
Fortunately, Bitcoin is deflationary, isn’t subject to any central authority that can reign over it, while also imposing a frictionless status, thus making it a better alternative to fiat. This is why it is important to make cryptocurrencies as popular as possible before that, as an effort to ensure that this time, the amount of people affected will be significantly lower.
As pinpointed by James Clerk Maxwell, a well-known mathematical physicist , ‘A man must be big enough to admit his mistakes, smart enough to profit from them, and strong enough to correct them’, which is basically the main principle that should be kept in mind whenever we find ourselves on the brink of another economic meltdown.
By keeping everything that has been outlined so far, another fall of the U.S. economy will be disastrous, but at the same time, it will most probably make Bitcoin one of the most popular currencies, as millions of people will start seeing that it holds a future and begin investing in it- thus creating an authority-free financial environment.