More and more, media outlets are reaching the inevitable conclusion—cryptocurrency is real. While certain news sources continue to publish their stance based on fiat backing and are determined to spend their time spreading FUD (fear, uncertainty, doubt), the number is dwindling. The latest to switch sides is mainstream news outlet Bloomberg, which—perhaps with a certain degree of hesitation—has announced that crypto is here and it won’t be going away.
Someone at Bloomberg had a “lightbulb” moment and came to the conclusion that many crypto enthusiasts have asserted repeatedly over the past couple of years. Tyler Cowen writes: “The obvious question is this: If Bitcoin was just a bubble to begin with, why has it been bouncing back in this manner? The answer is that cryptocurrencies, in some form or another, are probably here to stay.”
Cowen points out how the U.S.-China trade war could have been a catalyst for the recent crypto bull run, given the continued controls on the country’s economy. Those controls are converted into internal capital controls, which could possibly be forcing Chinese citizens to look for ways around their limitations. Cowen states, “It no longer seems that China will join the international economic order as that term might have been understood 15 years ago. Instead, there will be an ongoing cold war; China will not liberalize, and capital controls may persist. In that world, Bitcoin will continue to prove a useful way of getting funds out of China.”
If the Democrats are successful in beating President Donald Trump in 2020’s presidential elections in the U.S., there exists the possibility that tighter tax ramifications will be introduced against the country’s wealthy population. If that were to happen, there will be a push for alternative methods of currency to bypass the controls, and crypto could be seen as an option. The author explains, “[The new taxes] likely would boost the demand for Bitcoin and other crypto assets, as cryptocurrencies are potentially a way to store assets out of reach of many tax authorities. And the U.S. is hardly the only nation that may be looking to a wealth tax in the future to balance the books. In essence, the new and higher price of Bitcoin is telling us that fiscal solvency will be hard to come by, and the wealthy will not give up their assets without a fight.”
There is also the possibility that Facebook’s Libra could play a role in greater crypto adoption. If it is accepted by world governments, it would have the ability to greatly reduce the fees associated with money transfers, and this will undoubtedly take its toll on fiat’s stranglehold.
Cowen has acknowledged what many crypto fans have known—the fiat system is flawed and a better alternative is possible. As awareness increases, so does adoption. He concludes, “So crypto is alive and well these days, even if (like me) you reject the utopian predictions that it will somehow displace money as we know it. If we have had a hard time seeing the resiliency of the crypto space, it is because we are not used to thinking of futures that are radically different from the present. But those futures—for monetary institutions at least—now seem to be closer than ever before.”
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