Nearly ten years into failed fiscal and monetary policy experiments, when trust in institutions is ebbing near an all-time low, the rationale for holding bitcoin has never been stronger. Yet, many people are neutral and non-reactive on the matter, giving credence to the current state of affairs instead of challenging the very narrative that is gambling everyones’ future for small gains today.
With Inflation Historically Behind the Collapse of Economic Empires, Bitcoin Offers A Way Out
Many people point to the last financial crisis of 2008-2009 as the juncture where moral hazard reached a tipping point.
For those unfamiliar with the phrase, moral hazard represents the idea that when an entity knows it will be protected against the risks it takes, it will take outsized risks with the full knowledge that any failure will result in no meaningful consequences.
Instead of punishing the instigators and culprits behind the last crash, too-big-to-fail organizations and governments were propped up and bailed out by taxpayers. Unfortunately, redrawing the boundaries of moral hazard didn’t create fewer risks but rather more.
In the time since, interest rates around the globe have plunged to near or below 0%, resulting in an ideology whereby money printing can solve any and every problem. Now, with global debt totals hitting fresh new highs, the printing press turning at full speed, and inflation starting to run rampant, it begs the question as to why the fiat-faithful and undecided remain just that instead of embracing bitcoin.
The Repercussions of Inflationary Neutrality
Not embracing bitcoin or choosing not to take a position on the matter is indeed a vote of confidence in the current system. With an inflationary architecture in place and no plans to replace it, the value of money declines with each passing day.
Printing more money just accelerates this reality, and zero interest rates are punishing savers like never before. Leaving money in the bank might as well be telegraphing to the world that confidence in its antiquated artifices is merited and deserved.
Mortgaging people’s future to support failed policies in the present is a long-term losing strategy, and history tells us that. Eventually, the piper will be paid, and the current debt supercycle will not last indefinitely. There are countless current and past examples of these very events that underline how quickly a country can transition from a prosperous nation to a failed state.
Whether looking back at the Weimar Republic or current-day Venezuela, failed governmental and monetary policies eventually lead to hyperinflation. Rampant fiat currency devaluation combined with high debt levels are nearly insurmountable challenges that ultimately result in government and institutional failure, cultivating a perfect foundation for autocracy and tyranny to flourish.
Challenging The Fiat Narrative
Bitcoin has already proven that another meaningful approach to this problem exists for today’s crumbling status quo. As the best performing global asset over the last ten years by no less than a factor of ten, the belief in decentralization continues to grow as institutional mistrust rises in parallel.
Although there is no clear consensus on the total number of bitcoin holders given the difficulty in measuring participation, some studies suggest that over 100 million people currently own Bitcoin, reflecting a share of around 1% of the total global population.
The exciting thing is that the momentum of this belief in bitcoin isn’t relegated to just one country or region but reflects a growing global community of people who believe that something better is both possible, and realistic. Many people are voting with their feet, and bitcoin wallet data reflects this accelerating trend into deflationary alternatives.
Younger generations are overrepresented in this respect, which is hardly surprising given their first-hand experience witnessing the boom-bust bubble economy. Millennials, for instance, are three times more likely to own and hold bitcoin as long-term investments relative to any other generation. Generation Z is also joining the wave of participation at a feverish pace.
Bitcoin as A Reflection of Waning Institutional Trust
Whether or not you believe in bitcoin or the promise that cryptocurrencies hold, an insurance policy against bad governance and worse policies should not be underestimated and undervalued. The main point of having bitcoin centers on where you stand on government and your remaining faith in these very institutions’ monetary systems.
Ultimately, ignorance of the institutional stranglehold on inflation and the consequences it transfers to ordinary people is very perilous. This isn’t just a local notion either, but a global reality. Accordingly, not taking a stance on bitcoin is just as bad as avoiding it, given it reflects unfettered belief and trust in the very systems that have wrought nothing but deterioration for most of society over the last decade.
Trust is ultimately earned, not deserved. By design, trust isn’t needed to realize the benefits of bitcoin, but faith in its abilities is undeniably rising, putting the status quo on its back foot as new paradigms gain the confidence that people lack in government. Whether governments can rein in moral hazard is questionable, but bitcoin holds the untold promise of faith in a system that requires absolutely none to exist and grow.
So where does your faith lie? – with current governmental monetary systems or with the promise of a decentralized one? Let us know in the comments section below.