This is probably a rhetorical question when asked of people who are already involved in cryptocurrency. People, through this very action, are already hedging against fiat and what governments/banks around the world are doing.
Depending upon who you listen to, there is a chance that you heard talk that a financial apocalypse is on its way. Some will tell you the end is near. The problem I have with this viewpoint is the same people were touting that for much of the last decade. Right now, we see the stock market at an all-time high, the U.S. economy, the largest in the world, is growing, and China is still seeing a good, positive growth rate even if it is slowing.
Hence, are we really heading for a total collapse?
I guess the answer to this question is what your definition of collapse is and how you envision it. The doom and gloom people believe we are going to see most major economies, governments, and institutions going under almost overnight. Get the guns and bullets ready, civil unrest is around the corner.
Personally, my view is a bit less dramatic although very painful. I see the financial engineering that took place for much of the last decade coming home to roost. Somehow, they managed to prop things up for a decade, causing a run in many asset classes. This is a classic credit-fueled bubble. Looking back over the last 100 years, we see how this tends to unwind.
It is not pretty.
The global economy, in my opinion, is teetering. It is getting closer to going over the edge. No matter how much they engineer things, I do not believe recessions are avoidable. This is exactly what the central banks are trying to do. Perpetual growth is the only goal, subscribing to the belief that we can stop the pullbacks that tend, in the long run, to be healthy for economies.
Hence, we have a lot of zombie institutions out there. These are entities which should be dead and buried. Instead, they are propped up with cheap debt, thus putting off the day of reckoning.
Unfortunately, there comes a time when the can cannot be kicked any further. And that is when it is game over.
At present, I see the U.S. economy and the USD being the best of the worst. Both are fairly solid compared to the rest of the world. That does not mean it is good, just better than what else is out there. When this goes, then the "safe havens" people look for are all gone. Few use gold as a hedge and even fewer turn to cryptocurrencies.
However, the later might be just what the doctor ordered.
As asset prices start to collapse, panic sets in. People begin to look for places to park money that will hold up against the downturn. With a global economy being such a mirage, it is tough to know what that is. Markets have a way of mirroring each other, taking the diversification idea and tossing it aside. In the U.S., a large downturn in real estate is going to pull the stock market down with it. The Fed will, presumably, respond with more cutting (which they are doing anyway), meaning the currency and bond markets will be upset.
All the while, many of us are sitting in cryptocurrency. And this could be a saving grace.
The worse things gets, the better I foresee cryptocurrency doing. To start, the reason is very simple: crypto is often priced in fiat. This means that as banks start to race to the bottom, the fiat currencies are going to collapse. This will mean a massive run up in crypto just because of the pairing.
Another aspect to this is the idea of money flow. Crypto is still a small market. Thus, it will not take a lot of money flowing in to really get it going. The publicity over the last few years, albeit mostly negative, did make people aware of this as an asset class. Sharp investors are going to look to get out of those markets that are falling. Crypto could be a place many turn to.
The race between the present system and what is being erected using blockchain/cryptocurrency could be accelerated by events in the global economy. Many are already losing trust with the present state of things. My belief is the next downturn is going to surpass that of a decade ago...by a substantial margin.
Bitcoin was a result of the financial games played by the banks during the last crisis. Now, after a decade of development, we are seeing an alternative system developed using the crypto technology. The next financial collapse might be what pulls cryptocurrency into the mainstream.
History shows that each bust is worse than the previous. This is something that started in the 1980s and is only continuing. The net that is cast is getting wider with each one. This time, because of technological advancements and automation, I feel that corporations are going to make it very hard on people. Unlike in the past where there was little option other than to hire people back when things bottomed out, companies will have the choice of automating.
Suddenly, the ROI on that investment makes a lot more sense.
Regardless of when all this happens, I think being in cryptocurrency is a great way for people to protect themselves. As ecosystems develop and marketplaces start opening up, we will see mini-economies all over the place. Unlike the present system, we will not see governments and central banks playing their games. By the time they realized what happened, it will be too late.
The President and his cohorts have time to comment on Bitcoin when things are relatively stable (at least on the surface). When the wheels are falling off, Bitcoin will not even be on their radar.
Many will wish it was.
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