There has been a lot made over the case that the world seems to be heading towards another 2008-esque financial crisis in the wake of the Covid-19 pandemic and the world’s economic reaction to it. This, of course, has stirred ripples in the cryptocurrency sphere as many wonder how Bitcoin and its ilk will react having been borne of 2008’s collapse.
The fact that Bitcoin, having been created after 2008 to counter another occurrence of the 2008 crisis, and has had over 10 years to build towards that aim, is now facing another crisis means a lot of people have bated breath. However, as things stand at the brink of a potential crisis, Bitcoin is not donning its superhero cape just yet.
However, this may not be the crisis that Bitcoin is looking for to save the world from, in fact, it may not even be what could spark Bitcoin into financial rescue mode because the world is a very different pace to 2008, and the 2020 situation is also entirely different.
Co-founder of Ethereum Vitalik Buterin has taken to Twitter to express his views that cryptocurrencies play their part in a role that is not just about monetary reform.
2020 is not a financial crisis
Buterin began by explaining that yes, Bitcoin was indeed created out of a true financial crisis in 2008: “Bitcoin was born out of a crisis that was fundamentally financial in nature. Either the banks misbehaved, or the government over/under/misregulated the financial sector, or they bailed out too many banks, or they printed too many dollars,” he tweeted.
However, although there are parallels to how the economy could fare this time around in the wake of Covid-19, it does not make it another true financial crisis: “2020 is first and foremost *not* a financial crisis. It’s a virus crisis, it’s a crisis of epistemology (how we learn what’s true and what’s false in the face of competing groups misleading us), it’s a crisis of overbearing policing in many places, and much more,” Buterin went on.
He expanded further by saying that there was a part to play by the banks and governments that caused masses of money printing and stimulus only last seen in 2008, but it is only a small part of the grander scheme and in fact, inflation is actually still dropping.
More so, he pointed out that cryptocurrencies, as much as people would like them to be a hedge, are actually still heavily correlated to the financial markets.
More than money matters
Buterin went on to state that Bitcoin and the rest may be seemingly primarily financial in nature, but they offer so much more if the different avenues are explored. He quotes a tweet from the CEO of Binance who stated: “Bitcoin is a peaceful protest” and added: “I will come out and say this directly: this mentality below is *exactly* what we should be expanding beyond right now. REFORMING MONEY IS NOT SUFFICIENT.”