Defining the Future of Money

The recent collapse of three high-profile banks – Silicon Valley Bank, Silvergate Bank and Signature Bank – has caused a run of outflows at hundreds of regional banks. As a result, the U.S. Federal Reserve has created a new backstop facility reportedly worth $2 trillion, as well as Switzerland’s central bank bailing out Credit Suisse to the tune of $54 billion. 

Are we living through 2008 all over again? Because of these multiple crises hitting the wire, Bitcoin has rallied over $8000 because of its tamper-proof design…everything that maximalists have been saying for the past ten years. 

The emergence of the Bitcoin blockchain can be traced back to the tumultuous period of the 2008-2009 financial crisis, where Satoshi Nakamoto famously marked the date of Jan. 3, 2009, by embedding the headline of that day’s London Times, “Chancellor on the brink of second bailout for banks” (referring to the U.K.’s finance minister). 

The crisis underscored the vulnerability of our economy to the inherent risks associated with traditional banking practices, where banks are responsible for managing our money and payments. Mismatches between banks’ investments and liabilities can jeopardize their ability to fulfill deposit obligations, while the largest banks’ reliance on risky, high-return investments created systemic risk, making them “Too Big to Fail” and thus requiring government bailouts to protect the broader economy. 

The crisis also exposed how the financial centers of the world, such as Wall Street, could exert disproportionate influence on democratic governments.

Central Bank Digital Currencies (CBDCs) will be “sold” to the public as the solution to these, but much like China’s Social Credit system, does not provide privacy and anonymity to transactions. Once more, the State can control your money if CBDCs become “forced” upon the populace. 

Bitcoin’s day is just beginning. Strap on for the ride.