Bitcoin price surged in response to failing banks. Since 2008, recent events can be considered the worst for the banking sector. And that’s when digital currencies were born. Similar situations remind us, how vulnerable our finances are and how high our dependence on banks is.
The biggest banks create systemic risk and put themselves in a position where they are considered too big to fail. They are often bailed out by governments in order to protect the economy, an example of which is Credit Suisse, which took a 50 billion loan from the central bank. The banking sector therefore holds democracy hostage. As a result, the Fed currently has $2 trillion set aside in case aid is needed.
The future currency will be CBDC
SVB collected money thanks to the issue by the FED after the crisis in 2009. It did not hedge its interest risk, which, combined with high interest rates, was fatal for the bank. That started the panic and that’s it because of one company’s mismanagement, many people acted in panic.
Is such a system healthy? Our dependence on financial institutions is existential. Furthermore, it is unlikely that current capitalism will function in the same form over the long term. In the future we can expect that legal currencies will be digital, but still centrally controlled. You can read more about this topic in the article Negative change cannot be avoided even by Slovaks. CBDCs are coming unstoppably.
Many expect cryptocurrencies to be the future payment system. That’s probably true, but they won’t be the cryptocurrencies we know today. Current currencies will be in digital form in the future and their exchange rate will not be so volatile. And the coins we trade today will serve as a speculative tool.
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Cryptocurrencies will not be a means of payment
Confidence in banks and the centralized stock exchange is rapidly declining in both markets. Society is approaching the moment when everyone wants to be the owner of their capital. In reality, your money does not lie in the bank account, but the bank invests it. In the same way, you do not own cryptocurrencies on cryptocurrency exchanges, because the private keys to them are held by the exchange and not by you.
The future of our money is, unfortunately, in the hands of governments and probably the closest form will be CBDC. However, concerns about the centralization and control of CBDCs are justified because they can be used as a coercive tool.
In addition, it is considered above targeted differentiated interest rates, even negative, so that people are motivated to keep money in bank accounts. This step says clearly because banks are starting to worry that people will gradually withdraw money from their accounts. On this topic, we recommend you read the article World governments fear the worst – cryptocurrencies interfere with their functioning
It is unlikely that people will use cryptocurrencies as a means of payment, because high volatility does not allow this. Like it or not, the payment system needs oversight and regulation, which cryptocurrencies lack. Everyone will only use a currency that they are sure will buy the same amount of goods and services the next day.
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