Bitcoin in the Middle of the Deepening Financial Crisis
According to John Vaz, during an interview, he asserts that the outlook for Bitcoin (BTC) and cryptocurrency are dependent on the feedback from governments to the ongoing economic crisis. Vaz is a prominent economist and academic at Monash University.
Also, he noted the importance of broader adoption and acceptance of the cryptos. And this means that BTC has a possible role as a money commodity in the context of intensifying economic crisis to cigarettes in prisons.
In the short term, Vaz already expected that the price of Bitcoin has fallen. He asserted that BTC has suffered from a similar liquidity crisis like most markets. And Vaz emphasized, “When things go into chaos, people dump them.”
In addition to that, the economist highlighted that everything had taken a downturn recently. And it is only about a handful of commodity-type assets such as gold that they view as safe-havens are not seeing the same fast price drops.
Aside from the cryptocurrency, Vaz describes the perceptions of the U.S. dollar as a safe-haven as bizarre. And he even argued that the most poorly managed asset of all is the greenback.
Vaz explained, “Given dome of the expenditure that’s taking place in the U.S., huge unfunded tax cuts given to corporate sector and so on, large defense spending, and now, even larger spending for economic stimulus. So, how will that be dealt with?”
Opportunity for the Cryptocurrency
But in the middle of the raging economic mismanagement, Vaz found an opportunity for crypto assets to emerge. As an alternative currency with a few stability and protection from the basement.
John believes that the same economic policies that motivated the creation of Bitcoin and cryptocurrency in the first place will be running on steroids and post-crisis.
He believes that several countries will have a situation where they wish to protect their currency from devaluation and impose currency controls. This asserts that cryptocurrency might become too attractive for many markets as a way of subverting currency controls.
Based on Vaz, fiat currencies have more equity than cryptocurrencies. As they don’t have banks or governments to hijack losses and privatizing the profits. He also added that there is a lesser opportunity for those sorts of things with cryptos. Potentially, making them attractive as an alternative form of money.
BTC as Prison Cigarettes
Moreover, Vaz indicated that the success of Bitcoin would also depend if cryptocurrency obtains wider adoption. Especially when it comes to institutions.
In history, as the economist cited, money gains value because people use it and thinks it is worth using. Now, cigarettes are money in prisons – no one thinks of it as money. However, a person can get someone presumably beaten up, or killed, or anything criminals do for cigarettes. With this, it isn’t worth much more than cigarettes. But in prison, it is almost as good as gold.
Above all, John concludes that the way they manage the government and economy are going to be crucial in the Western world. And it might create an opportunity for cryptocurrency. He believes that whether crypto will succeed or not, it will all depend on how many prisoners are willing to get the cigarettes.
