Andreas Antonopoulos is “perplexed” at why some Bitcoiners wish for a global financial crisis because, as he acknowledged, Bitcoin is still “not ready” to absorb such a shock.
We Know It’s Coming
Bitcoin guru Andreas Antonopoulos shared his thoughts in a Q&A session with the audience at the recent D10E event in San Francisco on what would happen to Bitcoin in the event of another global financial crisis.
The question of what will happen to Bitcoin in the event of a “black swan” event, such as the collapse of Deutsche Bank, was asked by none other than Bitcoin investor, Michael Terpin.
“First of all, i don’t think that’s a black swan moment,” replied Antonopoulos. “We’ve seen it before. We know what it looks like. We know it’s coming. It’s probably going to come from somewhere we don’t expect like the third largest Italian bank you’ve never heard of.”
The author of Mastering Bitcoin may be on to something. Bitcoin.com reported that some of Italy’s major banks have recently failed stress tests. In other words, the country’s banking sector would be unable to weather a crisis and have its own “Lehman moment.”
However, Antonopoulos hopes that this won’t happen anytime soon because Bitcoin is still in its infancy and won’t be able to serve as an “exit valve” if the entire global financial system implodes. Moreover, he is also “perplexed” by some in the Bitcoin community who wish for a global collapse to happen, whereas the possibility of such an event is already high. He noted:
I hope that doesn’t happen. Unfortunately the system is very fragile so there’s a good chance it might happen.
“I’ve lived in a country that’s had a currency crisis, twice. I visited many countries that have currency crises. It is ugly. A lot of good people get hurt. Generations lose their futures overnight and do not recover in thirty years. So we should not be wishing for that,” Antonopoulos added.
Bitcoin ‘Not Ready’ for Global Economic Crisis
When — and not if — a global currency crisis does occur, however, many Bitcoin users believe that the decentralized, border-less, peer-to-peer, and open-access digital currency can serve as a life raft in an ocean of financial calamity.
This is not too surprising, though, considering that Bitcoin is the first (better) alternative to the existing monetary system outside of precious metals and plain old barter. Moreover, Bitcoin creator Satoshi Nakamo even embedded a Financial Times headline into the first transaction of a block, called a coinbase transaction. It read, “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” Many have interpreted this as Nakamoto being frustrated with the failure of the traditional financial system.
Furthermore, recent global financial system “stresses” such as Brexit, Bank of Japan’s helicopter money plans, and China’s bubble economy are also often accompanied by Bitcoin price upticks. But Antonopoulos doesn’t see this as a positive sign in an event of a full-scale collapse of the global monetary system.
“If we do have a global economic crisis at this point,” Antonopoulos said, “Bitcoin is not ready to absorb anything, let’s be realistic.”
“There is no exit valve,” he continued. “Even if everybody in Bitcoin actually gains an advantage from having some diversification — that’s not going to make much of a difference to anybody else. All of the investment in Bitcoin, not just in companies but also individuals and entrepreneurs, and startups dries up instantly over night and we’re all set back across the board by a decade.”
I certainly don’t want people to think just because Bitcoin can act as a safe haven investment, just because it can act as an exit valve, just because we see things like Brexit or the Yuan devaluation happen, Bitcoin spikes up. There’s a big leap between that and saying ‘I hope the world burns so I can make money on my bitcoin.’
Do you agree with Andreas or do you think a global financial crisis would help Bitcoin? Share your thoughts in the comments below!
Images courtesy of 99bitcoins, bitcoinwiki.co, Bitangels.
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