Bitcoin has gained ground in 2020, despite Covid-19 and the perilous market conditions which many traditional assets were not able to handle.
The Bitcoin rally of 2020 caught many people by surprise. In previous years, the cryptocurrency had been mocked by critics and labeled as fool’s gold. The tables have turned. In a Covid-19 era, the cryptocurrency has shown more resilience than many assets, including gold.
Financial journalists who once laughed at Bitcoin are changing their tune as the cryptocurrency continues to rewrite the history books of economies around the world.
Many believe that the demise of cash is inevitable and that Covid-19 has simply accelerated the process. Economists like Ken Rogoff welcomes the demise of cash as it could make the management of monetary policy easier and organised crime harder to commit.
A combination of different driving forces in the technological realms are shaping a monetary revolution that even the most experienced economists may not be able to comprehend to its full extent. The different performances of the U.S. dollar, gold, and Bitcoin sheds light on the new trends that are taking place.
The dollar is the world’s favorite money. Central banks around the world operate based on the movement of its value as it dictates the tempo of international transactions. Over the years, its value has decreased along with the confidence of the masses in it due to disproportionate amounts of quantitative easing and bad debt led by central banks.
According to Bitcoin expert Anthony Pompliano,
“Governments have held a monopoly on monetary policy for decades. They used it to manipulate economies, while driving insane levels of wealth inequality. Bitcoin is the only option built for the people. They can use it to protest central banks, while protecting their wealth.”
With inflation being the thorn in the side of fiat, including the dollar, it is no surprise that more people look to Bitcoin as a store of value, not just as a medium of transfer. Bitcoin has a monetary policy that is anti-inflationary. With its limited supply, it is impossible to devalue it through bad debt like many banks have done with fiat.