Why Bitcoin is Here to Stay
To most in the Bitcoin (BTC) and crypto community, mainstream media is viewed with intense skepticism. Case in point, the leading cryptocurrency has been declared dead over 360 times according to 99Bitcoins.
Most of these attacks come from mainstream outlets, from CNBC and Forbes to the New York Post and Bloomberg. For instance, one Bloomberg op-ed headline published in January 2018 reads: “Sorry, Bitcoin Fans. Digital Currency Is Still a Dream.”
This recently changed, however. A Bloomberg columnist and prominent economist going by Tyler Cowen recently gave a few nods to Bitcoin, releasing an article titled “Bitcoin is (Probably) Here to Stay”. Here is a quick compilation of his thoughts on why BTC is, after all, a viable asset in today’s ever-changing economic climate.
Geopolitical Tension: US-China Trade War
Firstly, the US-China trade war is likely to drive Bitcoin’s long-term value proposition. This is because it is widely believed that Chinese investors, namely those looking to bypass currency controls, are putting their capital into BTC and other digital assets via backdoor on-ramps, suggested to be Tether (USDT) and over-the-counter trading desks.
As reported by this outlet previously, Blockchain.com’s research division found correlations between periods of Chinese Yuan devaluation and Bitcoin growth, further corroborating this theory.
And more importantly, there has recently been a massive uptick in interest for Bitcoin in China, as made apparent by data from Tencent (WeChat), Baidu (China’s Google), and other outlets that suggest cryptocurrency is, once again, starting to grip the hearts of investors in the nation.
Libra Validates Bitcoin
Secondly, Cowen believes that Libra’s launch validates the idea of cryptocurrency. While he is skeptical of the Facebook-backed project’s ability to “get off the ground”, he noted that Libra is “backed by a pretty striking and radical innovation”, this being the potential for transactions to cost much less than their predecessor. He concludes on this specific matter:
The idea that transaction costs on remittances and other fund transfers can be lowered significantly by defining a new medium of payment, piggybacking on older media of exchange… Crypto still holds this promise.
Left-Leaning U.S. Politics
Thirdly, he remarks that the Democratic Party in the U.S. continues to lean left on many matters, especially in regards to wealth and taxes. Thus, he notes that a need for offshore banking, which can technically be Bitcoin or other decentralized cryptocurrencies, is likely to grow with time. This is because the nation’s sovereign debt continues to grow due to the need for more government services, necessitating the government to take more from taxpayers.
This catalyst is similar to one in Italy. For those who missed the memo, a prominent Italian minister recently proposed a wealth tax of around 15% on citizen’s safety deposit boxes. As some have put it, Italy could be the best thing to ever happen to Bitcoin, as investors would seek to store their money in an asset that the government cannot exactly confiscate.
Need for a Portfolio Hedge
Lastly, Cowen writes that there is a need for a hedge in today’s geopolitical and macroeconomic climate:
One final possible explanation for the resurgence of Bitcoin: Populism is spreading, the Middle East is not calming down, and the world is not solving its geopolitical problems.
This is obviously in reference to the idea that Bitcoin is a proper replacement for gold.