The COVID-19 pandemic had a significant effect on economy. Most of central banks forced to print money more than any other time in the history. In fact, over $2 trillion printed in order to stabilize the market and increase liquidity as well. In this post we are going to talk about income inequality and cryptocurrency as a solution.
As we know, Bitcoin created in 2008, in order to provide an alternative to fiat currency and revolutionaries the traditional financial system. Bitcoin is deflationary and what is make it different from fiat currency.
Central banks keep printing money
In the first wave of COVID-19 pandemic, the central banks printed trillions. It’s expected that they will keep printing money in order to create loans for the Businesses survival or deposit for individual’s survival. In fact, a large amount of liquidity injected to economy, which will find its own way to the equity market. It’s expected that same things will happen to crypto market as well, but that hasn’t happened yet.
Crypto users have to be familiar with the supply and demand dynamics, which cause the currency equity markets rally. Now, the equity market is fueling with new money. This is what makes inflation of financial assets and is needed to rescue.
Income inequality; Bitcoin as a solution
We read a lot on social media that bitcoin may be the solution. But, the fact is that Bitcoin simply cannot and does not utilize emergency funds in order the fix the problem. Because, the modern monetary tools are swift, flexible and powerful.
Although Bitcoin or other cryptocurrencies cannot play the role of real money, they could considered to be a meditative store of value.
Considering the liquidity entering the market and the limited number of Bitcoin, it’s expected that participants be bullish on the crypto market. We will have significant increasing in money flowing to the crypto market. This is so much similar to what happened for equity market. As a result, it shows that crypto did well during the financial panic.
What can blockchain and crypto do?
Blockchain technology has a wide range of potentials to use. Today, the focus is on banking and investment. On the other side, Stablecoins offer downside protection. Some provide volatile growth, while other are hybrids of the two.
The question here is that, does crypto solve the economic and financial crisis? The answer is No. crypto is an epiphenomenon on the world monetary stage. Users and fans hope that one day crypto could take center stage.