You will see in the headlines that Bitcoin is a bubble and that you should not buy Bitcoin because it is about to burst but this could not be farther from the truth. What the mainstream media are not paying any attention to are the huge stock market and real estate bubbles. When the price of BTC drops dramatically the world economy does not come to a standing still halt as has been proven since 2008. When the stock market or real estate markets crash it causes great economic disasters that can take years or even decades with the size of the current market to fully recover from.
It is not just the stock market and real estate bubbles that once pop will bring the house of cards down with it. The most worrying sector is the derivatives market which has never been so large before. These financial instruments have brought around great depressions and used to be banned until Bill Clinton made them legal again. The bonds market is also another bubble on its way to bursting and if this happens hyperinflation will be one of the biggest problems faced by governments. History shows us that this all will come to fruition, it is just a matter of when.
The question is what will happen to Bitcoin and Cryptocurrencies once the financial collapse takes place. The signs are that when economic circumstances start to deteriorate the price of Bitcoin rises. A prime example of this is during the Cyprus and Greece bailout which saw the price of BTC rise considerably during this period. With banks stopping access to cash in ATM machines, Bitcoin was the perfect solution to be able to store it safely out of the banks and Governments’ hands.
What also happens during a depression is interest rates skyrocket and start to see hyperinflation. This will mean it is extremely hard to get finance from banks and the cost can make it unsustainable. The ICO market is a perfect solution to this problem and as the banking sector suffers, ICOs will boom. More companies will look to these as a cheap way to raise money and will create their own cryptocurrency.
If the derivatives market crashes, there is not enough money to solve it as the sector is over 10 times the size of the global banking sector. Governments will need to find new solutions for money and finance due to total failure of the banks. There are two options when this happens. The first is world war 3 and the second is adopting the Blockchain and Cryptocurrency to provide a fairer, more transparent financial system that rewards its users, and not steal from them.
It is certain that during our lifetimes the financial system will need to be completely revamped. When this takes place it is going to be one of the most dangerous in our history. Luckily we have a solution and it is called cryptocurrency, it just needs one nation to fully adopt it as a national currency and then the other will follow.