Bitcoin 3 mins

Why Bitcoin Matters: Ghana Finance Crisis Ties Up $1.6 Billion for 70,000

Avatar Nick Chong 2 months ago

For the longest time, Bitcoin (BTC) has been viewed as something with no inherent value.

Legendary investor Warren Buffett, for instance, once called the cryptocurrency “rat poison squared”, later explaining that there isn’t much inherent value in the project. Other notable players in finance and politics, including U.S. President Donald Trump, have echoed this analysis, using phrases like “thin air” and “unbacked” to get their point across.

Related Reading: Bullish for Bitcoin Price: Wall Street’s Ex-Central Bankers Advocate For “Free Money”

Unlike traditional stocks and assets, Bitcoin doesn’t provide a fixed yield, a dividend, or generate cash flow. And compared to traditional and modern fiat currencies, BTC isn’t backed by the power of a government or the scarcity of an underlying asset.

But, a series of recent macroeconomic and geopolitical events all across the world have begun to prove that Bitcoin is needed, whether governments, Wall Street, Silicon Valley, or central bankers like it or not.

Bitcoin is Needed, Now

According to a recent report from Bloomberg, Ghana is in the midst of a financial crisis. The report, published this weekend, suggests that there are 70,000 Ghanaian investors affected in a “cleanup” of the nation’s banking industry.

The outlet writes that the crackdown, which resulted in many local lenders and savings companies shuttering their businesses, “triggered a run on fund managers”, most of which who weren’t liquid enough to satisfy the demands of their investors.

Due to this, there exist a purported 70,000 Ghanian investors who can’t access $1.6 billion worth of their investments, more than a third of the African country’s private fund sector. Yikes.

According to cryptocurrency commentator Rhythm, Bitcoin “fixes this”. What he/she seems to be referring to is the fact that unlike the traditional fiat system, Bitcoin and other decentralized technologies don’t require middlemen.

Should you be investing in the right products and with the right infrastructure, you should be the only one that can manage your Bitcoin and cryptocurrency investments.

This crisis in Ghana is somewhat reminiscent of what happened in Cyprus around five years ago. For those who missed the memo, the European island nation was required to bail in its commercial banks, resulting in thousands losing their wealth, a run on the banks, and a subsequent spike in local Bitcoin demand.

Of course, Ghana is in a different situation, but the underlying need for Bitcoin then and now is all the same, if not more accentuated. Bitcoin is decentralized, non-sovereign, scarce, immutable, programmable, and unconfiscatable.

Related Reading: Bitcoin as a Safe Haven: Yet Another Recession Indicator Flashes

World is Screaming for An Alternate Economy

This crisis comes as many other facets of the world are starting to scream for something new, something different.

Just look to Argentina, where the incumbent president lost a recent race to someone who analysts say will plunge the South American economy into yet another bout of chaos. This political result led to a 20% collapse in the Peso against the U.S. Dollar, a 50% collapse in the local stock market, and a slight uptick in Bitcoin volumes and a premium for cryptocurrency.

There’s also a crisis in Hong Kong, where literally millions of locals have been taking to the streets to protest the actions of the local government and the mainland Chinese government, who they say are encroaching on their democratic freedoms. There, too, a premium on the price of Bitcoin has been seen.

Bitcoin, according to a growing number of analysts, is a perfect hedge against macroeconomic turmoil, geopolitical debacles, inflationary monetary policies, irresponsible fiscal policy, and so on and so forth.

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