The financial crisis of 2008, which arose from the collapse of the real estate market and was fueled by the failure of mortgages, remains in people’s memory, especially Bitcoiners. It was this crisis that inspired Satoshi Nakamoto to create something as cover against future disasters in the centralized banking systems.
Twelve years later, another financial crisis has hit the world, this time caused by the COVID-19 pandemic. However, this outbreak sparked a recession that had been brewing for a long time.
The recession and its long-term effects are only just beginning to emerge, but companies in the United States are forced to fire hundreds of thousands of workers. The economy is so badly affected that even an “endless amount of cash” being printed by the Federal Reserve is not enough to delay this.
Bloomberg recently reported that if lenders prepare for the “biggest wave of bad debts in history”, mortgage defaults could build up at a rate that would make the 2008 real estate market crash seem small.
It seems that the incident in which Bitcoin has emerged is repeated, but is the cryptocurrency ready to show itself as a viable alternative with only 10 years of experience?
A new collapse in the real estate market
The United States economy is in a difficult situation. More than 10 million people have applied for unemployment benefits that allow them to skip mortgage payments for 180 days, including mortgages covered by the federal government. This way, they can avoid fines and further blows on their credit scores. This is equivalent to 30% of Americans (15 million households) who could fail if the economy remained paralyzed.
“This is an unprecedented event,” said Susan Wachter, a real estate and finance professor at the University of Pennsylvania Wharton School. [Bloomberg] “The big financial crisis happened over several years, it happens in a few months, in a few weeks.”
Bitcoin ready to shine
The outcome of this new global recession, which appears to be a growing monster, has yet to manifest itself. For Bitcoin believers, the recent recession triggered the blockchain and cryptocurrency revolution. Can Bitcoin keep its original promises given the upcoming new crisis?
It would be too enthusiastic to say that Bitcoin has become an alternative financial system that can withstand an economic collapse. The cryptocurrency has continued to move towards a store of value as greed determines its name. For this reason, the most practical use of Bitcoin at a time when it is difficult to find fiat money is to sell it to survive.
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