Today’s election is anything but ordinary. People from every corner of the globe have been watching, not only for its theatrical elements but because the impact will be felt around the world in very real ways. And nowhere will the impact be more immediate and certain than on the economy.
In August, the Wall Street Journal published a piece noting that economists were already seeing election-induced uncertainty harming the US economy. When the British people voted to leave the European Union, the value of currency literally plummeted overnight. If Trump wins today, the USD is likely to take a tumble just as the GBP did following the Brexit vote.
This year, we’ve seen firsthand the consequences of geopolitical risk on FIAT currencies like the USD and GBP. Bitcoin, on the other hand, has not only survived, but thrived despite increased hacks, competition, and scaling turmoil.
The Bitcoin Advantage
Digital currencies like Bitcoin were built from the ground up and designed for an era of information. Just as we engage in a world where information and commerce flows without the need of a central authority, Bitcoin allows value to be transacted directly, peer to peer, without an intermediary. This vastly increases system efficiency and enables the provision of financial services at a drastically lower cost basis.
Importantly, Bitcoin is a global digital currency that is borderless, frictionless and secure. Unlike legacy currencies and payment systems, Bitcoin is immune to capital controls and currency manipulation. It does not limit people’s freedom to move money to where they want it to be and cannot be controlled by governments for their political agenda. Most of all, it is well insulated from national political uncertainty that might cause aggressive fluctuations in other traditional currencies.
Is it just the uncertainty of today’s election that is causing volatility in FIAT currencies? Yes, the election, as with any national political event is bound to yield fluctuations within our economy. Should we expect that when that uncertainty subsides, so will the economic fluctuations? Yes, at least a bit.
But, as history has shown, we should also expect that the next political event is right around the corner, with the resulting economic impact. Conversely, since it’s inception, bitcoin has remained immune from fluctuations from political events, and I believe that will be the case with today’s election.
Why? Because as noted above, bitcoin is immune from capital controls and currency manipulation. We have entered an era of true independence in currency. That’s been shown in the past, and I believe we will see the same in the months to come.
Transformative Possibilities of blockchain technology
Taking the bitcoin discussion one step further, the blockchain, the underlying technology of Bitcoin, stands to change much more than just currency. Unlike traditional financial ledgers, kept by a central institution, the Bitcoin blockchain ledger is updated and maintained by everyone on the network.
The bitcoin blockchain hasn’t had any downtime since its inception nearly 9 years ago – a remarkable feat for any financial platform. It also means there is no gatekeeper collecting fees with each transaction. And because the bookkeeping is publicly accessible, records can’t be manipulated after the fact.
There’s general consensus that this technology will re-engineer the way we exchange value at both an enterprise and personal level. A greater percentage of the world’s population will be able to utilize digital financial products to transact, save, insure and hedge their way to a better economic future and nearly every major institution – from health to finance, entertainment to government – is exploring what block chain’s unprecedented efficiency, transparency and privacy means for them.
As digital currency cements its place in the global economic dialogue, many people are asking whether the blockchain will change the world. I think the answer is a resounding yes. And if the results of today’s election and recent world events teach us anything, it’s that our global economy needs the protection that a decentralized and global currency offers.