In 1968, roughly 100,000 Americans died from the H3N2 flu. Currently 105,000 Americans have died from the coronavirus. In 1968, protests erupted following the assassination of civil rights leader Martin Luther King Jr.
Today, people are protesting the death of George Floyd, a black man who died after being pinned down by a white police officer. In 1968, the S&P 500 posted yearly gains of over 10%. Today the Dow Industrial Jones is down on the year at 28,868 but has rebounded 38% after cratering to a yearly low of 18,591 in March – despite 40 million jobs getting wiped out during that same time period.
As the stock market appears to brush aside the deadly global pandemic, mass unemployment, peaceful protests, violent clashes and bankrupt businesses, Ethereum co-creator Vitalik Buterin shares his thoughts on why today’s crisis, despite the quantitative easing, the emergency stimulus checks and the volatile markets, is not a financial crisis and why cryptocurrency represents a new way for people to control their money as opposed to a US dollar replacement.
He tells his 911,400 followers on Twitter,
“Bitcoin was born out of a crisis that was fundamentally financial in nature. Either the banks misbehaved, or the government over/under/misregulated the financial sector, or they bailed out too many banks, or they printed too many dollars.
And bitcoin itself is primarily a financial tool. Ethereum is explicitly less financial in nature, but even there it remains a fact that a large fraction of applications that a blockchain legitimately makes better involve handling coins/tokens/money of some form.
2020 is first and foremost not a financial crisis. It’s a virus crisis, it’s a crisis of epistemology (how we learn what’s true and what’s false in the face of competing groups misleading us), it’s a crisis of overbearing policing in many places, and much more.
Yes, the money printer did go brrrrr. But that’s a relatively small portion of what is going on, and even there inflation is still going down not up.
And cryptocurrencies ended up being very much correlated to wider economic trends. Doesn’t mean they don’t protect from other things (eg. political barriers/interference), but it does mean that narratives need to adjust.”
Buterin adds,
“Conclusion: finance is relatively less important this decade than it was in the last decade, and the crypto space needs to adjust to this reality. Even within finance, some change of emphasis is in order.
Luckily, there’s many categories of ethereum applications (and other chains) that go beyond finance. Decentralized censorship-resistant publishing and communication, decentralized communities / governance / DAOs, DAOs for content curation, etc etc. All important work.
Within the space of financial apps, I would say the success of stablecoins has shown that what people want is not to get away from the USD right this minute, but to move into the crypto environment where they have more options of what to do with their money. Freedom of exit.
Financial censorship (especially the insidious second-order variety where intermediaries get quietly pushed to extrajudicially block use cases that are perfectly legal) continues to be a problem for many marginalized groups and crypto can help.
Though I do think that a broad shift from crypto just being finance to crypto also being decentralized governance and organization and community is needed, and is happening. After all, public goods and community are incredibly important even to the crypto space itself.
I will come out and say this directly: this mentality below is exactly what we should be expanding beyond right now. Reforming money is not sufficient.
2016-20 is a period of ideological realignment. Many old ideologies and coalitions are dying, and many new ones being born. The hills and valleys on the battlefields are shifting. The crypto space needs to be watching carefully and adjust to new realities.”
You can check out the full thread here.
Featured Image: Shutterstock/Ascannio