Industry News Bitcoin was not the Result of the 2008 Financial Crisis

Bitcoin was not the Result of the 2008 Financial Crisis

January 26, 2021

The history of bitcoin is not something that is often assessed in the mainstream media. However, when it is, too often does it end up in the realm of information that is neither factual nor does it fit in the wider narrative of the first cryptocurrency network in the world. One of the elements that is often referenced in these faulty tales of bitcoin is one that connects the network with the 2008/09 financial crisis. This period of global economic and financial instability is now infamous and one that undoubtedly influenced many elements of the modern world.

However, one of those is not the creation of this cryptocurrency network. Instead, even though many of the facts about how and why bitcoin came into being remain shrouded in mystery – mainly the identity of its actual author – the network that started changing the world of global finance had little if anything to do with the 08 crisis and the prior market crash. Here are some of the essential talking points about that idea and why it still more than matters, some 12 years after the network began working.

Satoshi Nakamoto Story

In 2007, some two years prior to the launch of the bitcoin cryptocurrency network, its creator, known only as Satoshi Nakamoto, began working on the protocol. That took place well over a year before the start of the financial crisis, especially the main one which took down the global markets. Yes, the subprime mortgage industry was in a state of collapse, but most financial experts were clueless about the process or where it will lead. As Nakamoto Satoshi worked on the bitcoin project, the banking and financial tremors began taking place, as well as a range of potentially devastating bankruptcies.

However, there is absolutely no indication that in the multi-connected world of esports, social media, and many more elements, that made any particular effect on the creation process. Of course, there is a relationship here that is undeniable. But, it’s essential nature and the trajectory of its development are nowhere near the statement that BTC simply came about as a response to this particular crisis. The intertwined past of bitcoin and the system around it goes much, much deeper.

Going Live

The bitcoin blockchain went online in January 2009. At the same time, the banking sector was in full crisis mode. Globally, the banks are under threat of failure left and right. In the US, the same financial institutions are in an absolutely abysmal situation and there is an ongoing threat that the crisis will spill over into other gigantic business entities. This includes names like General Electrics. The governments across the globe fully realize that if this takes place the entire economy is sinking to levels it has not seen even during the Great Depression.

Yet, the cryptocurrency network that is operating at that moment is completely unrelated to the developing and expanding crisis. Instead, the Genesis block of BTC is mined somewhere in early January that year. This timeline for a menu represents the notion that bitcoin was created as a levy against these turbulent times. But, this way of perceiving the same cryptocurrency is not actual and the history of peer-to-peer software development underlies this notion better than any other concept of the modern cryptocurrency ecosystem.

P2P Finance

The final product might have been the bitcoin network but the development process of the same set of principles dates back decades into the past. Previously, numerous individuals and organizations tried to solve the key problem behind all of the peer-to-peer financial setups. That is the issue of using decentralization and technology as a basis for financial sovereignty. Throughout history, central banks and governments used their inherent levels of trust to make any currency work. Once that level of trust is taken away, the resulting systems are shown to be not just fragile but also built on completely invalid concepts.

The implosion of the subprime mortgage market shows this perfectly well. But, the crisis of 2008 was not the moment that showcased this problem to the world. The same issue has been very well known among economic experts for more than 50 years. The truth of the murderer is that the present financial system is laden with problems and potentially catastrophic fault lines. Bitcoin was not developed to fight back against the 2008 crisis. Instead, it was created to oppose the powers that be inside of a system that allowed the crisis of 2008 to happen.

Wanting More

The desire to perceive bitcoin as a simple and elegant remedy to the fallout of the biggest financial crisis since the Great Depression is completely understandable. Even those who deny the relevance of this cryptocurrency or any other cryptocurrencies that came in its wake probably on some level want to do the same. However, bitcoin is not and it has never been something designed to come in and save the modern financial system. For a lack of a better term bitcoin is a means to build a parallel infrastructure that could in some manner work better than the traditional one and at the same time showcase all of its problems through direct examples. It is normal to want BTC to be more than that, but also unrealistic to expect those desires to materialize themselves into reality.

Even now, the uses of bitcoin and its BTC token are going outside of the desires of its creator or creators. Presently, more people are using BTC tokens as an investment asset than a regular currency. However, that does not change the fact that BTC was created as a currency and its intended use is that of a currency. The same applies to the concept of BTC being an antidote to the problems of the 2008 financial crisis. In a better world that might as well be true. But in the real world of the present-day and its previous history, there is no such correlation between bitcoin and that essential financial crisis of the early 21st century.

Source: Coindesk