Bitcoin is a decentralized digital currency that is electronically held. The currency was founded to help in purchasing software with more ease electronically. Bitcoin stabilizes the current assets’ value in the future purchasing power terms.
Reasons for the use of Bitcoin
Due to the incompetent central banking culture and the high risks in the market, investors could be driven to the use of Bitcoin. After the 2008 financial panic, the central bank pursued a policy strategy of debts monetization and low-interest rates. The zero-cost debt environment has brought about low returns on the investor’s money, thus need to relocate their money elsewhere.
The casino market Martingale system
The system argues that mathematically, it is not possible to lose a bet when there is enough money, and the casino is willing to take an increasing bet. The system is used to help in balancing wins and regaining losses. The central bank to have created this casino atmosphere where bets are doubled down every time the casino gamblers loose. This casino strategy deemed to continue as long as the unlimited printing of money exists. The approach has caused high risks on the investors’ assets while seeking high yields.
Consequences of the new central bank policies
Currencies like the U.S dollar, pound, and the yuan have fallen their values, and there are no chances to regain their values back. This has called for new financial innovation. The European Central Bank signaled their efforts to reduce economy stimulation when they reached a winding down an informal consensus on bond purchases.
Commonsensical observations.
The old business models have been destroyed by the low negative investment yields, according to some trusted observations by the corporate CEOs, Fed members, and economists. The central bank policies today has negatively affected many of the investments like bank net profit margins, insurance companies’ solvency, and the long-dated pension funds. Regarding yields, normalization will be lower than the historical averages and take long. This is more likely to destroy capital rather than create it Capitalism continues to be inhibited with more negative interest rates policies from the growth of the central bank purchases.
In conclusion, when the central bank continues to double down bets without trying risk to the global financial markets, the investors will finally shy off from the negative results and leave for other better alternatives. Bitcoin being one of the new financial technologies, there is a likelihood to attract these investors. The Bitcoin technology will help to protect the investors from capitalism threats; like poor interest rate policies by the central bank. This will, in the end, stabilize the economy and in the short run endorse economic growth. Therefore,it is evident that the central bank is pushing investors to Bitcoin.
