Bitcoin and blockchain technology provide financial empowerment and freedom in more ways than one. By allowing individuals to have full access to and control over their own assets, transactions can flow directly from one user to another. The traditional model, on the other hand, outlines the need for a middleman, or a bank, which can delay the receipt of such transactions and implement unwanted fees.
So why is financial freedom so important? It may seem like the answer is obvious, but we’ll give you a real world example anyway.
What’s Going On in Lebanon?
The Lebanese government has restricted citizens' ability to withdraw money from their own bank accounts in order to avoid a banking collapse amid rising inflation rates. The Lebanese inflation rate has surpassed 144.12% as of September 2021, worse than Zimbabwe and Venezuela as the economic crisis continues to spin out of control. Citizens are quite literally attempting to break down the doors of their banks in an attempt to withdraw money from their own accounts, with guards and personnel holding them back.
In 2020, banks had imposed illegal and random regulatory restrictions on their clients in an attempt to redeem losses in any way they can, losses caused by their heavy exposure to the state’s debt. Dissatisfied customers cannot switch banks, as financial institutions are continuing to refuse the opening of new accounts in the local currency. Lebanese citizens were also said to have reported additional fees on dollar deposits and randomized withdrawal limits. The COVID-19 pandemic has only exacerbated the crisis.
Understanding Banks in a Banking Crisis
Banks have imposed tight controls on accounts, including a de facto ban on transfers abroad and on local withdrawals of dollar-denominated deposits in dollars. The situation in Lebanon is not unlike financial crises we have seen before, but it is happening right now.
The ongoing situation offers insights into the weaknesses of large institutions such as banks that were intended to act as stable, secure forms of storage for one’s hard-earned assets. The most prominent weakness lies in the role of banks as a middleman between us and these assets, a role that we have come to normalize, and even rely on. The fear and uncertainty surrounding Bitcoin and crypto, then, stems from the uncomfortable realization that such reliance is no longer necessary.
Bitcoin and blockchain technology provide financial empowerment by allowing you to be in sole control and possession of your assets. Your crypto is stored in a crypto wallet that only you have access to, and transactions are performed directly from you to the source, without having to go through or rely on any kind of middle institution.
Have We Mentioned the Hedge Against Inflation?
While the threat of a banking collapse in Lebanon is further urged by rapidly increasing inflation rates, Bitcoin further acts as a hedge against inflation as there is a set amount of coins that can be mined.
Since no additional coins can be added into circulation once the 21 million mark is reached (and we are already past 19 million) there is no risk of inflation. With inflation rates surpassing numbers over 140% in countries around the world, a stable hedge acts as a solution that stabilizes the finances of not only individual citizens, but also the financial systems of entire nations. It’s no wonder Bitcoin has already been dubbed the “world’s currency”.
Defining Good Money
Sure, Bitcoin acts as a hedge against inflation and puts you in the driver’s seat of your finances, but what other benefits does it provide outside of extreme, bank crises-esque circumstances?
Practicality. We all like things that are simple, and our money shouldn’t be any different. If something is simple, it also means there’s more diverse access to it, providing the same benefits for a larger group of people. Not only can Bitcoin be divided almost infinitely, allowing the purchase of smaller goods as well as larger ones, it is also easy to transport, store, and manage. Bitcoin is already on track to surpass the efficiency and practicality of bank payment systems, and it won’t have you breaking down doors to get to it.
Where Will You Be During the Next Banking Crisis?
Well, if you got to the end of this article, hopefully nowhere near it. Bitcoin mining equipment allows you to unearth Bitcoin for a fraction of the price, with many mining rigs going for under $15,000 compared to Bitcoin’s current price of nearly $47,000, at the time of writing.
The world of Bitcoin mining is more than just a few machines - mobile mining containers, mining pools, and the construction of hosting facilities allows you to join a global community of enthusiasts. At Wattum, our teams are tailored to guide you through every step of the mining process, ensuring you’re set up for success and supported even after you get your operations going. With end-to-end solutions, learn more about growing your operations or getting started today.