Bitcoin may be the only solution to the upcoming global economic downturn

While the stock market continues to peak, economists say the global economy is nearing recession. A series of indicators show the failure of global finance, and it seems that governments are powerless to prevent that. Can Bitcoin become the solution?

The most prominent issues include the worldwide explosion of bad debts and the “imbalance” situation of the world economy. Both of these serious problems are geared towards a recession, and the tools to address them are few.

Debt and connection loss

Global debt has reached an alarming rate. Currently, governments around the world owe a staggering $ 244 trillion – the highest level ever.

Debt increases as central banks try to prevent recession with monetary policy. Lower interest rates to increase liquidity, and policies such as quantitative easing, have turned debts into government ledgers. And the worst is yet to come, if a recession starts in 2020.

Moreover, the world economy has begun the process of “imbalance”. For example, Britain left the European Union and the trade wars between the US and China. Both show a growing basic disconnect among world economies.

Anyone can think of globalization, which has led to the economy soaring earlier. Even with the complexity of Corona Virus, the global economy can still maintain trade and operations. A political reversal of this stability can cause disaster.

Central banks around the world have dedicated all their resources to protecting against the economic downturn. The general belief is that lowering interest rates and pumping liquidity through borrowing will protect the economy.

However, interest rates were at a record low. In Europe, some central banks have reduced interest rates to below zero – the first for the global economy. And the US exchange rate has been historically low, though inched up last year.

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Moreover, the injection of money through debt has been tried without success. The current debt ratio is very high because of this problem, causing central banks to struggle.

Can Bitcoin rescue?

In this chaos, Bitcoin offers a potential solution. Because digital currencies can act as a safe haven asset and a payment platform, it provides both liquidity and stability.

As a payment platform, Bitcoin can be used to pay for transactions of any entity. This provides global liquidity, reversing the trend of imbalances.

As a safe haven asset, Bitcoin provides a store of value that is not affected by government treasury policies. No central bank debt can cause Bitcoin to increase in number. In this way, Bitcoin brings global financial stability.

Combining both of these factors, Bitcoin could be the last hope for governments seeking to prevent an economic downturn. By using this digital currency as another “gold standard”, the central bank can reverse the situation before it breaks down.

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According to BeInCrypto
Translated by ToiYeuBitcoin

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