Even though it’s been around for more than 10 years, Crypto still feels like something exotic and new to most people. But it is growing – more than twice as many people in the United States are expected to invest in cryptocurrency than took it seriously in 2021.
You may think it still exists in the dark alleys of the internet, but crypto finds its way into the mainstream more every year.
So far, in 2022, three significant events brought crypto into the spotlight for the masses in new and exciting ways.
#1 Canadian Truckers’ Warning Siren
The relationship between the government and its people has always been fragile. People are willing to accept certain restrictions as long as they feel the government provides enough benefits in return. In America, especially, we expect that sacrificing some freedoms needs to be met with measurable benefits.
Unfortunately, that’s not always how history works.
After Canada issued a vaccine mandate, truckers returning from the United States had to show vaccination proof or to follow testing and quarantine rules to get into the country.
Several truckers didn’t like this. A group formed, calling itself, the “Freedom Convoy,” opposing the mandate and other measures by Canadian Prime Minister Justin Trudeau.
The protestors garnered some support but were stopped cold when the Canadian government retaliated by freezing their bank accounts.
Using Canada’s financial surveillance infrastructure, the PM invoked the Emergency Act that allowed these accounts to be frozen without obtaining a court order. This move shocked everyone worldwide – such measures are rarely done by Western governments with democratically elected officials.
Coinbase CEO Brian Armstrong said, “Concerning to see stuff like this happening in any country, especially such an economically free place like Canada. Self-custodial wallets are important!”
Financial freedom and free speech are linked. It is challenging to organize, demonstrate and speak up without financing.
While this may seem like a fight between liberals and conservatives, that’s not necessarily true. Instead, it’s a fight between folks in power – who can change at any moment – and those without. Protests acceptable under one government might be unacceptable under another leadership.
Investing in cryptocurrency has always appealed to individuals who distrust governmental power, so it wasn’t a huge leap to see that the situation reignited a passion for crypto, money that isn’t subject to seizure or regulation by most governments.
#2 Crypto Amid War
Until it happened, it seemed nearly impossible that we would glimpse the possibility of another global war in our lifetimes. Yet, on February 24, 2022, Russia escalated its ongoing conflict with Ukraine by invading – sparking the possibility of a nationalist land grab.
It may seem like the outlook for the Ukrainian people is hopeless. But they’ve fought back – and not just on the battlefield.
Crypto is shining and showing how powerful it can be. Ukraine’s deputy prime minister, Mykhailo Fedorov, pleaded with the world for funds. Normally, transferring funds across borders involves a complex and time-consuming system.
But the world responded by sending crypto funds in a large display of support.
Through crowdfunding, the Ukrainian government raised more than $42 million in cryptocurrency in less than six days. The government has accepted everything, from Bitcoin and Ether to even NFTs.
Funding a country in a state of disarray can be challenging. There are a lot of obstacles, but crypto has none of them. On the contrary, the rapid funding and outpouring of assistance have shown the world how easy it is to transfer money when the need arises to safeguard democratic values.
#3 Nickel Market and Risks of Centralized Exchanges
Earlier this month, Tsingshan Holdings, a leading Chinese stainless steel producer, couldn’t meet its margin calls on the London Metal Exchange (LME) after a sharp rally in nickel price.
As a result of a leveraged bearish bet, Tsingshan Holdings faced billions of dollars in losses that exchange officials feared it couldn’t meet. So LME decided to cancel all that day’s trading, more than 9,000 transactions worth about $4 billion, rather than see Tsingshan Holdings fail.
The use of leverage in financial markets is not new. The futures broker, MF Global, in 2011 faced a $310 million margin call and filed for bankruptcy protection. In 2007, Goldman Sachs injected $3 billion into the flagship Global Alpha quant hedge on account of significant losses.
Rather than allowing the market to function normally, the London Metal Exchange canceled all the trades and rescued the firm from the consequences of its bets.
Traders have questioned if LME acted fairly when canceling trades. A crisis of confidence has been created, and traders are now aware of the risks of centralized finance. Traders who had bet on higher prices are consulting attorneys.
But there is a better regulator.
Decentralized Finance, also known as DeFi, relies on smart contracts based on blockchain technology to enforce financial obligations without the interference of a central authority. The neutrality of cryptocurrency could have benefitted the exchange’s credibility and the trader’s confidence – bolstering financial markets instead of potentially crushing them.
Normalization Of Crypto Usage
Just in the first few months of the year, we had three significant events that point to crypto as a neutral path forward in resolving conflict. More events are bound to occur in the coming months and years. Crypto is becoming as normal as the stock market; the time to be educating ourselves is now.
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