On the same day that the U.S. government worked with two banks to engineer the latest financial rescue plan, the Bitcoin network processed a new all-time high for daily transactions, marking a 14-year record that beat the last one set during the 2017 bull run. The events may not be connected, but they surely suggest something about the future of the crypto industry and Bitcoin’s possible place in an ever-more-dysfunctional economy.
The timing indicates that while regulators and legislators work on lessening crypto’s inroads into the economy, the private banking sector is proving to be unable to manage itself. Crypto is growing as part of the wider political realignment towards populism that challenges the power of central banks and established authorities. The First Republic bailout acted as an example of profits being privatized while losses are socialized, a moral quandary that protects a certain class from the consequences.
Bitcoin has shown that it could serve as a legitimate global reserve currency like the U.S. dollar, as it is an alternative monetary system that follows written rules. The Bitcoin transaction has been rising since the launch of Bitcoin Ordinals, which enables the network to support non-fungible tokens (NFT). More than 2.39 million Ordinals have been “inscribed” to date according to Glassnode’s data cited by Blockworks. Despite the fact that Bitcoin NFTs now account for about half of the transactions on the network, some Bitcoin purists believe that the network should be preserved for monetary uses and that tradable digital collectibles are frivolous.
Nonetheless, Bitcoin is an open-source network, so people are free to use the technology as they please. If Bitcoin has a role to play in the future global economy, it’s because people are free to use it how they want.
JPMorgan Chase has now acquired First Republic, which became the second-largest bank failure in US history, after its assets were seized by regulators following weeks of uncertainty and a slumping stock price. In hopes of preventing a possible bank run, further contagion, and a drawdown of the insurance fund’s reserves, the Federal Deposit Insurance Corporation (FDIC) took over First Republic and provided JPMorgan Chase with $50 billion in financing to complete the deal.
In conclusion, Bitcoin and the recent bank buyout may be unconnected, but crypto has a role to play in the broader political realignment, questioning the sanctity of central banks and established powers.
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The material in this article is written on the basis of another article.