The global financial crisis we are experiencing between 2007 and 2008 continues to ravage our economies. If you don’t believe us, let’s just take a look at the European banks, which have begun to charge savers with negative interest rates for keeping their money in savings accounts. Anyway there is nothing to fear today, because Bitcoin (BTC) is already part of our lives.
How did the financial crisis begin?
The crisis began in the mortgage market of the United States. At that time mortgages were granted to property owners; which became higher than the value of the house itself. What allowed the Americans to buy another property, to later acquire another mortgage, and so on; continuing the vicious circle in which they were.
This is not everything
But, the horror story does not end here, and it is that this bubble quickly spread to the stock exchanges of the United States. These poor people over indebted and with no one to stop them; They went massively to the banks, which were more than willing to buy their mortgages.
These were then packaged together and listed in the stock market like any other financial instrument; but with a substantial difference, a juicy rate of return of more than 10%; to have a little context, the rate at that time of the US Treasury Bonds was between 2.5 and 3%.
Under the motto “Who doesn’t pay a mortgage?”, This pack of debts called“ Subprime ”began to be sold and bought with incredible speed. Which now began to mutate into different types of mortgage packages adjustable to any need.
High levels of return, and the suspiciously low risks of these securities, quickly made these derivatives the favorite investment of Wall Street.
But, unfortunately, the expansion of the deadly bubble did not end here. A literally the speed of light; Information on the high rates of return and the low risk of default on mortgages went around the world.
Not only banking institutions, such as insurance and pension funds, welcomed these “SubPrime”. But, that also nations around the globe rushed to get their share of these numerous benefits.
Thus, in the course of a few months, the entire globe had backed up much of its money in the unpayable mortgages of the inhabitants of the United States.
The explosion of the bubble is brewing Bitcoin
The doubts about the legality of these subprimes, and the echoes of a possible financial bubble, reached their climax in 2007. Many studies by several expert economists and major universities had already detailed the state of the housing and mortgage market of the States United, where even unemployed people had several homes and several mortgages.
Already at the beginning of 2007 many of the debtors could not pay their mortgages, a situation that did not arouse greater fears, because the numbers were still green. Even for October 2007 the sale of houses reached a new maximum.
The situation could remain relatively hidden until September 15, 2008, where the famous investment bank Lehman Brothers declared itself in broken banking, because it did not have the liquidity to cancel its debts with investors, since the money of the mortgage payment had months that were not canceled due to terrifying levels of default.
It is here that the bubble finally explodes, under the eyes of all investors, banks, nations and retirement funds. Quickly begins a world race to sell the SubPrimes and get the great returns promised. But they found themselves in the situation that almost no bank had the necessary liquidity to cancel their obligations, as the famous instruments were based solely on debts that were never going to be canceled.
Panic also traveled at the speed of light. In an instant hundreds of millions of dollars vanished. Financial institutions and large industries had to close their doors, their investors’ money had vanished along with the bubble.
Millions of people lost all their assets, their retirement funds or all their money invested in the stock market, including all their savings. Simply our money, which we had entrusted to banking institutions, to protect and invest cautiously by escaping high risks, had been used to obtain high rates of return without our consent.
This time it was shown that we are not really owners of our money.
After the storm always comes the calm
Meanwhile, somewhere in the world, Satoshi Nakamoto witnessed all the devastation that had been caused by the traditional financial sector, this being the culprit that we are still on the verge of a new world crisis.
The identity, or identities, of Satoshi Nakamoto is unknown, but what he does know is that, just one year after this tsunami, Satoshi presented an idea that would change the way we get involved with finances: now you are the owner of your money!
In this way, Nakamoto presented his idea of freedom in two technologies, called Blockchain and Bitcoin (BTC), the first cryptocurrency.
Thanks to this we would never have to entrust our dreams and hopes translated into savings to executives of risk rating agencies, banks, pension funds, and even the national bureaucrats themselves.
Also, thanks to the fact that both Bitcoin and the Blockchain are open source, today Satoshi’s dream of not relying on third parties, but on ourselves, is more alive than ever.
Well, from 2009 until now, thousands of cryptocurrencies and infinite new firms have been created that firmly believe in the ideals of decentralization, and among all have begun a new revolution that ends nothing more with money.
Therefore, we don’t have much to worry about, Bitcoin, has come to the rescue, and no financial crisis can take away what belongs to us.
Economics student of the UCV. Defender of individual freedoms and of course also of the market and cryptocurrencies.