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Market Lab Report - Dr K's Crypto-Corner - How Trade Wars Could Benefit Bitcoin

Dr. K's Crypto-Corner

by Dr. Chris Kacher
Cryptotechnologies...Kryptonite for Governments™


So the trade war begins between the U.S. and China. President Trump blames China for causing significant damage to U.S. manufacturers. The Trump administration plans to impose tariffs on up to $60 billion worth of Chinese imports. As a starting point, China’s commerce ministry fired back with tariffs against $3 billion in U.S. goods. In a statement, the ministry said the penalties are being imposed in response to the Trump administration’s tariffs on Chinese steel and aluminum products, which it said violate global trade rules. Chinese Ambassador to the U.S. Cui Tiankai said on state television that the country would “fight to the end,” in the case of a trade war.

Should this trade war turn into something even vaguely resembling the trade wars sparked by the Smoot-Hawley tariffs, markets could undergo steep corrections and the dollar could continue to weaken. This could benefit bitcoin as bitcoin is starting to be considered digital gold as an alternative way to store wealth. Gold is often considered the "fear" trade thus will usually retain its value during times of financial uncertainty and even crisis. Even in 2008 during the financial meltdown, while everything plummeted, gold lost the least on a relative basis and was first to rebound, trading near new highs by February 2009.

While bitcoin is still highly volatile, this volatility will diminish as major institutions as well as bllions of unbanked and underbanked will be coming online in the next several years with cheap mobile phones which will allow them to transact and store value via bitcoin and BitPesa as I have written in a prior Crypto-Corner piece.

Cryptocurrencies may also be used to get around the trade restrictions that are in place. This means that significant fees and penalties can be avoided while transactions go on as normal. Cryptocurrencies such as bitcoin provide a non-political standard of value and open settlement network where anyone, any company, and any country can participate. If the U.S. is in a full blown trade war with China, any Chinese entity, institution, or individual can settle with any American despite the countries being at war.

As the use of cryptocurrencies becomes common practice, many institutions will realize the steep benefits associated with this approach and may not return to fiat currencies even once volatility in those markets has stabilized. Indeed, this trade war could be one of the catalysts for a more significant and widespread adoption of cryptocurrencies as a medium of exchange.

Riding the Revolutionary Rocket with Cryptotechnologies... Entirely Evolutionary™ 

(͡:B ͜ʖ ͡:B)
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