Trade Wars And The Rise Of Bitcoin: Is Crypto The New Safe Haven

Trade wars are not uncommon; they occur periodically for various reasons. These include disagreement over trade imbalances, accusations of unfair practices, and political leverage. Good examples range from the 1800s’ Opium Wars to the current US-China trade war.

Historically, investors shifted to assets like gold when trade wars started. However, in the modern era, a digital alternative has emerged: cryptocurrencies. Cryptos like Bitcoin are now the new haven for the following reasons:

Decentralization

Crypto is decentralized. That means any authority, whether a corporation or government, has no control over cryptos. Bitcoin, for instance, isn’t issued or managed by any organization. New Individuals or groups mine BTCs, and users buy or sell them on exchanges worldwide. People use Bitcoin for a variety of purposes, including paying for goods and services. Read this comprehensive guide on what is bitcoin used for and why is it important to understand it better.

Governments cannot manipulate crypto during trade wars due to its decentralized nature.  Authorities can devalue crypto alternatives, such as fiat currencies, to gain a temporary advantage. The tussling can also impose capital controls and sanctions that have a significant impact on centralized financial systems and conventional currencies, especially fiat money. This is why many are switching to BTC today.

Scarcity

As previously discussed, most countries employ currency devaluation to maintain the competitiveness of their exports during trade wars. Savvy investors are aware of this, and most switch to alternatives that can retain value and cannot be diluted easily as soon as they suspect such policies are about to be implemented. Bitcoin and many other cryptocurrencies possess these traits, which explains their growing popularity.

Take Bitcoin as an example, its maximum supply is 21 million BTC, and over 19 million coins are already in circulation. That leaves less than 2 million that have yet to be mined. Since this crypto is scarce, people value it and turn to it as a haven during times of uncertainty. However, note that some cryptocurrencies, such as Ethereum, have no fixed supply and can rapidly increase in number, potentially devaluing over time.

Global Accessibility

Anyone can access crypto from any corner of the world, at any time of the day or night. These digital assets are available 24/7 to anyone with internet access and an exchange account, regardless of location, background, or nationality. Moreover, no central authority can deter individuals from owning and using cryptocurrencies due to their decentralized nature.

In trade wars, sanctions, geopolitical tensions, and other issues can prevent people from accessing specific financial systems and their hard-earned money. To avoid this issue, many are switching to crypto, which remains easily accessible, regardless of how many centralized institutions governments impose strict restrictions on.

The Bottom Line

Today’s financial systems are being tested like never before, due to escalating trade wars, increased geopolitical tensions, and numerous other issues. As an investor, you have every right to worry since such complications come with their fair share of challenges, from currency devaluations to extensive economic sanctions. The good news is you can use crypto like Bitcoin to weather the tough times.

But before you switch to crypto today, research and understand the risks associated with crypto assets. Additionally, if you are risk-averse, consider investing in digital assets that have matured and gained global recognition, such as Bitcoin. And whenever you decide to add a newer coin to your portfolio, do thorough research and verify authenticity beforehand.