This is something that I have been mulling over for a while. Please bear in mind I am not referring to crypto pricing. By economy I mean what is actually backing cryptocurrency, the activity that takes place on a daily basis.
In this video I discuss how we could see, collectively, the situation where cryptocurrency provides the average person with a recession-proof situation.
Check out the video and let me know what you think. Is the crypto economy recession proof?
▶️ 3Speak
I have no data but my first thought would be that Web 2.0 is subject to business cycles because ad revenue depends on them. Why would the crypto space be exempt from that if most cryptocurrencies end up currency used in business activities?
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What kind of business activities do you see cryptocurrency being used for?
What happens when people are paid for their walking they do? Or the posting that takes place online? Or their appliances interesting with other devices? Or gaming that people partake in on a daily basis?
Are any of these apt to go through business cycles? And none depend, at least solely, on advertising.
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Any business fiat is used for today.
That will be akin to UBI.
Some. The walking and posting parts not so much.
That depends on who or what entity buys the tokens giving them value. I don't think it's going to be the government because they will most likely issue their own tokens. The tokens might be given value to by companies buying them to reward consumers for activities in a cashback type of set up like loyalty points. Speculators like now? That depends on the rate at which central banks keep debasing the currency. If it gets even crazier than now the value of the tokens could be substantial but that would still make it a government sponsored situation like now. Central banks have no choice but to pump insane amounts of QE money into the system to keep it from crashing. This is why major corporations have begun to buy crypto. This is the way some of that money trickles through the legacy market into crypto. The crypto space is still so small that QE has a drastic impact on valuations in crypto. When the total market cap is 100-1000 times larger that impact will be less.
It might be although nothing about it will be universal since it will not be the same for everyone since people will be choosing what they are involved in.
Ultimately, the value of crypto, in my view, will come down to the activity provided by the users. Governments and corporations will do their thing but it will be small in comparison. Look at the activity on Facebook, it is pretty much recession-proof. Take that same idea and spread it across many activities that people do daily or where they provide data. Plus, with technology, we will have smart everything which will generate data on an ongoing basis that is needed by researchers and such.
In a world where more is being automated, the only question is who owns it. Right now, it is in the hands of a few. Yet over the next two decades, I expect that will reverse course.
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The cryptocurrency at the moment still needs money to be poured in in order to buy it. Not all of us are mining or gaining it through putting the work, but some buy it with the money that comes from the economy. If the economy goes bad, the people will have less money and so less cryptocurrency can be bought. And also the crypto at the moment is an investment or economy factor, in case of crisis people will need to cover basic needs and as any industry it might be put on hold.
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BEER.Summary:
In this video, the speaker discusses the concept of cryptocurrency being recession-proof. He emphasizes that cryptocurrency's value is not dependent on traditional economic cycles but rather on the activity and usage of the token. The speaker explores how cryptocurrency, especially Bitcoin, operates differently from fiat currencies and how its decentralized nature could potentially make it recession-proof. He discusses the economic and market aspects of cryptocurrency, its token distribution, and the impact of activity on the value of different cryptocurrencies. The speaker invites viewers to share their thoughts on whether cryptocurrency could eliminate or mitigate recessions for the average person.
Detailed Article:
The video addresses the topic of cryptocurrency and its resilience to economic downturns, offering a unique perspective on how cryptocurrency operates independently of traditional economic cycles. The speaker delves into the distinction between cryptocurrency's value being driven by activity rather than faith in governments, in contrast to traditional fiat currencies like the US dollar. He highlights Bitcoin's position as a "digital gold" due to its store of value aspect, setting it apart from other cryptocurrencies.
Moreover, the speaker examines the significance of activity in determining the value of cryptocurrencies beyond Bitcoin. He mentions Ethereum's success with decentralized finance (DeFi) and how the activity on a blockchain can influence the price and ranking of a cryptocurrency. The speaker uses EOS as an example, discussing how hype can initially drive a cryptocurrency's popularity but sustained activity is crucial for long-term success.
Furthermore, the speaker contemplates the idea of cryptocurrency as a separate economy and speculates on its potential growth and resilience. He argues that the consistent activity in online interactions, such as social media and gaming, could contribute to making cryptocurrency recession-proof. By focusing on efforts (data transactions) backing cryptocurrencies, the speaker suggests that the collective activity in the crypto world could lead to stability independent of external economic conditions.
The video concludes by prompting viewers to share their opinions on whether cryptocurrency could shield individuals from economic recessions. The speaker acknowledges the presence of debt cycles and defaults in both fiat and crypto systems but encourages discussion on whether cryptocurrency usage can provide a form of recession-proof financial security for the average user.
In summary, the video provides a thought-provoking analysis of the relationship between cryptocurrency and economic cycles, shedding light on the potential for cryptocurrency to offer a distinct economic landscape that may be less susceptible to traditional recessions.