META 1 Coin Follow Feb 28
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As conflict looms in multiple parts of the world, traders are left wondering how the next war will affect the cryptocurrency markets.Already, all markets have begun to see the exit of capital by large trading firms who view the conflict as driving volatility across the centralized and decentralized economies.
Conflicts Change Money To truly understand how conflicts change the monetary system, you need to take a moment to look at the history of money.In the past, the monetary system altered its behavior to accommodate the situations at hand.However, today there has been an increase in the rate at which the global financial system has been weaponized against states that don’t follow the common narrative or submit to the will of the ruling countries.
Shift in Strategies This shift in strategy is one of the reasons why so many nations have begun to look for alternatives to the centralized financial system.This last decade has seen countries have billions in gold confiscated, entire nations banned from receiving essential goods and medical supplies, such as COVID-19 vaccines, and much more.Here’s how the world ended up in a financial war and how it will affect the future of money.
History of Money and War War and money have always gone hand in hand.You can’t pay, support, arm, or feed your soldiers if you lack the necessary resources.
As such, wars are usually won on the financial side before the physical side.You can see examples of how vital financing is to a war effort when you look at conflicts like Vietnam.
As soon as the public loses faith in the project, lawmakers can’t secure the funding.These actions always result in the conflict winding down.
However, lawmakers and the centralized financial services don’t just shrink into the shadows following these defeats.Instead, they alter the monetary system to prevent the same issues from occurring in the future.Here’s how this strategy has played out so far.
Gold Standard The gold standard was in use for centuries by nations around the world.The gold standard was simplistic but effective when there was a small middle class.In the gold standard, a country holds large gold reserves.They would then print paper notes that represented these holdings.
The gold acts as direct backing for the notes.You could even go to the mint and exchange your fiat for gold in the early days.
WWI — WWII The gold standard worked well until WWI came around.The introduction of mechanized weapons and more advanced strategies led to resources being drained at an unprecedented rate.At the start of WWI, the gold standard was in use by all of Europe.
Following the end of WWII, all countries had left the standard.
The changes were brought on by the sheer destructiveness of the conflict.All countries involved in the war had fought until they ran out of reserves.They had even gone into debt with the United States to continue their efforts.The extra funding and resources the US brought to the European front helped these countries regain control over their lands.
However, the cost of doing so was the complete abandonment of the centuries-old gold standard.
Dollar-Standard Following the end of WWII, the European nations pegged their currency to the US dollar.
At this time, the US dollar was still pegged to gold.WWII was a game-changer for the United States.They secured vast wealth and resources from the warring countries as the conflict raged for decades.They also ensured future wealth by assisting in the rebuilding of the countries destroyed by the war.
The United States was the world’s first superpower.The world at that time was a very different place.
The US had the funding, the technology, and a lifestyle that was far more luxurious than most parts of the world.However, these years of prosperity would slowly decay as the country spent more and more of its reserves fighting conflicts globally.
Directly following WWII, the US became embroiled in the Korean War.
The war was fought to attempt to contain communism spread in Asia.Notably, the war came at a time when US citizens had grown weary of conflict.As such, the US government resorted to new tactics to fight this battle such as incorporating Puerto Rico as a “commonwealth.”
This decision enabled them to start drafting Puerto Ricans into the military.It enabled the country to fight the war with far fewer casualties from US mainland citizens.
Interestingly, the Korean War is still going on as both sides have never signed a formal peace agreement.
If the Korean War started the decay of the central financial system, Vietnam took it into overdrive.The conflict in Vietnam was hugely unpopular and cost the US its total reserves.The conflict was so expensive that the US had to go off of the gold standard, so it could continue to print money and pay for the war.This decision would have a detrimental effect on the centralized financial system 50 years later.
The decision to take the dollar off of the gold standard was huge.It represented the first time that a fiat currency was not supported by an underlying asset directly.Analysts would argue that the dollar still held its value for decades following the move because it was the only currency that you could trade oil with on the international markets.
To many, it was the US military that helped to keep faith in the dollar high.
Free-Floating Dollars are Not Good for the World As you could imagine, it didn’t take long before the free-floating dollar was being printed on a massive scale.This seemingly endless printing campaign that has ensued ever since Vietnam has ushered the currency into inflation.Inflation is a loss of buying power by a currency.
For example, the average cost of a house in the 1950s was $7,400.At the same time, the median household income was $2,990.There was less currency in circulation, and the country was still using the gold standard.If you fast forward to the 1970s, you can already see how Vietnam dropped the dollar’s value.The average price of a home in 1970 was $17,500, and the household medium sat at $8,734.
The prices of homes today are astronomical as the dollar has tanked significantly.
The average price of a home today is $346,900.What’s even worse, the printing of billions of fiat currency as part of the COVID-19 care packages has created even higher inflation in the currency.The price of homes rose 16.9% since 2020, the cost of food is up 30%, and the current rate of inflation is at a 30-year high.
The Weaponization of the Dollar Another factor that has driven countries away from the centralized financial system is the weaponization of the dollar.
Over the last 5-years, the number of sanctions and economic policies geared at crippling or limiting countries’ access to basic financial services has skyrocketed.The goal of these actions is to starve the people of a country to create discomfort for the ruling parties.They are vicious and use civilians as pawns in geopolitical struggles.
They also do little to prevent conflicts from turning hot.There is a well-known saying that China’s richest man, Jack Ma.
He said, “ War starts when trade stops .” The use of sanctions and other methods of hurting competing countries’ economies have created a scenario where conflict seems unavoidable.Here is how the next war could affect the current finical system and usher in the age of decentralized finance.
War with Russia Since the fall of the Soviet Union, the US has changed its tactics and battle strategy to focus on fighting forces that are technologically inferior.This approach has led the country and its financial services to automatically assume victory before a conflict begins.This attitude has left markets with bubbles and other errors that have cost the average trader big time.
A conflict with Russia, even though economic means, would have a huge effect on the centralized financial system.Already, the conflict in Ukraine has left the EU and the US to levy sanctions against Russia and even threaten to cut them off of the centralized SWIFT payments system.However, these threats have done little to change Russia’s course of action because they, alongside a variety of other top-performing economies, decided to ditch the dollar years ago.
Short Term Effects on the Market The short-term effects of the start of the Ukrainian conflict will be sharp price drops.You will see funds exiting the crypto and stock markets and pouring into commodities such as gold.
In the past, gold has served the world as the premier global currency.However, the introduction of cryptos such as Bitcoin and META 1 means that countries have better alternatives that are easier to store, protect, and grow than gold reserves.
Another major risk that the crypto market will face during global conflict is network censorship.You may see countries like China choose to ban specific blockchains if they find that messages put onto the blockchain violate their strict standards and narrative.
If this situation occurs, you could see networks forced to conduct hard forks with those living inside the censored regions only able to mine earlier versions of a network.
This situation poses a risk to the fungibility of cryptocurrencies.Fungibility is a term that describes monetary system interchangeability.For example, every dollar is designed to hold the same value.The same goes for Bitcoin and META 1.
Fungibility is a core requirement for a monetary system.When countries begin to fracture blockchains by banning miners in their region, it could threaten the fungibility of networks like Bitcoin.
Rise in CBDCs CBDCs (central bank digital currencies) are sure to get pushed to the forefront during the next conflict.
These centralized cryptocurrencies take the efficiency and technological aspects of cryptocurrencies and integrate them into the centralized systems.The results of these actions are digital assets that are easy to monitor, issue, and track.
CBDCs give the central banks unprecedented control over populations.As such, you could even see a day where CBDCs are competing against each other for control over the market.The good side of this scenario is that these developments will help educate users and grow the infrastructure needed to support large-scale cryptocurrency adoption.
Long Term The long-term effects of a global conflict are going to be people embracing cryptocurrencies on an entirely new level.The truth is that to stop global conflicts like the one currently looming at the doorstep, the people need to retake control over the financial system.Governments have proven that they will do whatever is necessary to carry out their military goals.Removing the ability to fund these projects is the only way that the people can slow down the global military complex.
A global conflict would also help to usher in hyper-Bitcoinization.This term refers to a sudden and quick acceptance of the world’s first cryptocurrency as a global standard.
Already, countries like El Salvador are seeing huge profits from their decision to make Bitcoin legal tender in the country.You can expect neighboring countries and other regions facing crushing inflation to follow suit and benefit.
Interestingly, it’s these countries that will become the next leading financial centers of the world.A global conflict, especially a nuclear one, would lead to a complete loss of faith in fiat currencies.Nobody is going to want a piece of paper as payment when the nations are in ruins.The Bitcoin standard provides a fair and transparent way for the remaining countries to rebuild an economy built on value and not debt.
A New Era — An Open Financial System for All Projects like META 1, Bitcoin, Zcash, and more provide the world with a viable alternative to the status quo.These projects enable the world to enter a borderless economy with open access for all.In the future, regardless of how bad the next global conflict is, the financial system must be controlled by the people to prevent wars..
