This is the opening opinion by Julian Linger Co-founder and CEO of Relai, a bitcoin-only investment app.
Conventional banks are shifting short customers by failing to reflect inflationary changes in interest rates at the savings account they offer. on me modifiedthis accounts for 0.3% in the US – a symbolic rate in the context of today’s economic landscape.
Some may remember that during lockdowns families in the UK saved an extra 190 billion poundsHowever, the value of this cash for rainy days eroded rapidly due to inflation. Inflation is a “silent thief” and its effect means that savers will continue to watch their hard-earned savings deplete in value, or they can look for alternatives with long-term value.
It may also be time to consider alternative investment options and asset classes that are decoupled from inflationary swings and are particularly resilient to the threat of government degeneration in times of political or economic turmoil. Bitcoin, when used for long-term savings, is one such alternative, and one that more people will consider as part of a revolving portfolio designed to beat inflation as well as geopolitical uncertainty.
Investors lose out by saving with traditional banks
Bank giants deceive investors every day when they fail to raise interest rates even though central banks are raising key interest rates. For example, the Bank of England raised its base price to 1.75% in August 2022.
The other problem with savings and investing via traditional banks is that government-issued currency comes with counterparty risk and, above all, is intrinsically worthless. Government central banks print on demand and there is a risk of losing value due to inflation or becoming worthless when hyperinflation occurs. On the other hand, bitcoin has a limited supply and a crypto monetary policy, which gives the commodity anti-inflation and value-storage aspects similar to gold.
Bitcoin has traditionally distinguished itself in low-interest or low-interest environments. Since the 1990s, central banks around the world have set low or negative interest rates, and we are likely to see a return to this strategy to fight the looming recession.
A core lesson that investors share in these low-interest environments is to forget about any idea you wish interest rates were to rise and allocate their money accordingly. For this reason, Bitcoin is a logical choice because its decentralized and finite properties are practically unaffected by inflation and interest rates set by central banks.
Confidence in traditional banking is declining
Since the 2008 financial crisis, banks have become somewhat of a bogeyman for many investors. Individuals in the European Union are less likely to trust traditional banking institutions, surveys YouGov It indicates that only some Britons still trust traditional banks, with 36% believing that these institutions work for them.
unsurprisingly, one in four Millennials, Generation X, and Generation Z investors are turning to cryptocurrency as their preferred asset class. These generations have reduced trust in central institutions, such as banks, due to the ongoing economic instability they have experienced in their lifetime. Moreover, bitcoin allows investors to benefit from self-custodianship, as they only own and control their assets. This is not the case for traditional banks and can leave people feeling out of control during economic uncertainty – or worse – during a financial meltdown.
This growing level of distrust of traditional banking institutions coincides with a waning of confidence in national currencies. Countries like Turkey, Lebanon and Argentina are real examples of how inflation gets out of control and how people eventually lose faith in their local currencies. A global, borderless digital currency, such as Bitcoin, is becoming more and more attractive as a means of storing wealth.
Bitcoin savings accounts are designed for risk averse and novices
Search It shows that financial insecurity caused by the cost of living means that 46% of Britons have reduced or stopped paying in some form of savings. What we have now is that many risk-averse individuals are shying away from investing or looking for ways to save passively.
At Relai, we offer Bitcoin savings plan Suitable for individuals who prefer an automatic hands-off approach to saving in bitcoin.
Regular and passive investing in bitcoin also allows investors to deploy a strategy called “cost averaging.” This is where individuals regularly buy bitcoin, ignoring market conditions and volatility. Individuals with little investment capital can make big gains with this strategy in the long run.
The current economic situation around the world has highlighted the weakness of fiat currencies and the need for alternative long-term value storage options such as Bitcoin. However, before making any investment decision, it is important to do your own research and assess whether the option is right for you.
This is a guest post by Julian Liniger. The opinions expressed are entirely their own and do not necessarily reflect the opinions of BTC Inc. Or Bitcoin Magazine.
#Banks #fail #savings #Bitcoin #alternative #Bitcoin #Magazine