All over the world, investors and testimonies ask the same question: are we on the brink of another 2008 Financial crash?
You just need to look at the S&P 500, the prices of shares in top companies like Nvidia (Nasdaq: NVDA) and Tesla (Nasdaq: TSLA), or the digital currency markets to see what happens: a mass -scale sale in risk resources and in a hurry for the exits. With US President Donald Trump who launched a diplomatic Blitzkrieg during the two short months since he took power, the uncertainty is great and fear is starting to take hold.
With Trade war Heating, customs duties on trading partners and a clear re -adjustment of US politically, institutions And other investors move to cash and secure assets until the dust settles. The global economy seems to reach a point of tipping reminiscent of the global financial crisis in 2008.
What are the markets screaming?
In one word: Uncertainty. While Warren Buffet Famous said it might be friend of the buyer of long -term valueMarkets do not like it in the short term, and it has not been so much uncertainty for such a short period since the Covid-19-Pandemic shook the world.
Some factors contribute to the uncertainty: geopolitical changes, trade war and a general risk-off mentality are the three most important.
Geopolitical changes – For the first time in history, USA voted with RussiaNorth Korea and Sudan in the UN. If there was an illusion that American priorities did not change, it crushed pretty much.
When the biggest economy in the world completely changes geopolitical direction overnight, it naturally creates some jitters. Nobody knows how America will go or what it means for the global economy, so risk-off is the answer until things become clear.
Trade War and Customs – The geopolitical changes are to some extent linked to the Trump government’s trade tariffs and the escalating trade war between the US and China.
I wrote earlier about how Japan signed Plaza Accord and killed his manufacturing competition at Uncle Sam’s request, But China is likely not to do thatSo an escalating trade war is the only predictable result.
Trade war creates a lot of uncertainty, but commercial duties can be equally destroying. Twenty -five percent customs on Canada and Mexico efficiently against US-Mexico-Canada Agreement (USMCA), making the goods from these countries more expensive.
There is nothing to say about the long -term effects will be so desirable (manufacturing jobs back to the US), but they will meet American consumers in the pockets in the short term. Since the United States is the largest consumer market in the world, any slowdown in American purchasing power will be felt around the world.
Risk-off attituded While the two previous points play into the risk-off story that takes hold of Wall Street and elsewhere, there is a general reconsideration of warehouses regardless of external factors.
Companies such as Tesla, Nvidia and Palantir (Nasdaq: Pltr) traded at absurd values During the fourth quarter of 2024, and it is only natural that large investors would eventually take a step back and re -evaluate. Interesting, while Gold and silver Seeing an uptick, BTC is not. So much for the safe seas access and Digital gold !
All these three factors, as well as others, contribute to current sales. But are we at a tip point that can take things from Selloff to Crisis? Let’s look back on the last.
A look at the financial crisis in 2008
Seeds for the 2008 financial crisis are sewn 2001-2006 when the banks gathered risky mortgages securities in mortgage loansGrading agencies misclassified them as secure, and a housing boom occurred due to low interest rates in the wake of the Dot Com crash.
The first warning signs began to emerge in 2007 when New Century Financial, a subprime mortgage, went bankrupt. Later that year, Bear Stearn’s two hedge funds closed much invested in securities -supported securities and GDP Paribas (Nasdaq: BNPQF) froze three hedge funds invested in the same, with reference to “a complete evaporation of liquidity.”
In March 2008, Bear Stearns collapsed. The US government arranged a rescue and JP Morgan (Nasdaq: JPM) went in to buy Its shares for $ 2 per piece, down from $ 170 previous summer.
It was not enough to stop the panic. In September 2008, the US government took over the mortgage giants Fannie Mae and Freddie Mac. Shortly thereafter, Lehman Brothers collapsed (Nasdaq: Lehlq), wiping out $ 600 billion in assets and triggers a complete panic. In mid -September, American International Group (Nasdaq: At), a Global Insurance and Financial Services company, received an exhibition of $ 85 billion to ward off collapse. While it survived, the economic landscape was destroyed.
Despite a Bailout of $ 700 billion in early 2009 (Starpen) And the Federal Reserve lowered interest rates to zero, US unemployment affected 10%, millions of families lost their homes and protests broke out all over the world from New York to London to Tokyo, Sydney and thereafter.
The essence of this whole failure was one thing: lack of openness. While excessively risk-taking, salmon supervision monitoring and direct fraud played their roles, the basic question was to see it coming. Only Michael Burry And some others cared about pouring the tasks and doing mathematics, and they served beautifully from that work.
Can scalable blockchains help prevent or detect another crash?
Public blockchains Has many potential use cases, but the essence of them all is real -time transparency. Each transaction on scalable blockchains like BSV is a timestamp and dated; It would be extremely difficult to commit a scale at the 2008 level if the world was run on such a general book.
While blockchain can be used in many fields, including cyber securityThe Delivery chainsAnd communication can also help prevent another crash in 2008 by substantiated a new financial system. In this new device, all tokenized financial asset would be traded on a tampers safe public general ledge and data related to leverage, counterparty risk and imbalances on the market can be monitored and automated. With Smart contractsPositions can be closed automatically when predefined risk measurements are broken. Black rock (Nasdaq: Blk) already Looks the potentialAnd it works towards its vision of the new financial system.
In the traditional financial system, the banks hide the risks, which leads to situations such as in 2008. But in a world world such a risk would be visible and reduce systemic shocks. While Decentralized funding (Defi) and the broader digital currency industry have had their share of dirts, they are linked to shady, off-chain operations such as FTX and Celsius NetworkWhich consciously made it difficult to see what happened inside them.
So even though human behavior ultimately caused the financial crisis in 2008, blockchain technology can help prevent the next or at least seeing it coming. While supervisory authorities and auditors failed with the public during the years up to 2008, anyone can review data on a public blockchain. In an age of artificial intelligence (AI), monitoring and warning of those responsible can also be automated.
So comes another crash?
No one can say for sure, but it probably won’t be on the same scale as 2008. Protective measures have been implemented to prevent the type of greed and fraud that caused a crisis of that size, but it can never be excluded. A minor crash or one for delayed global recession may come, but it differs from what happened in 2008.
The nature of black swan events is to see them come, and with record sovereign and corporate debt levels, a technical bubble similar to the early 2000s and massive geopolitical insecurity that none of us have seen during our lifetime, no one says what Dominos can fall and what consequences can be.
In any case, we would all have better if the information required to determine this was visible on a public blockchain. Thankfully, there are scalable public blockchains like BSV, and we can build a better financial system on top of them so that nothing like the financial crisis 2008 blinds the world again.
Is there a better blockchain use case than that? If so, this writer would like to hear it!
Look: peer-to-peer electronic cash system-it’s micropomes
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