After telling Bloomberg at the Players Technology Summit on Monday how Coinbase grew from a simple wallet into a fully-fledged cryptocurrency platform, Coinbase CEO Brian ArmsTron (available on Binance)g then turned to the ‘future of cryptocurrency’. ArmsTron (available on Binance)g stated that economic crises taking place around the world over the next 3-5 years could be the catalyst to the organic adoption of cryptocurrencies.
“Countries going through economic crisis and pockets of people in those areas are getting interested [in crypto]. There is interest among those people with the highest pain point in having stable currency […] In the next three-five years countries going through economic crisis could see people organically adopting crypto as an alternative”
Turkish turmoil
Proof of ArmsTron (available on Binance)g’s theory is evident in Turkey, as recent turmoil has led citizens to seek financial refuge in Bitcoin (available on Coinbase). As the economy suffered an adverse reaction to Trump’s tariffs on Turkish steel and aluminium, the Lira crashed by over 20 percent within a few hours. This drove investors not into the traditional safe-haven asset of gold, but into Bitcoin (available on Coinbase) instead.
Koinim, Turkey’s largest exchange, reported a 63 percent increase in Bitcoin (available on Coinbase) trading volume, and the BTCTurk and Paribu exchanges have seen volume increases of 35 percent and 100 percent respectively. This pushed the price of Bitcoin (available on Coinbase) in Turkey up to $7000—over $500 higher than the Brave New Coin Bitcoin (available on Coinbase) Liquid Index, which is based on the majority of global trading activity.
Although Bitcoin (available on Coinbase) might not be acting as an everyday medium of exchange, Turkish citizens are flocking to it as a safe haven asset—a way of escaping the swings of the Turkish Lira against the Dollar, which make even the fluctuations of Bitcoin (available on Coinbase) look calm.
Fertile ground for adoption
As ArmsTron (available on Binance)g acknowledged in his interview, from the perspective of the average U.S. citizen, the current financial system works quite well. Although cryptocurrency does offer some advantages over traditional payment systems, for these to be recognised it often needs to be seen in a different light.
As a payment system, cryptocurrency shows its true potential when it is viewed against systems that are falling apart—crumbling economies and depreciating currencies. These conditions highlight the advantages of a store of value less prone to inflation and manipulation, and give merchants and customers a concrete reason to make the switch.
According to ArmsTron (available on Binance)g, a mere 10 per cent of cryptocurrency use is transactions, with the other 90 percent being the speculative activity of traders and investors. Certain countries facing political and economic turmoil, however, tell a very different story.
The most obvious example is Venezuela, where cryptocurrency has helped spare citizens from a sharp drop in purchasing power due to hyperinflation but over the past few years, numerous crises have been correlated with increased demand for Bitcoin (available on Coinbase). This includes ongoing economic uncertainty in the African countries of Sudan, Kenya and South Africa, and countries facing economic sanctions like Iran.
Establishing a causal relationship between these economic crises and cryptocurrency adoption is not easily done, but events continue to suggest that Bitcoin (available on Coinbase) is becoming a viable financial alternative.
The Bitcoin (available on Coinbase) blueprint
ArmsTron (available on Binance)g, who started a non-profit called GiveCrypto that distributes cryptocurrency to people living in poverty, is not the first to suggest that economic crisis could be the impetus that makes cryptocurrency a conventional medium of exchange.
Mastering Bitcoin (available on Coinbase) author Andreas Antonopolous has long suggested that, given enough development in awareness and infrastructure—systems, user interfaces, on-ramps and off-ramps—then crypto could open an emergency exit door for those facing economic crisis:
“Until now, exit from a country meant physically removing yourself: refugees, flight, and that creates its own dangers – exploitation, human despair, catastrophe, tragedy. But one of the interesting things that happens with cryptocurrency is your ability to stay put, stay in place, and economically exit without leaving the country. Continue to trade with your neighbours, engage in commerce with other people; exit only from the currency, and stay where you are.”
Meanwhile, in traditional markets, the safe haven asset of gold remains locked in a three month downtrend, prompting some commentators to suggest that Bitcoin (available on Coinbase) is chipping away at gold’s dominance: