When it comes to the American economy, there’s a lot of controversy going on. After all, what’s good for huge corporations isn’t necessarily the best thing for the American economy (or its people). Moving production abroad and exporting huge quantities of dollars for foreign trade can have unforeseen negative financial consequences on the local economy.
This is a problem without a clear solution since, for better or worse (and despite growing China), the US is still the world’s largest economy and, as such, the world’s financial hegemon.
Still, what do American people and small businesses do against this adversity? How do they try to alleviate some of the effects of this system? Well, one of the things they could do is find financial instruments that they can leverage to their favor. One such asset is, unexpectedly, cryptocurrencies. Here’s how these can be used to help the American economy.
- Americans are massively investing in cryptocurrencies
Americans are already massively investing in cryptocurrencies. There are many reasons behind this and so many benefits of this trend. First, there’s a massive potential for long-term growth. For Americans disillusioned with companies and institutions, an alternative asset type can be useful, at the very least, as a form of diversification of their assets.
This is a decentralized market, but the flow of information is also decentralized. You don’t have one major government body issuing statements and stats. Instead, you have to do independent research, which is probably the best way for any investor to get informed.
For anyone disillusioned with big institutions, it is a good idea to learn how to do research, either reading directly from the developer’s notes or getting expert analysis of top new coins.
This is what any investor should already be doing, but many take a lazy approach. They follow a single trader or (worse yet) an influencer and get all their advice and insights from this one unverified source. Why? Because it’s easier and after one or two suggestions that are proven right, there’s no force in the universe that can dissuade them from trusting this source again.
Sure, the cryptocurrency market is volatile, but this means that it’s a massive opportunity for people with modest means to make this right and live the American dream. The fact that everyone has access to the same research resources and even platforms like robo-traders means that, for the first time, there’s a great equalizer on the market.
- They’re less vulnerable to political interference and inflation
The value of currencies often depends on political phenomena. After Brexit, the value of GBP showed a sharp decrease. A similar thing happened after the 2016 American elections. Sure, the values returned to the starting point after a while, but for a lot of Americans, there’s a huge problem every time a crisis happens.
Even if the problem happens across the globe, it’s the US citizens who will have to watch closely at their holdings and try to figure out how hard they’ll be hit with this latest in the line of fiscal instabilities.
Now, US citizens have another asset they can use to hedge against inflation. They can still keep most of their money in dollars, but if they ever choose to pick a different currency (as part of their savings), they’re no longer obliged to pick a foreign FIAT currency. Instead, they can use decentralized cryptocurrency to keep their money safe and on point.
This process is already ongoing and unstoppable. According to some estimates, roughly 21% of US hedge funds now own BTC in some form, which is done to make these funds more resilient.
One way the US government tries to regulate the economy is by printing as much money as it feels it needs. The problem is that this often results in high inflation. Cryptocurrencies, on the other hand, have a cap (a limited number of coins). While the value can go up or down, there’s no creating new coins.
- Helping small businesses
While the idea of bringing jobs back home is still hugely significant, many small businesses are still holding their ground in the US as we speak. For them, the greater adoption of crypto may have unforeseen positive consequences.
If you want to help small businesses become more competitive, early adoption of the technologies underlying these cryptocurrencies might just be the way to go.
Sure, in the past, crypto was too volatile to be taken seriously in this field but now, there’s regulation, the staff of financial institutions focusing on crypto is almost double what it was, and there are new forms like stablecoin designed to provide additional stability.
It’s clear that these coins are designed for higher adoption, but massive enterprises have too rigid structures to implement them quickly. This is one of the biggest competitive advantages of a small business – change can come quickly.
Just imagine a scenario where you’re using a tool or a platform for thousands and thousands of employees. Now, imagine a situation in which you want to replace a platform with a more competitive alternative. It’s not as simple. However, if you’re a six-person enterprise, you can make an executive decision early in the morning and implement it by the end of the work day. We’re not suggesting that you should; we are merely pointing out that you can do it.
With more and more customers actively using cryptocurrencies, this could be a massive game-changer. For once, it’s small American businesses who have a chance to be ahead of the curve.
- DeFi means less institutional control
A lot of Americans fear big institutions. This is a natural consequence of disasters (like the one in 2008) where big institutions made a huge mess and bore virtually no consequences. Sure, there’s a good “political” explanation as to why more people weren’t held accountable, ranging from the end consequences on the American economy. Still, there’s no good explanation for why people who made the mess just got to walk away free.
The only logical explanation is that these are rich and powerful people whose connections and lobbying bought them to get out of jail free cards, which became useful when the risk of investigation rose.
When it comes to cryptocurrencies, the system is not as easy to rig. Since the system is DeFi, it would be fair to describe it as truly democratic. This means that even if there was malicious intent to rig the system, no one with their hands on levers of power could make such moves.
Now, while it’s true that this field is less regulated, its actors are still held most accountable. For instance, take a look at one of the biggest scandals in the history of this asset, FTX. Sam Bankman-Fried got 25 years for his participation in this massive fraud (regardless of the fact that he tried to play it off as incompetence).
Now, try to connect the dots and compare this to the situation from 2008 (which was far worse and where most of the chief actors never served a day). Suddenly, cryptocurrencies seem less like a gimmick and more like a proper financial system.
Cryptocurrencies can be used as a great equalizer
The fact that these assets exist on the DeFi system means that, for the first time, no one has institutional protection or an advantage. Moreover, due to their flexibility, small businesses have an easier time integrating crypto into their organization and offering crypto-related services to their customers. Moreover, this is another great investment and diversification opportunity for Americans, regardless of their financial status.
