How Bitcoin Protects Against Geopolitical Risk

The U.S. presidential election is no ordinary election. People around the world are watching this election not just for its dramatic elements, but because it will be felt and impacted around the world in very real ways. And nowhere is the impact more immediate and certain than in the economy right now.

In August, the Wall Street Journal published an article stating that economists have seen how uncertainty caused by the election will hurt the U.S. economy. When the British voted to leave the European Union, the value of the currency plummeted overnight. If Trump wins, the dollar could fall in the same way that the pound did after the Brexit vote. (Note: The results of the U.S. election were not yet known when this article was published)

This year we’ve seen first-hand the impact of geopolitical risk on fiat currencies like the USD and GBP. Bitcoin, on the other hand, has not only survived, but is still thriving despite increased hacks, competition, and scaling turmoil.

Advantages of Bitcoin

Digital currencies like Bitcoin are built from the ground up and designed for the Information Age. Just as we live in a world where information and commerce take place but without the need for a central authority, Bitcoin allows for direct, peer-to-peer transactions without the need for a middleman. This greatly increases the efficiency of the system and enables financial services to be provided at a very low cost.

More importantly, Bitcoin is a global digital currency that is borderless, unlimited and absolutely secure. Unlike traditional currencies and payment systems, Bitcoin is not subject to capital control and currency manipulation. It does not restrict people from moving money where they want and is not controlled by government policies. Most importantly, it will not be like legal tender, as national political uncertainty may lead to radical fluctuations in traditional currencies.

Is it the uncertainty of the US election that causes fiat currency volatility? Yes, elections, like any national political event, are bound to create volatility in our economy. Should we expect economic waves to fluctuate when uncertainty subsides? Yes, at least a little.

However, as history shows, we should also expect the next political event with economic impact to be just around the corner. Bitcoin has been immune to political fluctuations since its inception, and I believe the same will be true for the US election.

Why? Because as mentioned above, Bitcoin is free from capital controls and currency manipulation. We have entered an era of true currency independence. The past has shown, and I believe we will see the same trend in the coming months.

The transformative potential of blockchain technology

Further discussing Bitcoin, blockchain, Bitcoin's underlying technology, it's not just the currency that's changing. Unlike traditional financial ledgers that are kept by a central authority, the Bitcoin blockchain ledger is updated and maintained by everyone on the network.

The Bitcoin blockchain has not been shut down at any point since its inception nearly nine years ago — a remarkable feat for a financial platform. It also means there are no third-party fees charged for each transaction. And because the ledger is publicly accessible, records cannot be manipulated after the fact.

The general consensus is that this technology will redesign the way we exchange value at both the corporate and individual levels. A greater percentage of the world’s population will be able to leverage digital financial products to trade, save, insure, and hedge for a better economic future, and nearly every major institution — from health, finance, entertainment to government — is exploring what the unprecedented efficiency, transparency, and privacy that blockchain can bring can mean for them.

As digital currencies take center stage in the global economic conversation, many are asking whether blockchain will change the world. I think the answer is yes. If the results of the US election and recent world events have taught us anything, it’s that our global economy needs the protection of a decentralized, global currency.