Could a Dollar Collapse Yield a New Digital Monetary System?

Summer's Over, and the Debt Ceiling is Looming (Again)!

It's well known that the final quarter of the year after summer is always full of economic drama, crashes, and political turmoil, and this year is likely no different!

Lawmakers have their work cut out getting the debt ceiling raised in time. Five crucial bills need to be signed by President Trump in order to raise the debt ceiling and avoid a potential government and economic shutdown.

Possible Implications if the Debt Ceiling Isn't Raised

If the debt ceiling isn't raised, the implications could be disastrous. The government could shut down, triggering a political civil war and an economic catastrophe, which would likely roll over upon the rest of the global economy, causing a global crisis.

The U.S. economy and the Western economies overall are in no condition to handle a crisis of this magnitude, especially combined with geopolitical tensions with Russia, Iran, China, and North Korea. The timing couldn't be worse!

Years of quantitative easing and inflation would finally catch up with the economy!

These issues would normally send less frail stores of value such as gold and silver higher in price. The new alternative comes without an official asset class: cryptocurrencies. They are becoming a more established, yet unofficial way of preserving wealth, but how would they react when facing turmoil?

Would Bitcoin truly behave as digital gold and flourish in the midst of such anarchy…?

**Bitcoin in an Economic Shutdown! **

If we look at uncertain times or events such as Brexit or when President Trump was elected, Bitcoin performed incredibly well. As global markets became unstable from what the majority seemed to assume would happen, Bitcoin was less volatile than the British pound, one of the strongest currencies on Earth, despite the crash against the dollar in June 2016.

Bitcoin is looked at as a new way of storing wealth in a secure manner outside of the manipulated precious metals markets and a more profitable alternative to the traditional high-street bank savings accounts that offer dismal returns to long-term savers.

At the time of writing, Bitcoin has over quadrupled in value since 2016, with altcoins producing gains that make the traditional stock markets look extremely tame. Cryptocurrencies are new, modern, and decentralized, with an almost impossible reach by the government's surveillance.

For the time being, cryptocurrencies are changing how we expect precious metals to be doing. We could see an influx of fear-driven investors flock to Bitcoin and altcoins as a way to preserve — and even increase — their wealth during an unstable economic downturn.

Gold bugs who strongly oppose Bitcoin may embrace this savvy technology as part of their portfolio alongside the precious metals to create more diversification.

A Dollar Collapse Would Trigger a New Digital Monetary System!

The dollar is saturated in debt, printed in unlimited amounts by the Federal Reserve, and has no gold backing it since the Nixon shock.

What solutions would the people turn to if the banking system failed? If a nation's purchasing power reached all-time lows, we could see wheelbarrows of cash or people would simply use the Blockchain-based payment networks like Bitcoin, Litecoin, and others to send payments and value to one another.

The volume and price of cryptos would surge as demand reaches highs never seen before. Economic and political announcements could send the prices either way, as fear influences the markets.

Gold and silver, although the most tested form of wealth, are not as liquid as cryptocurrencies. Provided people have electricity and a secure Internet connection, Blockchain-based payment networks could become the solution and give way to global solutions as the financial bodies recuperate.

How Would Bank-Focused Cryptos, Like Ripple or NEM, Perform?

Blockchains focused on providing services to the banking sector could suffer as their target clients suddenly have to tighten their belts, but on the contrary, Ripple and NEM have a supply limit on their tokens.

This creates a supply and demand element to these digital currency alternatives, and banks may use this as a hedge against their own fiat-based financial mess!

Raise the Debt Ceiling or Reset the Debt-Filled Economy…

How many more times can the debt ceiling be raised? Should the economy be left to simply default and reset? While sceptics accuse the cryptocurrency market of being in a bubble despite it being a meagre $150 billion industry, they neglect to mention the inflated trillions of dollars propping up a global economy that has no real value behind it.

Is it any wonder that people are flocking to cryptocurrencies and precious metals?

No one truly knows how Bitcoin and cryptos will perform if we see an economic crash/Great Depression, so always research before investing!

Written by Luke Dodwell for CrushTheStreet.com 2017-09-07