Searching For The Roots Of Bitcoin’s Narrative
If we are to understand bitcoin’s meteoric rise, we must return to 2008. After all, the world’s largest cryptocurrency by market capitalization is a child of the global financial crisis (GFC).
Once Lehman Brothers went into bankruptcy, many banks and financial institutions across the globe followed. Governments all over the world soon stepped in, bailing them out. Three days after Lehman went bust, Hank Paulson, U.S. Secretary of the Treasury, and Ben Bernanke, head of the Federal Reserve, went to President George W. Bush and him, “We need a trillion dollars in cash, and we need it by five o’clock,” as Steve Bannon, a former Goldman Sachs investment banker and advisor to President Donald Trump, recalled in 2018.
After Bush shrugged them away, Paulson and Bernanke went to Congress, where they repeated their plea: “If we don’t have a trillion dollars by today, the American financial system will melt down in 72 hours. The world financial system will melt down in two weeks, and there will be global anarchy,” Bannon recounted.
While the global financial system didn’t slide into abyss, trust had been lost in a monetary system that ran on trust. Robert Shiller, named a Nobel Laureate in 2013, pointed out that the experiences surrounding the financial crisis wove the narrative for Bitcoin:
“I think narrative is very important to the popularity of Bitcoin and other cryptocurrency,” he said. “Part of the reason that Bitcoin succeeded is that it fed into an anarchism narrative that government is unnecessary and untrustworthy. It fostered a narrative that young people have created a financial institution that is out of the government’s reach. That’s a powerful narrative.”
Fast forward a decade — welcome to a world of “helicopter money,” negative interest and big debt.
Though the U.S. and EU economies had been out of the woods for a while, neither…