Are cryptocurrencies an alternative to a new Lehman Brothers?

When we talk about Blockchain, we always talk about trust or better said certainty, the certainty that our transactions are in a decentralized network with a currency limit and the confidence of the P2P. But do you remember the moment when the world held its breath and looked desperately around for a solution that would rescue us from the banks and their mistakes?

Crisis Subprime is the denomination of the financial crisis that had its beginning in September of 2008.

The origins of the crisis are in a bubble, in the overvaluation of assets, in this case real estate, the prices of housing in the United States. This came to be added to an environment of very low interest rates, which in some way encouraged the indebtedness of families and the quick and easy, not prudent, granting of loans and credits by US financial institutions. So easy was it to obtain loans to acquire real estate that were granted to the segment called “subprime”, which is none other than customers with low solvency and, therefore, a great risk of default. These assets with such a high level of risk, once they were unpaid and entered into the balance sheet of the financial institutions as payment of the debt, at a value well below it, were called “toxic assets”.

When mathematics fails.

The Subprime system is based on the Black-Sholes equation. This Black-Scholes model or Black-Scholes equation is an equation used in financial mathematics to determine the price of certain financial assets. This equation is largely based on stochastic process theory, in particular, it models price variations as a Wiener process. In 1973, Robert C. Merton published “Theory of Rational Option Pricing”, in which he referred to a mathematical model developed by Fisher Black and Myron Scholes.

Those who saved the situation were the shadow Banking

The Shadow Banking, or banking in the shade, was the term coined by Paul McCulley, former director of the American investment fund specializing in public debt PIMCO, to refer to all those companies that perform financial and credit activities, but that escape any banking regulation .

What would happen today?

Today the regulations with respect to banks have changed, the states could hardly rescue them again, since in the experience of 2008 … rescuing them did not help. So it will hardly happen again.

But at first sight and always in a hypothetical way, in case this crisis erupts again, today there is a real alternative to banking. A structure such as cryptocurrencies, today technology and mathematics play in our favor.

Now we have a refuge to keep our values, a decentralized and transparent site that States and banks can not control. But if today the case were repeated again, how many people could have access to rescue their savings in cryptocurrencies?

To give an example, currently in Argentina and Venezuela there is an economic crisis established years ago, even so, although the Argentine and Venezuelan communities are the largest in Latin America. How many Argentines and Venezuelans continue to suffer for the “come and go” of government decisions?

It is for the above, that although we smile with mischief thinking about what would happen if there were another crisis like 2008, we must be honest: The cryptocurrency and Blockchain community is not yet ready to be a real alternative to Banking. On the other hand, some currencies are falling into the same “vices” by customizing their movements in a single actor, as is the case with Ethereum or Bitcoin Cash, causing these actors to influence the fluctuations in value.

Sitting down, all of us who see Blockchain technology as a real solution, we must be cautious and accept our shortcomings, this is how we will differentiate ourselves from banking and traditional politics

Enric Martí

Enric Martí

Economy fan, hangued, hooked on crytocurrencies and junkie of audiovisual stuff...on rehab