3 Events That Brought Crypto Mainstream

In the beginning, crypto was something only a few people knew about. People heard whispers about it, but it mainly existed in the dark alleys of the internet.

Crypto finds ways to get into the mainstream every year, and 2022 is no different. The following will highlight three major events linked to crypto that brought it to the masses in new and exciting ways.

#1 Canadian Truckers’ Warning Siren

The relationship between the government and its people has always been fragile. People are willing to accept certain restrictions as long as they feel the government provides enough.

In essence, the two entities must agree that the deal is beneficial to both. Many historical moments test that agreement, and the pandemic has strained this relationship.

After Canada issued a vaccine mandate, truckers returning from the United States had to show vaccination proof to get into the country.

Several truckers didn’t like this. A group of protesters large enough to challenge the Canadian government opposed a variety of Trudeau’s ideas, including pandemic controls and a carbon tax.

The group called itself the “Freedom Convoy.” The protestors garnered some support, but the Canadian government retaliated by freezing bank accounts which was a big move no one saw coming.

It was a move possible only through Canada’s financial surveillance infrastructure.

The Prime Minister invoked the Emergency Act that allowed these accounts to be frozen without obtaining a court order. This move shocked everyone worldwide because such measures are rarely seen being done by Western governments with democratically elected officials.

Financial freedom and free speech are linked. It is challenging to organize, demonstrate and speak up without financing. Even worse is the closing of personal bank accounts for participating in protests such that one becomes unbanked.

The announcement reignited the passion for crypto, a kind of money that isn’t subject to seizure by the government. Investing in cryptocurrency has always appealed to individuals who distrust governmental power. It makes sense that this hunger has increased.

The government broadened its powers to ensure that these truckers couldn’t get support even on crowdfunding sites.

Coinbase CEO Brian Armstrong said “Concerning to see stuff like this happening in any country, especially such an economically free place like Canada. Self-custodial wallets are important!”.

While it seems like a fight between liberals and conservatives, that’s not necessarily true. It’s a fight between folks in power and those without. 

The people in power can change in a split second, and what protests are acceptable under one government might be unacceptable to another political party.

The damage has been done. Some people saw the power governments can have. For many in 2022, this event clarified that crypto is freedom.

#2 Crypto Amid War

Ukraine has suffered an invasion which is happening right now.

It’s impossible to imagine that Europe, which has been the tinderbox for the two world wars, is again in the midst of something similar. Even more mind-boggling is that Russia, a significant military and nuclear power, is involved.

Everyone looks at this happening and feels helpless, well, not entirely.

Crypto has been given an opportunity to shine and show how powerful it can be. Ukraine’s deputy prime minister, Mykhailo Fedorov, pleaded with the world for funds. Transferring funds across borders involves a complex and time-consuming system. The world responded by sending crypto funds in a large display of support.

The Ukrainian government raised more than $42 million in cryptocurrency in less than six days through crowdfunding. The government has accepted everything, from Bitcoin and Ether to even NFTs.

Funding a country in a state of disarray can be challenging. There are a lot of obstacles, but crypto has none of those obstacles. The rapid funding and outpouring of assistance have shown the world how easy it is to transfer money when the need arises to safeguard democratic values.

#3 Nickel Market and Risks of Centralized Exchanges

Last week, Tsingshan Holdings, a leading Chinese stainless steel producer, couldn’t meet its margin calls on the London Metal Exchange (LME) after a sharp rally in nickel price.

As a result of a leveraged bearish bet, Tsingshan Holdings faced billions of dollars in losses that exchange officials feared it couldn’t meet. LME decided to cancel all that day’s trading, more than 9,000 transactions worth about $4 billion, rather than see Tsingshan Holdings fail.

The use of leverage in financial markets is not new. The futures broker, MF Global, in 2011 faced a $310 million margin call and filed for bankruptcy protection. In 2007 Goldman Sachs injected $3 billion into the flagship Global Alpha quant hedge on account of significant losses.

The hedge fund Long-Term Capital Management in 1998 faced a margin call on their high leverage strategy. One of Warren Buffet’s famous quotes about the entire situation was, “To make money they didn’t have and didn’t need, they risked what they did have and did need. That is foolish”.

Rather than allowing the market to function normally, the exchange canceled all the trades and rescued the firm from the consequences of its bets. 

Decentralized Finance, also known as DeFi, relies on smart contracts based on blockchain technology to enforce financial obligations without the interference of a central authority.

Traders have questioned if LME acted fairly when canceling trades. A crisis of confidence has been created, and traders are now aware of the risks of centralized finance. Traders who had bet on higher prices are consulting attorneys—another instance where neutrality of cryptocurrency can move the needle.

Normalization Of Crypto Usage

 In the first three months of the year, we had three significant events highlighting how crypto can be the neutral path forward in resolving conflict. More events are bound to occur in the coming months and years that would help normalize crypto.