In the event of a financial crisis it is possible that the ATMs could “go dry” as liquidity leaves the system and banks are unable to make their depositors whole. When this happens, cash will become very scarce – it will turn into an incredibly important commodity as everyone will be holding onto what little physical cash they have left. It will be increasingly hard to come by because banks won’t cash paychecks either because…well…they are holding onto their precious cash reserves.
What does this type of scenario mean for digital currencies like bitcoin? Will it survive and thrive or crash and burn?
Seeing as one of bitcoin’s primary tenets of value is the ability to transmit value seamlessly and in a frictionless fashion, bitcoin could be utilized as a medium for bartering. Goods and services could be paid for with bitcoin simply because it would be the only currency system still up and running.
The decentralized nature of bitcoin could in fact save people during this time provided they have bitcoin. And if they don’t have bitcoin, people may flood that market when dollars are seemingly too precious to part with as the supply chain breaks down. Something also to consider is the purchase of physical silver in the form of a “monster box”. If the system goes down you’ll want both traditional money (precious metals) and the future of money (bitcoin) in your back pocket to weather the storm.
It’s an interesting thought experiment to contemplate as our society isn’t as far away from the aforementioned scenario as some might think. Consider bitcoin as your banking system failure hedge….you may be paying for groceries with it in the near future.