by Lumai Mubanga
The financial crisis of 2008 could be defined as an epoch event in the history of humankind that passed and left a trail of unknown effects, effects that would be felt decades after it is even forgotten. One though cannot mention that event without mentioning the banking sector.
Whatever the causes of that event, it left many wondering the actual effects it had on the financial world. The following year and beyond, bitcoin, the first blockchain-based cryptocurrency was launched. To date, we have witnessed a surge in these cryptocurrencies. Could this effect have been caused by the 2008 financial crisis?
The Financial World Before 2008
It is easy for many of us to remember and relate to that world before the crisis. Many banking and financial institutions had the trust, at least to some extent of their customers. Although blockchain was already available, an independent and distributed ledger system that could offer online financial transactions had not yet been devised. Millions of people relied on institutions like’s banks and governments as the guarantors of trust in the financial world.
Passed the Financial Crisis
The post-financial crisis however has witnessed a diminished trust in institutions such as banks and financial service providers significantly. What probably caused this mistrust now is the global financial crisis, including all the major financial scandals that became known because of the crisis. Most of us stood helpless as we watched our bank account and assets lose value by the day. As the global financial system continued to collapse, we heard daily reports of some members of the global financial community pursuing profits at the expense of their customers. In addition, government regulators were also paralyzed as they stood by and failed to protect us. Ultimately, millions around the world lost their homes, savings and everything they had invested over a long time. For example, in the US, it is estimated that American households lost approximately $20 trillion in wealth. Is it surprising that many people began to lose trust in financial institutions?
Shift of Trust?
When bitcoins hit the financial market as a new innovation, there were misgivings as expected. However, with time, many people have come on board and the online transaction platforms have gained ground and a measure of trust. It is true that trust is gained and cryptocurrencies have been gaining that trust. There is a definite shift of trust from the ordinary banking institutions to online transactions, backed by blockchain innovations.
Consider this fact. According to Investopedia.com, by January 2020, there was close to 2000 types of cryptocurrencies in existence world over! What makes it even interesting is that these coins are enjoying a lot of popularity and trust not only from millions of users but financial institutions too. Is it any wonder that many financial institutions have opted to evolve and embrace innovation?
Clearly, the 2008 financial crisis could have inadvertently brought about what we are witnessing today. The law of cause and effect could be at play in the evolution of our current financial platform.