Regulators may still want to suggest that Bitcoin is just a tool for criminals, but for many middle-class consumers, it is proving to be a lifeline.
Even as politicians like the President of the European Central Bank, Christine Lagarde, criticize cryptocurrency for providing “gaps“used for” funny business, “people like Saeed, an Iranian immigrant to France, sees cryptocurrency as a necessity, due to the difficulty of using mainstream financial systems.
Until 2020, Saeed, who only asked to be known by his first name, was a software engineer in Iran whose salary barely reached € 300 because rampant inflation. In 2017, he started freelance work for international clients who paid him in Bitcoin. By September 2020, he had finally saved enough Bitcoin to go to graduate school in France. However, the pandemic made his immigration process much more difficult.
“I passed all that weird bureaucracy and arrived at a course in France last September, with just € 1,000 in my pocket,” said Saeed. “HSBC, Banque Nationale de Paris, La Banque Postale, refused me, refusing to open a bank account. I finally found a bank after a month. ”
Saeed, meanwhile, used Bitcoin. He is exactly the kind of person who benefits from “gaps” in the traditional banking system.
“Many people in Iran work with European technology companies,” says Saeed. “I may not be able to buy Bitcoin directly from the exchange because of my nationality.”
Saeed believes that Lagarde represents the interests of bankers and government, not ordinary citizens, who are happy to work with him. He said stricter regulations would make his entry into the financial system more time-consuming and expensive, as he would have to pay friends and colleagues to negotiate on his behalf. However, Iranian migrants are hardly the only consumer group relying on Bitcoin during the pandemic.
In the United Kingdom, a British expat named Paul found himself trapped in London when flights back to his Asian country of residence were canceled. Due to tight capital controls in his former country, and the challenges of return during constant locks, Paul lived between regulatory systems.
“I closed the business down [in Asia] just before the pandemic begins. “My father died and it was difficult to continue my company,” said Paul. I was in hotels and Airbnbs for weeks and had no residential address … without Bitcoin I would have been locked in cash. I could only withdraw money from the ATM machine for a certain number of months because it is limited to holidays. “
Fortunately, Paul acquired a bit of Bitcoin earlier that year. Unlike Saeed, he did not feel comfortable with the technical aspects, but learned quickly. He used Bitcoin to buy gift cards for groceries, phone bills, hotels and Uber, and paid a friend back in Asia to help wrap up his apartment and put things in storage.
“I think it’s generally a bad idea but, with Brexit at least, thank god I wouldn’t be subject to whatever Lagarde does,” Paul said, adding that regulation can be beneficial if it avoids restrictions for people who do not have banking access.
Today, almost a year later, Paul still has no access to most of his financial accounts. Instead, he downloaded Monzo, a banking app that uses passports for identity verification instead of residential addresses. He pays friends in London to deposit it into his Monzo account.
“It’s becoming really confusing. I use crypto mainly because it’s easier, ”says Paul. “One of my friends is a Nigerian student and has had a similar experience. He used Bitcoin to pay his school fees … I have been at my current residence for a couple months, so I would finally be able to open a bank account. But now I really don’t see the need, especially with the news of negative interest rates. ”
Meanwhile, the price of Bitcoin-denomination fiat surge over the past six months. This gave Saeed and Paul a little extra capital to spend time working out what they want to do next. For Saeed, does it make sense to do the graduate program online, with fewer networking benefits and hands-on experiences (the reason he came to France)? How is Paul progressing with his career now that his family business has closed and his (music marketing) sector in piggy back?
Buying Bitcoin could be considered a form of gambling. In fact, a lot middle-class hobbyist traders accumulated amounts of life change over the past year, usually through experimenting with dangerous software. For people like Paul and Saeed, who generally avoid experimental trades and lack alternative investment options, Bitcoin’s price appreciation helps them to go through a time of abysmal job markets and intermittent locks. People do not need to live in a dictatorship or a country suffering from high inflation to benefit from Bitcoin. We will know; I’m one of them.
Like many people during the pandemic, my living situation changed dramatically and initially I couldn’t work full time from home. I was fortunate to sell a few poems in exchange for cryptocurrency, usually through direct messaging and Bitcoin wallets or as digital collectibles through collaborations with tech-savvy artists. The bull market then increased again, sending those rare earnings high enough to pay for some of my bills. A valet worker and student in Kansas called Hess had a similar experience.
Quarantine helped kill his six-year-old relative and he found himself in need of moving out. He put his savings into Bitcoin in the spring of 2020, so he could move out by December.
“COVID struck and I was out of work for four months,” said Hess. “Honestly, were it not for my decision to throw 70% of my net worth into Bitcoin, I don’t think I would be in such a good place mentally and financially.”
To be clear, that is a very risky financial move and I would not advise it as a first choice. And yet, for many people experiencing unexpected change due to COVID-19, Bitcoin has become a lifeline for Hess.
Over the past year, it is possible that Bitcoin donations have gained popularity with several American communities, including some of the extremist groups involved in Capitol Hill storming. Coming in Treasury Secretary Janet Yellen echo Lagarde’s concerns about Bitcoin being used for criminal activities.
However, so far, the analytics company Chainalysis estimates such gifts roughly correspond $ 522,000. These numbers can also be compared with the cumulative totals managed by other topics referred to in this article. For another legitimate example, Lawrence Douglas, a former director of operations at a California event security company, lost his job as a result of the pandemic.
“Cash Cash changed my financial life to a great extent,” said Douglas. “Bitcoin prices during the 2020 calendar year provided me with a lot of wiggle room, while I am currently looking for a new job.”
As an unemployed Black man, he was statistically less likely to have contacts that could help him learn about stocks or precious metals, for example. He said that, relatively, Bitcoin has a “low barrier to entry.” In April 2020, he turned his stimulus check into a bit of a Bitcoin nest egg. By November, he was using a strategy called average dollar cost, routinely buying small amounts of Bitcoin.
Douglas, like Paul, first bought cryptocurrency during the pandemic. On the other hand, when I interviewed more than a dozen Bitcoin users across Europe and North America for this article, most of them were crypto veterans who said that Bitcoin gave them “peace” during the year-long crisis. length. Anesthesiologist Quentin Lobb, for example, said, “bottom line, our net worth grew tremendously in 2020, thanks to Bitcoin. It has provided a pleasant and exciting sense of financial security. ”
Another crypto veteran, Texas real estate agent broker Brandon Arnold, said the national political and economic situation was more “mentally taxing than ever before.” Against that backdrop, managing a fraction of his own wealth gives him a sense of security. The price appreciation helps too, to be sure, though that’s not why Bitcoin is now so popular among middle-class consumers.
“If I factor in the risk of not having access to my capital, the price volatility doesn’t really matter,” said Paul. “As long as the price of Bitcoin goes nil, it’s still more useful to me than the other options available.”