The Financial Crisis of 2008
The financial crisis of 2008 is the worst economic crash since the crisis of 1929. What started as a crisis related to the mortgage market, quickly developed into a huge global financial crash. And now everyone is wondering how the rules have improved, and how to prevent this from happening again. The transparency and stability of the current banking system are questioned, the trust is less.
How did it start?
The issues that took place in 2008 were primarily caused by decisions of lawmakers, diplomats, and policymakers made years earlier.
The collapse of the US housing market initiated the start of the financial crisis. Followed by the Lehman Brothers which filed bankruptcy in October 2008, this caused a crippling effect on both the US and EU.
Result in the United States of America
In the US alone, over 8 million people lost their job, 2.5 million businesses collapsed and almost 4 million homes were foreclosed. Officially the recession ended in 2009, but for example, the unemployment rate recovered to its pre-crisis level in 2016.
October 31st, 2008, Satoshi Nakamoto released the whitepaper of Bitcoin called; ‘’Bitcoin: a peer-to-peer electronic cash system’’. Compared to traditional FIAT currencies Bitcoin is decentralized, not controlled by governments or central banks. The underlying consensus algorithm of Bitcoin ensures the scheduled issuance of new coins. The maximum supply of Bitcoin is 21m, so no unexpected surprises in the supply.
New coins are generated by miners. Having said that, miners aren’t only responsible for new coins, but they also verify & validate transactions and secure the network. The code of Bitcoin is open-source, which means anyone can contribute and participate in its processes & development.
It has been over a decade since the financial crisis hit the world, and there are still concerns. The recovery of the global economy is fairly weak compared to historical data.
Regulators declare that the financial system is improved since 2008 and safety measures have been implemented. So, many believe the system is stronger than ever before. But, still, people wonder. Could a financial crash of this size happen again? In short, yes, anything can happen.