First, let us define antifragility and discuss the implications of this concept about bitcoin and the United States dollar. Nassim Taleb is credited with coining the phrase “antifragile.” Antifragile systems have the following characteristics, according to Taleb, as stated in the following quote:” Some things gain from shocks; they flourish and develop when subjected to volatility, unpredictability, chaos, and stresses, among other things. The resilient can withstand shocks and maintain its shape; the antifragile improves.” According to economic theory, economies that are not subjected to government oversight, such as tariffs, subsidies, and bailouts, are generally increasingly efficient than countries that function under government oversight, referred to as “fragile” industries. And before we move further in this guide, read more about bitcoin as the one world currency and learn all there is about the safest ways to earn in the bitcoin currency.
A firm that receives government assistance grows more dependent on the government to remain in operation. Businesses may begin to act more recklessly, making high-risk choices with the knowledge that if anything wrong occurs, they will be able to turn to the government for assistance. In such a situation, the resources of the government, the economy, and the business are not being put to the most excellent possible use, resulting in an unstable economic structure.
Consider the immune system as an example of how antifragility may be used in the real world. It is possible to get ill if your body becomes contaminated with germs and bacteria. However, your immune system becomes more robust, as a result, allowing you to battle infections more effectively and, as a result, you have a healthier body. While staying in your home and never venturing outdoors, you would have a weak immune system, and the first sickness you had might be enough to set off a more severe illness later on.
The same concept holds for a country’s economy. Because the 2008 financial crisis was very complex, we’ll make things as basic as possible and start with how it all began. Fannie Mae and Freddie Mac were well aware that these mortgages were dangerous, yet they continued to purchase them since they were also very profitable.
To put it another way, imagine yourself isolating yourself in your home while the government backs Fannie and Freddie. When Fannie and Freddie took on riskier investments, their dependence on the government increased, and their ability to withstand potential shocks grew more precarious. And when that shock arrived in 2008, they were both unable to cope. Their stock values plummeted by more than 99 percent, several banks to which they sold securities went bankrupt, and millions of Americans were forced to abandon their homes.
Consequently, the big question is, in your opinion, how antifragility could have prevented the financial crisis. Fannie Mae and Freddie Mac would not have been willing to take on such high-risk loans if the government had not provided financial support. Instead, they would have put their money into more secure loans, such as a 30-year mortgage. This would have resulted in more excellent long-term economic development.
The Relationship Between the Dollar and Bitcoin in Terms of Fragility and Antifragility
Given that the dollar is inside the sphere of government control, the government has the authority to create and manipulate the money in any way it sees fit. It simply printed the money that the agencies need to remain afloat. Bitcoin, on the other hand, does not operate in this manner. If the United States were to operate on the Bitcoin platform, the government would not provide financial protection to anybody. The consequence is that companies would be forced to act properly to survive, as they would recognize that there is no government safety net to fall back on. Bitcoin is just a means of preserving the inherent antifragility of the free market. Besides the fact that Bitcoin preserves antifragility, Bitcoin is also antifragile in and of itself.
Bitcoin is based on open-source peer-to-peer technology, which means that anybody who has access to the internet may use it to transact. When someone attempts to manipulate the money, it may be immediately identified and handled by other network members. It works on a massive network of computers, allowing anybody to check on its supply and transfer at any time of day or night. This is in contrast to fiat money, controlled by a central bank and handled behind closed doors. No one is aware of any fiat currency manipulation, including when, when, and how. We are just instructed to cease asking questions and place our faith in the higher-ups at the Federal Reserve.
Bitcoin returns that power, strength, and information to the people who’ve lost them. And anytime someone attempts to take that power away from us, Bitcoin adapts and develops to preserve its decentralized and limited characteristics.