We know for sure that gold, silver, art work, and real estate are true tangible assets which have an inherent value. But how about bitcoin and cryptocurrencies?

I am a big fun of bitcoin and cryptocurrencies, but I still wonder how their value will be kept while irresponsible governments are “printing” (digitally?!) fiat money? As it is expected dollar to collapse sooner or later and a huge inflation to be determined by printing fiat currency, we might have big numbers of bitcoin expressed in dollars, but with less or no value?!    

So the question is:

Will bitcoin and other non-asset backed cryptocurrencies keep their value? If yes, how?

Here is the possible answer:

In fact Bitcoin is not "backed" by the dollar but only compared to the dollar right now, as the power of dollar is still big and global! Also, Bitcoin started with a global crisis in 2009 and it seems that it was waiting for the next one in 2020! As we know, Bitcoin was designed by Satoshi Nakamoto to work on a standalone basis, without the need of banks, financial institutions, governments, international currencies or other traditional fiat money systems.   

Now, we know that the economic turmoil caused by the Corona virus will affect many companies, credit lenders, etc. This fact also will remove confidence in the old financial system as a whole.  

"As we can see from the chart below, Bitcoin lacks of correlation with stock markets. Investors in traditional assets realize the fact that the actual crisis has impacted almost every asset class. The chart represents the price relation between the S&P500 and Bitcoin on a scale from -1, a perfect inverse relation to +1. The indicator clearly trends to 0 most of the time indicating there is absolutely no relationship between the two assets." (Source: https://cointelegraph.com/news/bitcoin-was-designed-for-a-financial-crisis-so-far-its-working-well). 

Bitcoin and S&P 500 60-day correlation chart. Source: TradingView  

Bitcoin not backed but compared to fiat! 

As I said before, the powerful reality is that bitcoin is not "backed" by the dollar but only compared to the dollar! That is why it will withstand its value intrinsically given by the mathematical and cryptographic system through which it is created. 

Until now we had a kind of blind trust in the traditional banking financial system. In theory you trust the ability of governments/banks to manage the monetary system. However, they proved to be incompetent.

Then, Bitcoin came with a change of thinking and paradigm, so you no longer have to believe someone (a person, bank, government), but you can choose to trust the unchangeable laws of mathematics and cryptographic! 

Bitcoin price chart by Coingecko.com

Conclusion

I believe that the so-called capitalist financial system will collapse, with all those vaporous assets which have no real value: stocks, bonds, ETFs, options, etc.

Indefinitely, we can invest in cryptocurrencies, precious metals, real estate, art objects and other feasible assets, and in this way we keep these markets alive forever! 

Of course, cryptocurrencies won't be the first option for all investors, but those who are already in will invest more. Also a percentage of traditional investors will switch from fiat to crypto investment and trading. 

This article is for educational purpose and does not represent a financial investment offer. Before you invest, do your thorough personal research and never invest more than you can afford to lose.