Bank Collapse Sparks Fear: Why Bitcoin Was Created, Crypto Community Says13. März 2023
•The Silicon Valley Bank (SVB) collapse on March 10 has caused fear, uncertainty and doubt (FUD) across the crypto community.
•Six weeks after the dramatic collapse of Lehman Brothers, Satoshi Nakamoto released the now-famous white paper, paving the way for Bitcoin’s emergence.
•USDC issuer Circle revealed it could not withdraw $3.3 billion of its $40 billion reserves from SVB, leading to a sell-off and the stablecoin’s price dropping below its $1 peg.
Silicon Valley Bank Collapses
On March 10th, The Silicon Valley Bank (SVB) collapsed causing fear and uncertainty in the crypto community. This was reminiscent of 2008 when Lehman Brothers’ meltdown had sparked a need for a new financial system – one that would eventually lead to Bitcoin’s creation.
Circle Affected by Collapse
Approximately six weeks after Lehman Brother’s collapse, Satoshi Nakamoto released their now-famous white paper which paved the way for Bitcoin’s emergence. USD Coin issuer Circle initiated a wire transfer in order to remove their funds from SVB but were unable to withdraw $3.3 billion of their $40 billion reserves due to the Federal Reserve increasing its benchmark rate up to 4.5%. This lead to USDC depegging from the U.S dollar which prompted other stablecoins to do so as well resulting in decreased prices across all stablecoins including USDC whose price dropped below its $1 peg.
Crypto Community Responds
The crypto community responded quickly with Ryan Selkis (founder and CEO of Messari) stating “there’s an entire generation of builders who only read about Lehman and the financial crisis and scoffed at Bitcoin“. Other responses included Meltem Demirors (@Melt_Dem) tweeting „the SPEED at which all of this is happening is unbelievable“and Sheila Warren (@sheila_warren) adding „add ‚interest rate driven bank run‘ to the increasingly long list of ‚things I did not think I’d see in 2023“.
Why Bitcoin Was Created
Many have returned to Bitcoin’s roots as a reminder why it was created – as a decentralized form of finance that doesn’t rely on banks or centralized institutions such as government agencies or corporations which can be prone to collapses like what happened with SVB on March 10th. Toby Cunningham (@sircryptotips), summed it up saying “It’s truly amazing how many people are scared that a couple banks went down Someone tell these people WHY BITCOIN WAS CREATED“.
In conclusion, The Silicon Valley Bank collapse has sparked fear and uncertainty among those within the crypto community but also serves as an important reminder why cryptocurrency was created in the first place – as an alternative form of finance that doesn’t rely on centralized entities such as banks or governments around which our current banking systems are built upon .