Bitcoin (BTC) is again drawing attention for having emerged as an alternative to the 2008 global financial crisis and large-scale bank bailouts. An analysis says monetary expansion policies by governments during the crisis exposed the limits of the existing currency system, helping spur Bitcoin, which operates without central control.

On June 29, local time, blockchain outlet Bitcoin Magazine released an analysis outlining the 2007 to 2009 global financial crisis, monetary expansion policies and the background to Bitcoin’s emergence.

The outlet said the U.S. Federal Reserve sharply cut policy rates and eased financial conditions after the 2000 dot-com bust and the Sept. 11, 2001 attacks, leading to a housing market bubble. It said that as the 2007 to 2009 financial crisis hit, mortgage-backed securities (MBS) that had fallen sharply in value spread across the financial system, triggering a chain of crises among major institutions including the collapse of Lehman Brothers.

During the crisis, governments and central banks moved to provide large-scale bailouts and expand money supply to prevent the financial system from collapsing. Central banks bought government bonds and cut policy rates, while supporting banks so they could raise funds at low cost. Peter Praet, then the European Central Bank’s chief economist, described this in the documentary "Oeconomia" as "creating electronic money rather than physical money."

Bitcoin Magazine said such monetary expansion policies structurally dilute the purchasing power of existing currency holders. It said newly supplied funds flow first to banks, corporations, governments and borrowers, while existing cash holders bear the impact of currency depreciation.

The outlet said inflation also has an effect similar to a tax, but the general public often does not recognize it as a direct tax.

Bitcoin emerged as an alternative to this financial system. Satoshi Nakamoto released the Bitcoin white paper on Oct. 31, 2008, about 6 weeks after Lehman Brothers filed for bankruptcy protection. Nakamoto then started the Bitcoin network on Jan. 3, 2009 and created the first block, the genesis block. The block included the message: "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." The phrase was the headline of an article in British daily The Times and is widely interpreted as a message criticizing repeated bank bailouts.

Bitcoin Magazine cited a 21 million cap on total issuance and the absence of a central controlling body as key features of Bitcoin. It said that in such a structure, central banks cannot arbitrarily issue additional currency. It also said users who store assets directly through personal wallets can be relatively free from risks such as bank failures or account freezes. The outlet also presented as an important feature of Bitcoin that central authorities find it difficult to unilaterally restrict users’ access to their assets.

The outlet also said the existing financial system is structured to repeatedly expand money supply whenever an economic crisis hits. It said various crises, including climate change, pandemics, wars and demographic shifts, can be used as justification for additional liquidity supply.

It also introduced a quote attributed to Mark Twain and cited in the film "The Big Short": "It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so." It said this was an example showing such awareness of the problem.

Bitcoin Magazine ultimately assessed Bitcoin as an open network designed as an alternative to unlimited money issuance and repeated responses to financial crises. It stressed that the biggest difference is that Bitcoin is not a currency that people are forced to use, but a decentralised financial system that anyone can join voluntarily.