Just before World War II, the United States Government began backing the mortgage market. Seventy years later, the attacks on the Twin Towers happened. The Federal Reserve imposed low interest rates to prevent a recession. Investors and financial institutions alike weren’t seeing high-yields and the yearning for higher profits became intensified. Unable to meet a higher demand for higher-yielding investments, the United States made a decision that changed the financial world: mass-producing securities backed by mortgage payments. American consumers bought homes at a record-pace and banking institutions made record profits on securing these mortgages.
That is, until the overextended American consumers began defaulting on their loan payments. Unable to collect on loans, banks (such as Lehman Brothers, Merrill Lynch, and AIG) collapsed. On September 29, 2008, the Dow Jones Industrial Average had its largest single-day loss in its history. With distrust for both banking institutions and government-issued securities at an all time high, an idea was born: a new, decentralized infrastructure for financial transactions. This was the creation of blockchain and cryptocurrency as we know it.
Blockchain and cryptocurrency are essential to estate planning, as all consumers need to know their legal duties as fiduciaries when marshaling assets. You can find out more about blockchain, cryptocurrency, and estate planning, here.
