Cryptocurrencies amid COVID-19 Pandemic: Our Saving Grace?

During the past decade, the technological advancements in numerous spheres had been moving forward at an astonishing pace, leading many people to believe that the future, as long portrayed in animated films and video games, is drawing ever closer. However, the halt hammer was swung just as unexpectedly and swiftly, this time in the form of the COVID-19 pandemic. The outbreak managed to destabilize the whole world in a matter of months and currently threatens to destroy many global businesses, economic boundaries, and even the fundamentals of our financial system, that we spent ages to erect.

Despite the global crisis and numerous uncertainties regarding the origins of the virus, through a combined effort, the world has been able to keep matters under control, at least when compared to other outbreaks. A Reference can be made to the not-so-long-passed Spanish Flu of 1918-1920 when around 25% of the world population was infected and an estimated average of 40 million people died.

I’d like to stress that this combined effort has been made possible largely due to technology, which allows people to stay connected, consult doctors through video conferences, master the resources required to build a new hospital in a matter of days, and even somewhat secure your finances by investing in digital assets. Indeed, a few years before the COVID-19 stepped into the scene, the cryptocurrency space was slowly maturing, boosted by the possibilities to reform or, I’d prefer to say, improve, our current financial system.

The Unfavorable State of the Crypto Market

Naturally, since the cryptocurrency market is extremely volatile, young, and unstable, it comes as no surprise that it took significant hits during the past couple of months. Just a month after BTC crept over $10,500, a new high price in over 20 months, it crashed by almost 45% in a matter of hours to $3700, before rebounding to around $5000.

As the case has always been, the runner-up cryptocurrencies followed the downward trend and fell by more than 30%, with the exception of USDT. However, during the difficult times of oil price wars and global stock market decline, such figures are to be expected, and by no means is this the end for crypto. On the contrary, we still have much to look forward to.

The Digital Century and Our Oldest Values

Since ancient times, gold has been the sanctuary of investment and fund protection during any crisis. Despite numerous price fluctuations and other inconveniences, the value of gold has been rising steadily throughout our history, and, unlike currencies, has never been reduced to zero. Also, gold has been traditionally used to back paper money back in the day, however, it isn’t the case anymore. As a result, the economies grew bigger and more paper money was printed, and it eventually got to a point where its stability during global cataclysmic events such as the COVID-19, became quite shaky.

Enter the 21st century.

With the emergence of digital currencies and BTC especially, the investing principles changed for many. From an investment perspective, BTC has multiple advantages over gold. It isn’t reliant on transportation and logistics, it can be acquired by virtually any person on the planet and doesn’t require much effort to do so. Frankly, you don’t even have to leave your home.

Throughout the past decade, the number of BTC holders continued to increase at a growing pace, which exploded after the peak BTC price of $20,000 in 2017. Furthermore, over half of the total BTC supply hasn’t been moved over the past year. This goes to show that BTC is more than capable of holding a candle to gold, and although the numbers are nowhere near close right now, that may change in a couple of years.

The Never-ending Debate

All the talks and debates surrounding cryptocurrencies and BTC have never been pretty. Many believe that the cryptocurrencies are here to completely shatter and reform the current financial system, liberate the world from centralized institutions and control, while others regard it as a highly volatile, unstable asset, which cannot, by nature, be used as a foundation for any economy.

Whatever the case may be though, one cannot deny the benefits of digital currencies – the absence of complex supply chains and logistics, and the fact that BTC can be sent and received from the safety of your home. Moreover, the transparency, immutability, and security of the blockchain technology add even more credibility to the case. And in fact, governments with vulnerable economies agree with this.

Recently, the Supreme Court of India has lifted the ban on financial institutions that prevented them from financing cryptocurrency companies from the Reserve Bank of India. This has led to a significant increase in the cryptocurrency trading volume. As reported by WazirX, a Mumbai-based cryptocurrency exchange, the sign-ups have increased by 25% during the lockdown, and the daily trading volume has increased by 60%. Needless to say that countries like Japan, Singapore, and Switzerland have been doing their best to embrace the benefits of digital currencies, even before the COVID-19 outbreak.

Furthermore, BTC has numerously been forecasted by many millionaires, venture capitalists and investors to hit insane price points – well over $250,000 – during the next five years. One of these people, Tim Draper, a renowned venture capital investor, went as far as to say that Bitcoin will be our saving grace once the crisis is over.

Entertainment for while you are holed up. When the world comes back, it will be Bitcoin, not banks and governments that save the day.

Apart from being extremely bullish in his predictions, Draper is also heavily invested in decentralized finance projects, and also in governance tokens like DMG.

The Future is Already Here

Let’s face it.

Even with advanced technologies at our disposal, the COVID-19 virus proved how fragile our current financial infrastructure is, much like gold (the irony). In a matter of 4 months, it showed how severely a crisis can disrupt the global economy, which will take years to rebuild. If this isn’t a big, red, screaming sign that the tides have turned, and that we need a new, more reliable, convenient and sustainable investment asset, I don’t know what is.

other blogs