Since the emergence of a novel coronavirus (COVID-19) late last year, it has been a turbulent ride for most countries of the world. One of the most noticeable impacts of the coronavirus across the globe is a nosedive in the economy. The significant determinants of the economy, including retail, education, travel, and so on, were affected by the many lockdowns happening in different nations. There are many reports of a decrease in the value of many fiat currencies, loss of jobs, falling oil prices, and so on. However, cryptocurrencies are far from the economies worst hit by the C0VID-19 pandemic. The impact on cryptocurrencies has both been positive and negative, and mostly surmountable.
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One of the direct negative impacts of the pandemic on cryptocurrencies is the disruption of cryptocurrency mining. For instance, the Asian continent, which was first hit by the coronavirus, reportedly has nearly 80% of the mining powers of bitcoin. Although many advancements have been made in the technological equipment developed for cryptocurrency mining, there is still a need for people to have access to the mining farms for the entire mining capability to be sustained. The lockdown in the major countries (China and South Korea) disrupted this and this negative impact can be observed in the marked price fall between February and March, 2020. Other prominent cryptocurrencies, such as Ether and Ripple, experienced a sharp loss in market capitalization by March too. All of this caused doubts about whether bitcoin and other cryptos are really a safe zone from the economic troubles. Another plausible reason for this price fall is ‘baby’ investors trying to sell out their coins amidst early panics. Owing to the positive impact recorded, these coins have now regained value significantly.
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On the brighter side, cryptocurrencies have gained more trust and acceptance during the COVID-19 pandemic. This is a profound positive impact. People were able to see through the crisis experienced by traditional banking models in times of political, social, or economic turbulence. Cryptocurrencies were developed to combat such crises. Hence, cryptocurrencies witnessed a steady rise in usage because it gives people the avenue to store monetary value far from the reach of many instabilities. Another positive impact of COVID-19 on cryptocurrencies is the rising institutional use. Blockchain has been technologically developed to perform tasks such as product authentication, storing sensitive data, food tracking, sovereign of currencies, and so on. All of these will drive a corresponding increase in value, especially for bitcoin as the mother cryptocurrency.
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There has also been a need for uniform currency in the booming global space. While this may not be happening with fiat currencies anytime soon, many settings where this is so much needed will gladly adopt digital currencies for this purpose.
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Another potential positive impact of coronavirus on cryptocurrencies can be observed through the rise in remote jobs. Many job descriptions, especially in developed countries, can be carried out remotely. Many companies such as Twitter® are interested in extending this possibility beyond the pandemic phase. This will help to shed more light on the applications of blockchain smart contracts. Smart contracts are self-executing across any decentralized network. They will be of greats use in remote projects, work, programs, etc.
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The COVID-19 pandemic is still ravaging in some parts of the world. So far, notable cryptocurrencies have proven they are a far better powerhouse than fiat currencies. The near future will answer our questions. We would love to know how long these digital currencies can remain infallible. Can the fiat-backed economies make a stronger comeback? Our bet is on prominent cryptocurrencies.
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Since the emergence of a novel coronavirus (COVID-19) late last year, it has been a turbulent ride for most countries of the world. One of the most noticeable impacts of the coronavirus across the globe is a nosedive in the economy.
Written by Saira wo
COINRATECAP