Bitcoin and the Covid-19 pandemic – what you should know
Share this article:
Satoshi Nakamoto invented Bitcoin in 2009 as a response to the 2008 financial crisis.
Its performance to date has been impeccable despite the Covid-19’s widespread impacts on the global economy. Economists agree that Bitcoin experienced a temporary hit in early 2020 due to the Coronavirus’ global financial impacts, but it recovered much faster than most people expected. Many investors believe Bitcoin has become even much more potent than it was before the pandemic.
Bitcoin doubles up as an asset class and a currency but, it has several unique characteristics, giving it an edge over other assets and money. The following article explores how the Covid-19 pandemic has impacted Bitcoin.
Many investors have described Bitcoin as a safe-haven asset due to its ability to perform well in highly volatile markets. Bitcoin has steadily held its value in the last two years, with constantly growing prices as the markets experienced turmoil from Covid-19. Besides, Bitcoin’s decentralization makes it impossible for it to bow to political or government influences. Its value mainly relies on consumer confidence.
Bitcoin’s value dropped temporarily during the pandemic but has since recovered with new record prices. As some investors say, the Covid-19 pandemic has proven Bitcoin’s resilience to both social and economic uncertainties. Many investors and corporations now use Bitcoin to diversify and safeguard their assets against market fluctuations.
Renewed interest in virtual investments
The Covid-19 pandemic induced tight restrictions and lockdown procedures that kept most people indoors. That inspired many people to seek alternative investment avenues that they could pursue at home. And Bitcoin is one of the most efficient and reliable virtual investments that continue to attract millions of investors worldwide. Bitcoin is a digital currency that facilitates seamless and less-costly cross-border payments.
The Covid-19 restrictions prompted millions of people to resort to digital transactions, bringing Bitcoin even much closer to the public. The renewed interest in virtual investments and online transactions also inspired the proliferation of several crypto marketplaces such as Oil Profit. Those platforms allow users to trade, invest and send money in Bitcoin.
The decline of traditional banking systems
The Covid-19 pandemic forced banks and other conventional financial institutions to shut their doors for several months. Although many people still use them to transact, there is a growing need for more innovative financing solutions. Several banking institutions have unveiled plans for independent digital currencies; cryptocurrencies such as Bitcoin remain the most popular and sought-after financial instruments.
The lockdown rules made it impossible even for those with bank accounts to access their funds, impacting severe financial ruin. Unlike fiat money, Bitcoin users do not need bank accounts or any institution to transact. Those characteristics have made it more attractive to businesses and individuals worldwide.
Bitcoin enabled people to move money across international borders during the Coronavirus pandemic quickly. Unlike conventional money transfers, Bitcoin remittances are cheaper, safer, and reliable because they do not involve intermediaries. Such attributes have convinced many people to shift towards decentralized monetary systems, significantly increasing Bitcoin’s global popularity and adoption.
Advancements in crypto technology
The pandemic has enormously amplified the demand for cryptocurrencies worldwide. That has also intensified crypto innovations, with many companies creating and developing various products around Bitcoin. Those new technologies and products make Bitcoin more accessible and efficient. However, sustainability remains one of the major concerns for Bitcoin users. Engineers and academics have recently unveiled several crypto innovations, such as green Bitcoin mining solutions. Many crypto mining companies and individual miners rapidly shift to clean and eco-friendly energy, including solar, hydroelectric, and nuclear power.
Overall, the Covid-19 pandemic impacted widespread turmoil in all the global economic sectors. It would take time before some industries get back on track. Nevertheless, Bitcoin has impeccably weathered the storm, with investors expecting steady growth in the future.