To say that the COVID-19 pandemic has changed a lot of things is an understatement, yet perhaps nowhere is this more true than when it comes to cryptocurrency.
Over the years, cryptocurrency has gone from a perception of it being dodgy at best (with fears that it will be mainly used for illegal activities like black market dealing and money laundering) to a legitimate investment vehicle. Under COVID-19, the cryptocurrency market has performed better than ever and this has led to much speculation that the pandemic could be the trigger for its mass mainstream adoption. After all, it was in July 2020 that bitcoin — long the most popular cryptocurrency around — soared past a $10,000 (USD) valuation.
Indeed, with cryptocurrency making all sorts of inroads recently it begs the question: how might the pandemic change the way people perceive cryptocurrency?
Its increasing necessity will legitimize it
The unparalleled contagiousness of COVID-19 has made people so much more conscious of bacteria on the things they touch and handle. It’s therefore no surprise that cashless transactions have seen a dramatic surge in the past year.
Although many of these cashless, digital transactions often done through online banking, there’s an opportunity here for cryptocurrency as well. Consider that PayPal supports cryptocurrency are starting to provide cryptocurrency transactions — businesses might want to start taking a look at crypto as an alternative means of payment.
It’s also become easier than ever to accept cryptocurrency in a brick-and-mortar store. We have manufactured point-of-sale machines called the XPOS that enable stores to transact with crypto. In fact, ever since the mass production of its devices back in early 2018, the XPOS has already been deployed in over 30 countries worldwide.
The combination of growing retailers and solutions is a nail in the coffin to the argument that crypto is impractical and that nobody really uses it. The increased demand for digital payments will see to it that rather than being just a handy payment option, incorporating crypto may even be key for some businesses to survive.
DeFi and crypto’s time to shine
With record numbers of unemployment and tons of businesses everywhere having to shut down, 2020 is a year of financial crunch. This global economic crisis will inevitably lead people to look for additional income and a way to grow their assets — and this is where decentralized finance (DeFi) comes in, one of the fastest-growing sectors of the cryptocurrency industry yet.
DeFi is an umbrella term for a range of financial applications and/or products geared towards decentralizing traditional financial services like banking, trading, lending, and so much more. DeFi has also been a vital part of many cryptocurrencies as it enables smart contracts between parties that remove intermediaries one might find in traditional banking.
Aside from the savings accumulated from not having to deal with middle men and the like, DeFi has also grown popular as an innovative and effective way to channel the usage of capital. DeFi’s decentralized network of lenders and borrowers has given rise to the practice of “yield farming”, where traders lend or borrow cryptocurrency to profit off its interest and/or receive all new digital tokens. With currencies like Bitcoin then seeing a rapid rise in its valuation in just this year alone, it isn’t hard to see why crypto is now being seen as a great store of value.
The pandemic will push people to look for alternative digital financing solutions and DeFi has made sure crypto is an opportunity ripe for the taking.
Photo by Jason Briscoe on Unsplash
Government responses to the pandemic show it’s an asset
Reeling from the economic effects of COVID-19, world governments have gone into crisis mode. The US government, for example, cut interest rates, filed for trillions of dollars in loans, and increased its purchase of US treasury securities in an effort to stabilize the national economy.
According to Bitcoin tycoon Mike Novogratz, the situation couldn’t present a “better macro story” for owning the currency right now. With fiat currency showing unprecedented levels of instability these days, it isn’t so unthinkable to start looking at crypto in a more favorable lights.
Although the COVID-19 pandemic is certainly no blessing, it is perhaps one of the catalysts to grow the crypto adoption with public perception towards it slowly turning positive. Years from now, it may even be looked back on as the turning point for the world and the rise of a newer, efficient financial system.
