Coronavirus has been the biggest disrupter of the 21st century worldwide. It has drastically changed the lives of people in a short time and overhauled the functioning of economies. There has been a rapid shift towards online payments and Cryptocurrency development rose to the occasion as people fear that the virus may be transmitted via currency notes and coins.
Bitcoin, the leader of the cryptocurrency industry has surpassed the $18,500 mark which is its highest since December 2017. It also serves as an effective hedge against inflation and government intervention.
The vulnerabilities of the existing financial system were shown as they could not serve the unbanked and underbanked sections of the population due to the ongoing pandemic. Ripple has been a blessing in disguise as it uses blockchain technology to reduce the costs of cross-border fund transfers. Many companies like PayPal, Blockchain App Factory, and Square are also betting big on the future of cryptocurrencies by investing in Cryptocurrency wallet development and accepting payments made in crypto as part of their business operations.
The supply chain system has been tremendously affected by the virus as goods are failing to move from one place to another due to the various lockdown phases and travel restrictions imposed by the various governments across the world.
Blockchain technology helps in ensuring a decentralized system and can distribute products by analyzing the needs of specific areas. Blockchain technology can be used in different sectors like financial services, food industry, supply chain management, and data storage.
The Direct Influence of COVID-19 on the adoption of Cryptocurrencies
Though cryptocurrencies can be labeled as a mainstream asset in some economies, it is yet to be fully institutionalized. It is one of the best investment avenues for portfolio diversification. The other traditional mode of investments like the stock markets and bond markets have crashed more than the cryptocurrency market.
With businesses focusing more on strengthening their digital infrastructure due to the work from home culture, remote financial services and Cryptocurrency payment gateway development have become more common now. Virtual currencies backed by Cryptocurrency development have stepped in at the right moment.
Bitcoin halving is also set to occur this year, and it may lead to a decrease in its price since there is a limited supply of 21 million coins. It omits the role of intermediaries and can be used for different purposes like payments, acquisitions, and settlements effectively.
Another factor that has led to a bullish run of cryptocurrencies in the market has been the massive fiscal stimulus packages announced by governments around the world to revive their economies from recession.
Central banks of different countries are also seriously contemplating to issue their own digital currencies. The performance of investment alternatives like Gold and the US Dollar has weakened. The number of active Bitcoin addresses has climbed to a record 1.2 million in 2020, showing a lot of organic growth.
According to Mike Belshe, the CEO of Bitgo, which is an institutional digital asset platform offering services like portfolio management, tax reporting, and wallet integration, there has been more interest in digital assets now. Covid-19 has accelerated the use of crypto in the whole world.
Economies around the world are battling high inflation as the fiscal policy of the governments has resulted in them printing more currency notes, reducing the value of the traditional fiat currency. Digital assets act as an effective store of value amidst this uncertainty. Bitcoin has become an important part of every investors’ portfolio.
The Repercussions of Coronavirus on the Usage of Blockchain Technology
Many commercial banks will be forced to come out with blockchain products. Italy’s banking sector which comprises more than 100 banks uses a blockchain network named Spunta for facilitating smooth interbank reconciliations.
With the usage of cash decreasing in many developed countries, banks are concentrating on shoring up their digital payment services by offering incentives for Cryptocurrency payment gateway development. The co-founder of Ethereum, Joseph Lubin who is the head of ConsenSys now, is working on a variety of central bank digital currency projects in nations like Hong Kong, France, Australia, and Thailand. They cover different areas like asset management, capital markets, decentralized finance, global trading, and Cryptocurrency wallet development.
Blockchain technology provides a lot of advantages as it can manage data in a trustworthy manner by storing it in immutable blocks. It eliminates unnecessary paperwork in different systems by digitizing all the processes. It prevents compliance violations by business firms. It helps in enabling complete automation without the need for any human involvement and can be used in identity management.
Blockchain-based tokenization of securities is being eyed as the next big thing in capital markets. It has different use cases like tracking high-value goods, making supply chains more secure, contact tracing, verifying data integrity on a real-time basis, and saving money on remittances. It can help in preventing fraud as it operates through a decentralized platform without requiring any central supervision.
Some of the leading companies that are pioneering the use of blockchain technology include Microsoft, Mastercard, Airbnb, Huawei Technologies, J.P Morgan, Walmart, IBM, and FedEx. The various industries that blockchain can disrupt are banking, instant messaging, education, cloud computing, entertainment, real estate, insurance, and healthcare.
Blockchain technology can be used in the fight against Covid-19 by identifying cases accurately, enabling tracking of patients, facilitating real-time data sharing, ensuring regulatory compliance, streamlining the communication between the different stakeholders, identifying the virus-free zones, and reducing the chances of information falsification.
The Future of COVID-19 & How it can Change Blockchain Technology & Cryptocurrency as a whole
With the coronavirus pandemic not going to end soon, business firms need to fastly adapt to the usage of cryptocurrencies and blockchain technology in their daily operations. New financial products will be developed in emerging economies. Cryptocurrencies have proved to be highly resilient amidst the severe economic crisis caused by Covid-19. There has been a vast interest in investing in digital assets among both institutional investors and the general public.
The urgent need for the industry is progressive regulatory measures and avoiding any sort of anarchy. Investments in cryptocurrencies depend on various aspects like demographics, markets, and economies. Many countries like Japan, Australia, South Korea, and Switzerland have voiced their interest in institutionalizing cryptocurrencies in the years to come. Countries like India and Pakistan have not banned the usage of cryptos. Positive regulations will create more jobs in the industry and also a greater tax revenue for the government.
Cryptocurrency exchanges need to lead the way by immediately flagging suspicious transactions by scrutinizing the fiat deposits and withdrawals made from bank accounts by their users. They need to work in tandem with regulators to remove any bad actors from the system and enhance their customer protection framework to provide more value to the users.