The rapid spread of the COVID-19 virus and the actions taken to curtail it has had an unprecedented impact on the business and financial world. Most of these industries have been affected negatively, with businesses closing down and people losing their jobs, creating a worldwide recession.
Like all the other industries, the crypto industry has been hit by the pandemic, both positively and negatively. People have moved to cashless methods of storing and transferring value leading to increased adoption of digital currency.
On the other hand, the pandemic has affected the mining of cryptocurrencies such as BitCoin, especially since the virus has hugely affected Asian countries like China and South Korea, which have most of the currencies’ mining powers. If you are a crypto investor that is keen on how to trade the news, some takeaways are crucial.
Here are some of the key takeaways on COVID-19’s impact in the crypto industry.
COVID-19 Has Accelerated The Adoption Of CryptoCurrency
The stocks and securities in the open market have been plummeting during the pandemic and by March 2020, they had dropped by 30%. Investors, unsure of the economic and financial effects the virus will have on traded stocks, are opting to invest in safer and more stable assets, including cryptocurrency.
Bitcoin and other cryptocurrencies lack governmental controls and already have established regulations for mitigating inflation. This makes the currency a good hedging option, even if the traditional markets collapse.
The disconnection of the cryptocurrency from other traditional currencies and financial options makes it useful as a store of value as these other options collapse.
Increase In The Use Of Blockchain Technology
The spread of the pandemic across the world and the deployment of resources to help contain its spread, together with the mistrust in the old systems has increased the need for blockchain technology.
The technology can offer safer, more efficient and more accountable ways of resource distribution. Government institutions and NGOs are making use of the technology to effectively distribute and account for the COVID-19 resources.
Blockchain technology has also made trading in currencies easier for investors by making inter-currency trade more secure, transparent, reliable and time-saving. The pandemic has reduced the options available for trade by these investors, making them take a better look at the technology.
CryptoCurrency, An Alternative to Hard Cash
Most governments have encouraged the use of non-cash payments in business transactions in a bid to curb the spread of the COVID-19 virus. This has led to the adoption of digital modes of payments for goods and services, including cryptocurrencies.
Before the spread of the virus, investors mostly used cryptocurrencies as a store of value. The move to cashless payments has however expedited the acceptance of the currencies as mediums of exchange.
Increase in Crypto Fraud
Many families across the world have lost their sources of income due to the COVID-19 virus. This has made people seek other means to earn a living, including some illegal means such as crypto fraud.
The Twitter bitcoin fraud is one of the most recent scams and around 130 high-profile accounts were hacked.
How The Crypto Industry Has Been Affected By COVID-19
The business and financial world, including the crypto industry, has been changed immensely by the spread of the COVID-19 virus.
This industry has experienced growth and increased acceptance during lockdown since it offers alternative payment methods to traditional cash, which contributes to the spread of the virus. Negative effects of spread of the virus include an increase in crypto fraud.