6 Major Ways COVID-19 Will Affect the Crypto Industry
With over 23.5 million people infected across the world, COVID-19 is reshaping life as we know it. Not only that the virus has forced us to stay home but it has also turned the economy upside down. Every industry got affected in its own way and some are dealing with it better than others. For example, it’s believed that the coronavirus will cost the tourism industry at least $1.2 trillion. But what everyone is wondering is how the COVID-19 pandemic will affect the crypto industry. If you want to find the same, you’ve come to the right place.
The popularity of cash will decline
It’s no secret the world has been transitioning to a cashless society for years. While we may not be there just yet, the emergence of digital currencies has definitely speed up the process. More and more people are paying for stuff using cryptocurrencies and even more will do so in the future. In addition, some governments are considering going cashless. For example, the popularity of cash in Sweden has been dropping ever since the 2009 Västberga heist and only 13 percent have used it in 2018. The country has even started their own digital currency called e-krona. Crises like the one we’re experiencing at the moment can bring even more pace to changes like this. Even though studies say currency doesn’t transmit the coronavirus, people feel it’s safer paying for stuff digitally.
Banks and regulators will look at crypto
Ever since they emerged, digital currencies have made a lot of noise. Still, banks and regulators refused to go after crypto and they’ve stuck with traditional currencies. This was even the case in countries such as Switzerland where banks like SEBA and Sygnum have seen some traction. However, the coronavirus has caused them to take a fresh look at crypto as they look to minimize their losses during the pandemic. With their “traditional” assets not performing well enough, they will have to make a change in approach. The volatility of cryptocurrencies makes them exactly what banks are looking for in a situation like this.
Digital currencies will replace gold
If you look at how investors handle things, you’ll see that all of them diversify their portfolios. For ages, gold has been one of the best assets you can get when you want to add something to your portfolio. This is mostly because gold has always performed extremely well. When the coronavirus pandemic started, all investors wanted to get this precious metal and use it to store their wealth. However, the pandemic turned out to be even worse than expected and borders were shut down. This caused logistics to become a huge issue and investors had to turn to something else. They decided to go for digital currencies as you can buy and sell them from home. Most of them started by allocating 4 percent of their portfolio to digital currencies but we may see this number increase in the future.
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Digital currencies will perform well
As mentioned earlier, many industries aren’t doing well at the moment. Besides the tourism industry we mentioned earlier, the entertainment industry and the restaurant industry are suffering huge losses. Just in the US, 16,000 restaurants have been permanently caused as a result of the pandemic. The good news is that some industries aren’t suffering the same way and the crypto industry is one of them. In fact, many view digital currencies as the safe haven in times like this. With that said, if you don’t own crypto at the moment, buying some might be a good idea. For starters, look at Litecoin predictions and get ready to add this peer-to-peer cryptocurrency into your crypto wallet.
Blockchain technology will rise even higher
If you’ve been online for the past few years, you had to hear a lot about blockchain technology. It’s this tech that makes digital currency transactions take place. Even before the pandemic, everyone was extremely enthusiastic about this tech. This was mostly because it eliminated third parties from the game and it made transactions take place in a matter of seconds. But now, when we are forced to look at everything from a new angle, the future may be even brighter for this tech. Many believe that the doctors and researchers will use this tech to transfer information in real time and work together on fighting the virus. With the role of blockchain increasing, digital currencies will blossom as well.
Crypto mining might suffer
More than 70 percent of the mining power of Bitcoin is located in China and South Korea. Given the fact that the coronavirus pandemic broke out in Asia, it was natural for crypto mining to suffer. Luckily, the nature of crypto mining is such that you can get the work done from home as long as you have an effective crypto mining rig. While miners continued to do their work, the pandemic did cause more issue to the crypto market. Isolation and quarantine have made it impossible for some miners to update their rigs, causing them to use equipment that is exposed to certain inefficiencies. As a result, Bitcoin suffered a 15 percent drop in March.
Nobody knows how the world after the COVID-19 pandemic will look like. With the way things look right now, the future will be bright for digital currencies. If you’ve ever thought of buying it, now may be the perfect time to do so.