Guest Post

Bitcoin and Covid 19: What should you know?

Written by: Coinpedia

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Coinpedia

Crypto Journalist and Editor of guest articles in CoinPedia. I am also handling Outreach & Partnerships Manager. Contact me: [email protected]

    Aug 22, 2021

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    The advent of Covid 19 has wreaked havoc in the global scenario. Financial assets and commodities have lost their value to a great level.

    The value of cryptocurrencies have not dwindled due to it being very different from fiat currencies. The value of cryptocurrencies have moved up from 7000 USD in 2020 to 54,000 USD currently.

    This is one of the greatest astonishments in the financial world. 

    However, reasons for the same can be traced back to a few existing facts. The reasons for the rise in value are what one should know.

    It is rather an interesting read to know how cryptocurrencies are behaving in the absolute opposite way of fiat currencies. 

    Reasons for Rise in Crypto Value

    The most important reasons why cryptocurrencies are observed to be Covid 19-proof are listed below:

    • Independent Currency: The most important reason why the value of cryptocurrencies remains untouched in spite of an economic breakdown globally is because it has no regulatory board. It is an independent currency without the regulation or intervention of any governmental body. Fiat currencies and other financial assets are regulated by the policy makers of the state. But cryptocurrencies have not faced the consequences of being regulated by the government. It has existed almost as a parallel economic system.
    • Peer-based Networking: Cryptocurrencies are traded on the basis of peer-based networking and trust. This is a closed network and if the participants decide to trust each other and invest in proper channels, no one will be able to decrease the value of these currencies. This closed network is one of the primary reasons for cryptocurrencies being Covid-proof. 
    • Increasing Demand: With the dwindling value of fiat currencies, people are looking for alternative means of earning money and investing. Cryptocurrencies have established themselves as an alternative economic system and there is a rise in demand among people. But the supply of these currencies is limited. This leads to the rising value of cryptocurrencies in the market.

    Covid 19 Impacting Positively on Cryptocurrencies

    In spite of the market volatility of the currencies, it was observed that people bought cryptocurrencies as assets or investments during the globally raging pandemic.

    This led to having a few positive impacts on the currency, as follows:

    • The prices of bitcoins were as low as 3780 USD in March 2020 before the pandemic started raging globally. Later, during the pandemic, the prices started soaring due to an increase in demand and popularity.
    • The current market cap of bitcoins is 1.1 TN which is half of the total cap of 2 TN.  There has been huge capital accumulation in the cryptocurrency sector, during the pandemic.
    • The pandemic made people realize that the physical worth of things were dwindling. Every platform was shifted to an online alternative. Since cryptoes were cloud currencies from the very beginning, the utility and convenience was realized during the pandemic and many new investors trusted this network.
    • The exchange figures of cryptocurrencies in third world countries like India shot up steeply during the pandemic. People trust on Bitcoin Billionaire about the currency. This also expanded the crypto network and increased the flow of capital within the network.

    Cryptocurrencies were initially banned in a lot of countries. Later the bans were lifted. This was primarily because of many illegal activities that were being conducted with the backing of cryptocurrencies. 

    Conclusion

    Since there were no regulations or policies concerning these currencies, there were more chances of them being used for illegal purposes.

    Cryptocurrencies were also very volatile and not stable assets like gold or silver. However, the pandemic has had more positive effects on cryptocurrencies and the value has increased by many times.

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    Coinpedia

    Crypto Journalist and Editor of guest articles in CoinPedia. I am also handling Outreach & Partnerships Manager. Contact me: [email protected]

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