Let’s dive into various pointers that signify the role of cryptocurrency post Covid era:
- During pandemic crisis of coronavirus government and banks observe a high risk factor in handling of cash because paper currency has a high potential to carry virus and bacteria as it involves change of hands between unknown people many times a day. Previous researches during 2015-16 in India have concluded that almost 60-90% of currency collected from various peoples including doctors contained virus, fungus, bacteria and other pathogens that can cause various diseases. Some of the major institutions like Deutsche Bank has stated that this pandemic could be the tipping point for digital currency adoption. To overcome the spreading of virus through currency notes, people/ institutions will start adopting digital payments systems like cryptocurrencies. This will also lead to new job opportunities being created in this domain.
- Cryptocurrency is not connected to the traditional system as various other assets because of this the price movement in crypto is not affected due to such pandemic but we saw a dip in price for bitcoin during the initial days as the stock market crashed. The reason behind this dip in cryptocurrency can be directly linked to the adoptability of the currency as people are not able to buy goods from crypto which makes a leakage in the system and disrupts the circular flow of the currency. Bitcoin rebounded pretty well and faster than the stock market. Bitcoin is considered similar to gold as the currency in circulation is limited and it is also decentralized. During this pandemic, cryptocurrency is able to provide access to various services that traditional banking is not able to provide or provide more expensively. This will drive people more towards use of cryptocurrency.
- Banks will start issuing their own cryptocurrency as during pandemic times these currency could be very useful. Central bank of china has already started issuing its own digital currency and will be in circulation in near time. This type of pandemic will directly link to creation of central bank digital currency which can help government send money to people quickly and directly. Many relief funds have also been established for institutions but it is very difficult to reach them right now when they need the money, Cryptocurrency can also be useful in this scenario.
- Various countries have different regulations for cryptocurrencies some of them accept them as any other asset while other completely ban the use. After this pandemic as users understand the importance of crypto it will lead to a positive outlook for such currency and ultimately lead to more acceptability by governments and regulations would be easier for public use.
- As some of the countries would soon start struggling with issues of hyperinflation and currency devaluation as world will start recovering from this pandemic. During these times we can expect in huge increase in adoption of cryptocurrency as citizen would lose believe in there nations currency and start moving towards cryptocurrency to have something more stable and this kind of behaviour is already seen in past in case of Venezuela.
As these factors show that after this pandemic situation cryptocurrency adoption will be improved and as an effect people will start understanding importance of cryptocurrency and start implementing them. Even countries will start legalizing cryptocurrency and including also central banks will look forward to create their own digital currency. This currency will also enable us to eliminate use of cash.