The COVID-19 outbreak has managed to consecutively sabotage and reshape the world as we knew it within just a few months. Economic systems have been shaken to their cores, financial institutions thought to be stabilized have taken unfathomable damage as economic boundaries have shifted and shown clearly why it’s high time to adopt upgraded financial systems.
The pandemic is obviously something that appeared out of nowhere, just like all of the previous global plagues that nobody saw coming. There’s one thing making all the difference this time around, though: humanity is now more connected than ever before, thanks to the internet. We were very quick to entirely switch over to some underrated, pre-existing solutions like work-from-home, online education and shopping, and digital currencies not limited by the restrictions of centralized fiat money to sustain ourselves.
Digital currencies, or cryptocurrencies, if you will, have been around since 2009, when the OG crypto Bitcoin was launched. Bitcoin and the decentralized ledger technology behind it – the blockchain, have revolutionized the financial markets, and set the bars quite high when it comes to quick, transparent, and wholly reliable financial transactions. The general populace, however, has been dubious at best and downright hostile at worst towards crypto all these years; until COVID-19 appeared out of nowhere, that is.
In the times before crypto, gold was considered the sole reliable asset that’d persist even when all else failed. After all, despite some major snags and price shifts, the value of gold has only increased over the years, and as opposed to fiat money, has never had its worth go down to zero. But then Bitcoin came along, with a highly enthusiastic and steadily developing fanbase and a nearly unblemished track record in the markets.
So basically, gold and Bitcoin had been contenders for a while now. However, the COVID-19 situation gave Bitcoin a clear upper hand.
Well, gold inventors have to at least partially rely on the likes of financial organizations, transportation protocols, and logistics sectors, all of which have ceased to function properly due to the pandemic. On the other hand, Bitcoin, being a virtual currency, exists over the internet and therefore is neither restricted by real-world calamities nor reliant on any centralized organizations.
Investing in the traditional assets right now wouldn’t be the best move. This is a fact that a large part of the financial markets seems to have realized already. Consider gold, for example. Its value in the US market reportedly did go up to $1700 in May, but began to hike down almost immediately. It’s a similar situation in other markets, and the value of INR itself is also falling quickly against the US dollar.
Contrarily, Bitcoin values have stayed constantly stable. The prices rose up to $10,367.53 in mid-February, and as of the end of September 2020, the approximate price of a bitcoin was $10,728.25.
Source: Deutsche Bank
As many finance experts predict, since COVID is here to play the long game, the financial institutions aren’t going back to being fully operational any time soon. Many argue that cryptocurrency remains the only sensible alternative at this point, and it indeed does seem to be gearing up to play a major role in revolutionizing the financial sectors in the coming times.
Hm, I’m not convinced. Why do you say cryptocurrency, of all things, is the future?
Let’s take a look at some of the key qualities cryptocurrency brings to the table, shall we?
Cryptocurrency Gives Your Personal Data the Maximum Possible Security
The biggest advantage cryptocurrency has over gold or any other assets is the privatized aspect of it. As consumer expectations and demands have changed over time, encryption to secure private information has become the norm. At a time when even casual messaging apps like WhatsApp have opted for end-to-end encryption, it’s only practical to demand full security of personal financial information as well. However, with the centralized online databases various financial agencies use, consumers’ personal data is all but up for taking in case of any hacker attacks.
Cryptocurrencies bring forth a financial system that has a global reach, allows instant fund transfers, and charges low transactional fees – all of it with increased privacy protections. Blockchain tech records the data of every transaction on a public ledger while also maintaining the users’ privacy by documenting only their digital signatures (which is like a social media username, in case you weren’t aware).
Traders on the chain are given private keys so they can initiate transactions with no need for any intermediaries. Plus, some cryptocurrency exchanges like WazirX have even come up with KYC protocols to match those of any financial institution.
You Are in Charge
As mentioned before, cryptocurrency gives you the full freedom to control your own funds without a centralized organization holding power over your money. In crypto transactions, only the counterparties are involved, and they make the rules. Anyone with an internet connection (given there are no location-specific laws or other issues) can buy, store and transfer digital assets without needing an authority figure to watch over the trades.
Given that the world has seen more economic mishaps due to the usual global financial systems’ unreliability and instability in the past few months than in years before, having full control over your assets and the independence to move, trade, and invest them however you please is definitely assuring.
Cryptocurrencies Are Designed Such That Their Value Isn’t Artificially Dictated
As opposed to fiat currencies and tangible assets, cryptocurrencies are always fixed in number. For instance, there will only ever be 21 million bitcoins. For many cryptocurrencies, the blockchain system is designed in a way so that there’s a definite number of coins to be mined, which successfully reduces the chances of an economic crisis, like the one the global economy is currently facing due to COVID- 19. Therefore, their value is only a function of market demand, not specific policies that can be conjured up at all. So digital assets are assuredly a more predictable and safer investment alternative for the common population.
In very recent times, we have seen many renowned public figures and organizations backing up cryptocurrency and utilizing digital assets in the fight against the pandemic. With the worldwide children’s charity UNICEF investing in technology companies with Ethereum and the American billionaire and venture capital investor Tim Draper adopting Bitcoin and broadly acknowledging its usefulness, it’s only a matter of time before cryptocurrency becomes the standard mode of investment and payments.
One thing is for sure: as the world devises newer, innovative schemes every single day to push back against the pandemic, cryptocurrency’s value, as well as its integration with regular life, will only continue to grow. From grocery shopping to business transactions, in a post-COVID world, digital assets hold the potential to take over the entire financial system. As Tim Draper himself predicts in an interview with the 415 Stories Podcast: “…when the world comes back, it will be Bitcoin, not banks and governments that save the day.”