It is arguable that in 2020 the entire world stands at a crossroads, and that therefore cryptocurrency has also reached some kind of turning point. Of course, at a crossroads there is a choice of directions, and right now nearly every economy in the world is spinning in the centre wondering which road to take into the future. What seems certain to many is that the road already travelled may not be the best choice to get economies back on track.
Even before most countries had gone into lockdown, we watched stock markets crash and the oil price collapse. Only a few months later, as a result of businesses being closed due to the measures taken to contain the virus, there is a vast number of people globally who have been left without employment to return to. The virus has nuked the hospitality and tourism industries, many shutting their doors and filing for bankruptcy.
The blockchain sector has not been immune to the challenges of Covid-19, and we have watched as the price of the leading cryptocurrencies has risen and fallen, echoing the state of traditional share prices. It certainly made some pause to re-evaluate crypto as a safe investment, especially when in less than a week after the first reports of coronavirus cases in China came out, the cryptocurrency market collapsed by almost 50%. However, that certainly wasn’t the end of its Covid-19 story
How Did We Get Here? A Decade of Crypto
Amy Day writing for Finance Magnates reprises the history of cryptocurrencies in her analysis of how digital assets have got to where they are now, and it would be pointless to recap it again here, as she has followed the timeline so well, including the proliferation of altcoins – the name stemming from them being an ‘alternative’ to Bitcoin, if you didn’t realise that already.
As Day points out, it has only taken a decade for cryptocurrencies to arrive at their current position, and there has been an enormous amount of activity along the way. She says, “In 2020, during the COVID-19 pandemic and economic recession, it may seem that cryptocurrencies were designed for the entirely new world that we are witnessing now.”
The pandemic has encouraged the idea of a cash-free society, as the virus can be transferred on paper notes and metal coinage. There is also some movement away from currencies that are tied to traditional assets, such as oil. Furthermore, there is a move towards decentralisation on the work front, with working from home suddenly emerging as a winning strategy during the lockdown.
And the cryptocurrency market displayed a substantial recovery after its initial plunge in February. Day points to research by the deVere group that shows Europe experienced a 72% surge in fintech app use fuelled by the lockdown.
Travelling in a Blockchain Direction
It’s also timely to point out that blockchain isn’t just about cryptocurrency. The pandemic has highlighted its other uses, such as vaccine development and medical supply delivery.
Other factors supporting blockchain and suggesting it is may be the best answer for many sectors in a post-Covid world, is the emergence of Web 3.0, which will by default encourage crypto adoption due to new browsers, such as Opera, that support BTC and ETH, and can also make crypto wallets more accessible to regular users who are not tech-savvy, thereby, expanding the crypto community. Then there is the DeFi market, which crossed the $1-billion mark at the beginning of 2020. As Day says, “Even space exploration can benefit from the use of the blockchain system.”
It seems inevitable that blockchain technology in its many forms is the way forward, and that at the crossroads where the world stands now, blockchain and cryptocurrency is signposting the way to our future. However, as Day concludes, “Our task is to embrace these changes and spread awareness of how this technology and movement can improve our lives.”