The current situation with pandemic is going to change the world in the way one can’t predict. What is certain, the majority of us will change the lifestyles and way of thinking as the world will never be the same again. Except the greatest fear about themselves and the close people, the world’s population thrills in the unenviable expectation of economic crisis. People used to think that the 2008 financial crisis was a severe demonstration of world’s shock. However, they say 2020 presents us the biggest emerging markets crisis ever. Can digital money anyhow influence the situation? Let’s have a closer look.
No sudden devaluation of Bitcoins
The famous American author and journalist Kurt Eichenwald shared his opinion concerning digital money. He claims that Bitcoins can be traded or used for purchases, but only with those sellers who will accept them. Because it is a system independent of external meddling, there can be no sudden devaluation of Bitcoins through the actions of governments. At the same time a part of countries are already experiencing currency devaluation.
What happens to Bitcoin is a more or less similar scenario with avalanche-like rides struck mostly by the news of influential whales. They might also talk a lot about the ‘unfair’ usage of electricity for the whole globe, but it still makes no difference on the huge arena. What’s more, the virus attack and its consequences do have an impact on Bitcoin mining, but crypto enthusiasts watched its fall and now the rate stabilizes. The question is whether Bitcoin is able to save user’s money at devaluation.
Will Bitcoin be a security?
The traditional financial system could never agree that there is something to connect security and Bitcoin. Some experts state that cryptocurrencies are just replacements for sovereign currencies. Bitcoin’s rate is extremely unstable and a number of countries have regulations about purchasing a significant amount of digital money or simply restrict it. Crypto opponents find it helpful and support one more approach which seems to be awkward, but still has right to exist.
People prefer the money that are possible to carry, to see and use at once. Especially when the matter goes about crisis. Savings should be in cash, not even a bank account. Being under the influence of general alarm what a person needs is security, and there should be only a tiny percent of those, who are eager to try some risky business. They follow mostly the conservative approach. The most secure assets have been gold and dollars by far. The dollar has always crowned the big winner in currencies. The dollar has obviously been one that has been strong for people. It is complicated to find any alternative now.
Digital money as safe haven
Bitcoin is a digital asset designed by its inventor to work as a currency. They dispute a lot whether it is a currency or not. Crypto enthusiasts treat Bitcoin as a special kind of safe haven. In comparison with other currencies, Bitcoin shows no negative correlations with so-called risk assets. At the times of crisis experts offer to follow separate options to keep the money safe.
There is no doubt that the question is not about the person’s life savings, but a part of funds that are to be invested with no huge wavering for the personal budget. Investing in Bitcoin is not a joke. Yes, it is on the Internet, but Bitcoin itself is secure. Another topic is the wallet storing them and the exchanges to learn and so on. However, it is just a matter of knowledge. Financial experts believe that cryptocurrency is not the best option for investments during a crisis. But it is definitely an option. John Shedd said, ‘A ship in harbor is safe, but that is not what ships are built for’.