According to experts in leading crypto firms, the COVID-19 pandemic propelled the development and adoption of cryptocurrency and blockchain technology. Decentralized systems continue shining under the spotlight as traditional models crumble under pressure due to crashing economies.
Crypto and blockchain services are solving problems exposed by traditional financial institutions due to the COVID-19 pandemic. RippleNet general manager Asheesh Birla says in an interview with crypto news site Cointelegraph, ‘COVID-19 pandemic exacerbated the inequities for many people who are unbanked or underbanked.’ The situation shed a light on the worsening problems they are facing which stems from the shortcomings of the current financial infrastructure.
RippleNet solves this problem by using crypto and blockchain technology in cross-border transactions. Ripple’s solutions have lowered the cost of remittance payments and shortened processing time by partnering with major banks and payment solutions companies such as Bank of America and MoneyGram to name a few.
Fiscal and monetary policies cause a mass exodus to crypto
Cryptocurrency has proven its status as a ‘safe haven’ from inflation after governments have imposed fiscal and monetary policies to curb the effects of the pandemic. The United States Federal Reserve alone has printed up to an estimate of $15 trillion. ‘The United States printed more money in June than in the first two centuries after its founding,’ confirmed Dan Morehead, the CEO of investment firm Pantera Capital in an interview with Cointelegraph.
The increase in supply causes rapid inflation according to basic economic laws. Furthermore, this will also cause the devaluation of the dollar. Morehead adds that investors are aware of the effects these policies will cause, thus they get ahead of the oncoming inflation by shifting to decentralized monetary systems such as Bitcoin. Bitcoin has a hard cap of 21 million to assure scarcity and the supply of new Bitcoins added to the market are reduced in half every four years as a way to cut inflation rates.
Mike Belshe, the CEO of institutional digital asset platform BitGo notes that institutional firms such as investment banks and major custodians are moving to cryptocurrencies since they are a hedge against inflation and act as a safe storage of value. Belshe adds that due to government policies, ‘COVID-19 has significantly accelerated the adoption and interest in digital assets and crypto around the world.’
NEO and OnChain founder Da Hongfei highlights the increasing demand for blockchain adoption and innovation caused by the global pandemic. He adds that COVID-19 revealed the weaknesses in the current paradigm and it also highlighted the pressing need for blockchain technology today.
It can be leveraged in building a decentralized supply chain which can distribute products more efficiently based on how badly they are needed by a specific area. Blockchain can also be used in tracking and tracing infection cases while protecting the privacy of patients. Hongfei sees a need to break from our current paradigm ‘to embrace a truly digitized and globalized world which has the flexibility, agility and efficiency to flourish and thrive.’
The World Health Organization officially categorized the COVID-19 situation as a pandemic on March 12, 2020. Governments announced nationwide lockdowns, bans and prohibitions in gatherings in response. A significant number of businesses have closed down causing a rise in unemployment rates. The stagnation in economic activity caused economies and industries to drastically drop.