Digital Currency Revolution Series: Are Purposes of Cryptocurrencies Serving Amid Crunch Time?

We all know that the essence and concept of cryptocurrency was incepted during the last global financial crisis. An anonymous person named Satoshi Nakamoto came up with the frameworks of pioneer cryptocurrency (namely, bitcoin) with an objective of combating such financial crisis in the year of 2008.

As the total reported death cases exceeds due to the deadly contagious coronavirus, almost all markets have halted with a trauma.

This week delivered the first concrete economic reports beginning to document the magnitude of the global economic disruption owing to COVID-19. Despite the containment measures kicking into high gear only midway through the month, the March news is sobering and validates our forecast that the global economy contracted sharply last quarter. 

Covid-19 Merchandise Attracts Cryptos: Amid swiftly widening novel virus threatened major masses of people, consequently, they are rushing to equip themselves with the preventive gear such as N95 respirator masks, gloves, sanitizers and daily essentials etc. 

Quarantined masses tend to transact via Bitcoin (BTC) amid Covid-19 apprehensions. While the limited supply amid mounting demand drives the exorbitant prices of these merchandises. As a result, the Darknet platforms offer “COVID-19 test strips” accepting cryptos as medium of exchange.

Blockchain Plays Crucial Role: The underlying technology behind cryptocurrency has also been playing its role efficiently. With the cognisance of efficient utilization of blockchain technology during health emergency conditions, the developer of Blockchain-driven applications, such as, Acoer, has come up with a much necessary tracker application which is the data visualization tool for ‘Contagious & Fatal Coronavirus’.

The Underlying Price Stability: The major forex and equity markets have been extremely turbulent, while commodities have tumbled to their multi-years’ lows including crude oil. 

While the price of Bitcoin (BTCUSD at Coinbase) has been stabilized and rebounded with the intensified buying sentiments amid the struggle of the financial markets due to pandemic outbreak. The price of bitcoin has now reclaimed $7,400 mark and stabilizing well these above (currently, trading at $7,419 level). It has bounced from the March lows of $3858 levels to the prevailing $7,419 levels, thereby, a mammoth 92% jump in just fortnight or so. Due to which, the total market cap is finally reclaiming beyond the $200 billion mark. 

CBDC Developments: On the prevailing backdrop, the development of the PBoC’s digital Yuan appears to be indulged by the ongoing COVID-19 pandemic. On this matter, conference-call was scheduled by the officials of PBoC on April 3rd. Primarily, the developments of the digital renminbi was discussed.

With that perspective, BoK now appears to be positioned in an anticipation of moving in tandem with the paradigm shift in the payment mechanism in the days to come, the essence for the inception of the central bank digital currency (CBDC) has been observed.

Bank of Korea officially made an announcement, that it is opting for pilot-testing whether a CBDC would be feasible and stable. They announced ‘digital won’ could be viable at this juncture, as other Asian nations and nations across the globe have been functioning on their own CBDCs.

Some research reports suggest that DM labor markets are jerking more than anticipated. More important than its implications for current-quarter GDP figures, the unprecedented March-April deterioration in labor market conditions raises concerns about large, lasting damage that will arise from the 2020 recession. The details of the PMI survey also show the COVID-19 shock’s devastating consequences for the service sector and labor markets. US employment fell a remarkable 701,000 in March. The cyclical effects of this is most likely to have adverse impact on the global trade and in-turn FX markets as well.

Under the pandemic circumstances, the Covid-19 crisis illustrates the essence for innovation from within companies by "social intrapreneurs." While ensuring this we have to ensure social distancing as much as we could until the eradication of this virus. Thereby, from e-commerce companies to healthcare, shipping to software and almost all industries are advised to prefer digital mode of payments. Though FX markets are considerably volatile, the mutual cooperation between the parties could provide some cushion, but nobody has, so far, predicted how long does this problem persist. DM countries, like the UK has already eyed for 6-months lockdown. Contemplating the above factors, we could foresee the prospects of cryptocurrencies and upside traction in its underlying price is quite reasonable.