Celebrities Infected, NBA Shuts Down, International Flights Banned — How COVID19 is affecting Crypto

Celebrities Infected, NBA Shuts Down, International Flights Banned — How COVID19 is affecting Crypto

By Mappo | Top Blockchain News | 12 Mar 2020


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By now, everyone around the world will be aware of the Corona Virus (COVID19). Many of us will have been impacted in some way, either through panic buying of toilet paper, or changed travel plans or simply cancelled public events. Are we all going to die, I suggest not. I’m not a medical expert on the virus and I will not be discussing the health implications of such a pandemic. But to think that will be the only type of impact is short-sighted. So how will this affect the crypto industry?

Although I cannot say with 100% certainty the events that will play out in the coming months, I can surmise some of the likely outcomes.

What has already happened

This morning I woke to news that the NBA had suspended the season indefinitely due to a player testing positive to COVID19 and Tom Hanks and his wife had contracted this virus too. This is the latest news in a spat of announcements from around the globe. 

The US have banned all international flights coming out of Europe, asides from those originating from the UK. Italy is still in the grips of the crisis seeing over 12,000 identified cases with over 800 deaths. The number of cases around the globe have broken the 125K mark today and continues to rise.

Many events around the world have been cancelled due to public concerns including music festivals like Coachella and SXSW, St. Patrick’s Day Parade, and E3 2020. This list is likely to grow. In fact, the NBA and some other organizations were already discussing the implementation of fanless events to reduce risks to players, staff and fans.

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There has been growing concerns over the last month regarding the transmission of the virus through physical cash causing an unprecedented recommendation to use digital payment methods where possible. It seems the days of ‘Cash is King’ are now behind us.

We are going to continue to see greater impacts as vaccines are months away at the earliest and might not be available until next year. Israeli researchers believe they could have a vaccine in just 90 days. The University of Queensland in Australia, in January said it could have a vaccine on the market within six months using a new technology. German biotech Curevac says 12 months and US-based Inoiva Pharmaceuticals expects to have 1 million doses available by the end of the year.

Impact on our Industry

It doesn’t take much to realize the impact these events or disruptions will have on the economy around the world. There was already speculation around the weakness of the current US economy before mention of the virus had even begun. Although we might think each country has their own economy, they are in fact, much more intrinsically tied than many understand. At best we will see a dip in many economies followed by a push back up, but at worst, well who knows how far down this will take us. It is clear treasuries, and reserve banks are already concerned about the impact and are implementing strategies in an attempt to counter any negative impacts.

Rush for CBDCs

In the past few months, news has emerged of a few Central Bank Digital Currencies currently under development from countries like China, Japan, Venezuela, Canada, and Sweden. But with the current situation, we could start to see countries expedite these developments for a few reasons. The most obvious reason is that you can’t catch a virus from a digital currency, but in addition to this, we could see the biggest FOMO (Fear of Missing Out) from banks as people are too scared to use cash and decide to use alternate sources for storing value and transacting, like cryptocurrencies.

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The other and less likely reason for the fast transition to a CBDC for many economies, could be due to hyper-inflation and part of the counter strategy to a global recession. This approach is quite tricky and if not thought through carefully will simply transition the troubles the fiat currencies are facing to the new CBDCs. If they are created due to impending recessions, then the CBDC will need to be seen as the creation of a new currency, starting fresh so to speak, with no ties to the current economy. Perhaps they might peg them to Gold, or another ‘more stable’ store of value.

Influx of new Crypto Users

As people lose confidence in their respective fiat currencies, we could start to see an influx of new crypto users, similar to the numbers we saw during the 2017 bull run. This will likely coincide with the Bitcoin halving event and result in some high volatility. Whether the price of cryptos in general will go up or down no one can tell you for sure, but the indicators suggest the price will go back up. 

Cryptos could be seen as a new safe haven for a store of value for many people trying to protect their investments. Some will undoubtedly turn to gold, others to real estate or other tangible assets, but there will be plenty who will take a second look at cryptocurrencies.

On the other hand, we could be in the middle of a bull run when the COVID19 crisis is finally resolved and all the new users pull their funds back into fiat currencies causing a stall in price rises or we might even start to see price drops. The extent of these price drops will come down to how educated the rest of the crypto community is and if it results in an unexplained panic sell.

Rise of NFTs & eSports

With the many cancelled events or fanless events, many will turn to online entertainment for their amusement. This will undoubtedly include films and tv series, but also esports and online competitions. As this industry grows, we will see the further development of in-game currencies and NFTs (Non-fungible Tokens). The technology is already there with the rise of games like CryptoKitties, Gods Unchained and others, but it is yet to see widespread adoption and use. This pandemic might be the push the industry needs to move into the new technological era.

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Borderless Aid

As seen in Italy, there will be some countries that are hit hard by this virus and could face catastrophic results to both their economy and livelihood. These communities will need aid from those outside of their borders. This can prove to be a logistical nightmare when all economies are in turmoil. Through the use of cryptocurrencies, many of the issues currently facing aid organizations will be negated, improving both effectiveness and efficiency of funds transfers.

Hodlers becoming Spenders

Should economies see a strong down-turn then income received will be less effective at covering the living costs of many people. As such, those who hold funds in crypto might find the necessity to access those funds. This could see a large sell-off negating any by in from new users seeking to protect their funds.

Depending on the capacity of this, it could pave way for new companies who seek to bridge the gap between crypto users and retailers, or it could play as a deterrent to many from holding too much of their funds in crypto and might seek to transfer it instead into one of the ‘more stable’ fiat currencies.

Increased acceptance as means of payment

Just as individuals will be hit by a struggling economy, so too will we see businesses suffer. Payments in their local currency may lose their value and businesses may seek to accept payments through alternate means, one being cryptocurrencies. Similarly to the previous point, this will see an increase in companies bridging the gap between consumers and businesses. But instead of this acting as a deterrent for individuals, it will be seen as a form of mass adoption, greatly increasing the use-case of cryptos as they will now be able to be used for the purchase of necessities and everyday items.

Many other potential scenarios

There is the potential for many other scenarios, but these listed above are some of the more probable. Although I hold an unbiased view and don’t want to see any economy collapse or widespread pandemic surge through our world, we must prepare for the possibilities. Many of these outcomes suggest crypto will fare better than many traditional financial systems, but in truth, only time will tell.

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What is important is not to panic as the media would like to suggest, but rather to do your own research, and make calculated actions for the best of those within your responsibility. This could be yourself, your family, your company or your country, but for every person who profits from times like these, there are one or more who will suffer.

It might seem like the apocalypse to some, but that is only because you weren’t around to survive the last ‘apocalypse’. Humanity will survive and often through these difficult times come great technological advancements, great acts of service and great leadership. What type of great will you strive for?


Mappo
Mappo

aelf Head of Content - Cointelegraph Featured Author - Blockchain advocate


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