We have all heard many tales of how the coronavirus has affected so many people across the globe. The worldwide lockdown is definitely something that rocked the boat of all things financially related.
The fiat currencies took a drop, which was understandable because so many people were unable to work; others were retrenched, and some small businesses simply did not survive.
Cryptocurrencies were likewise affected, according to www.blockchainjobz.com/ records show that they also experienced a dip, but not as drastically.
Those who have some form of cryptocurrencies must be wondering what to expect in the coming months. Are there any risks to be expected?
How Fiat currencies failed to stay afloat
Fiat money relied heavily on institutions like banks. Clients who have their money stored with banks need to go into the facility to access their money. Statistics show that only 60% of Americans are using their digital banking services.
The remaining 40% would be unable to sort out any banking errors because the banks were forced to close their doors, thanks to the pandemic. No wonder there was such widespread financial ruin.
If you look at how the exchange rates are changing in such an unpredictable manner, that is a sure sign of the volatile nature that fiat currencies possess.
What happened with Cryptocurrencies?
The pandemic resulted in a global lockdown, and ultimately froze the economy worldwide. We were all surprised by this pandemic, and it was the last thing to be expected. We all got a bit of a fright. Even cryptocurrencies took a dip – but it was short-lived.
Cryptocurrencies are unique to other currencies in that there is no need for a banking institution that runs from facilities across the nation. Everything is online and digitally represented. Even though the cryptocurrencies dropped a little, they were able to pick up again in no time at all. This is because there is no need to visit a facility to access the funds.
In addition, cryptocurrencies are much easier to send internationally, and it has become the preferred method of transferring funds across the globe. There are no intermediaries, so it is much cheaper, safer, and more reliable. When the lockdown was initiated, those without access to their banks were switching to cryptocurrencies.
What is happening now with Cryptocurrencies?
As fiat currencies were shown to be highly volatile, people started looking for other methods to store their money and deal with transactions. The attractiveness of cryptocurrencies is hard to ignore because there are so many benefits to appreciate, like the ease of sending money internationally, and the low cost of general transactions.
The world is waking up, and the people are steering away from institutions, including banks, because of the high costs, their resilient control factors, and protocols that prevent you from progressing financially.
Bitcoin is one of the more popular choices for cryptocurrencies, and when the pandemic struck, it actually rose in demand by about 300%! That is quite a substantial amount. This was because investors saw an opportunity to “hedge political risks,” like the inflation that was brought about by the effects of COVID-19.
This shows the attractiveness of cryptocurrencies is growing even more because it has this remarkable ability to resist the pulls of inflation. It cannot be manipulated by one institution, but it is managed by a program that was designed digitally, and all transactions are visible to all participants, putting everyone on an equal footing.
The transparency that cryptocurrencies work with makes it hard for any sly dealings to go down unnoticed, and fraudulent accounts are easily tracked down. This, along with the unwavering nature of cryptocurrencies being so resilient to things like high transaction fees or increasing inflation rates makes it a choice that is definitely worth considering.