The current crisis lies in production
The crisis we have at the moment is because there is no production due to the quarantine decrees. Which means that many people do not have a fixed money entry or if they do, this may be lower than normal.
As production is the main problem, in some ways cryptocurrencies are safe from suffering falls due to the pandemic, which makes them more attractive in the midst of this scenario.
This It does not mean that prices cannot fall, volatility is one of the characteristics of the cryptocurrency market, but it is certainly an opportunity for this new technology to demonstrate its potential.
The bitcoin opportunity
The exchange of BitMEX cryptocurrencies published a report explaining the impacts of the coronavirus on a financial level and in the study (titled “Inflation is coming”) ensure that this is the opportunity for Bitcoin to demonstrate its value.
The company maintains that “in this changed economic regime, where the economy and financial markets are falling (…) it could be the greatest opportunity that Bitcoin has seen, in its short life.”
Compared to fiat currencies, which are centralized and controlled by governments, cryptocurrencies have an advantage. In the midst of this situation, many central banks have started printing money to try to cope with the crisis.
However, this is something that in the long term generates inflation and causes the currency to lose value, but since bitcoin is a crypto with a finite and decentralized supply, it is safe from any authority deciding to issue more units.
The main reason why Bitcoin and cryptocurrencies have a promising opportunity this time is because of decentralization as it leaves them out of the reach of the crisis.
Nobody has the power to issue cryptocurrencies as they please, which prevents their value from falling due to excess liquidity, which is what happens with fiat money when it is printed without a backing.
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