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A Future Crypto World – Will Covid-19 drive mass adoption?
- What are the factors which will influence mass adoption?
- What does the future hold?
Bitcoin took the world by storm in the mid-2010s. Safe to say that speculations about the mass adoption of cryptocurrencies have circulated since then. Whilst opinions may differ, everyone agrees on one fact. The road to the mass adoption of new technologies is typically a slow one.
Covid-19 is paralyzing economies and plunging international markets to new lows. Traders are now wondering whether this will create a golden era for cryptocurrency. Will it propel the mass adoption of digital coins among average consumers?
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But what are the factors that may drive mass adoption?
More people are using contact-less methods and choosing digital financial exchanges over traditional payment options. Italy is one of the countries where the virus hit the hardest. Consumers got the possibility to use Bitcoin for regional and international payments. This might be an important initial step for the adoption of Bitcoin on a mass consumption level in Italy.
More adoption possibilities for cryptocurrencies lie in inefficiencies in the traditional financial world, the Euro’s unsustainability and countries leaving the EU. If the international crisis continues to escalate, increased crypto usage may well be possible.
Prior to the Covid-19 outbreak, the general perception was that cryptos (chiefly Bitcoin) were a way in which to bypass legal crackdowns. Indeed, entry and exit laws that restrict the amount of money you can carry in and out of a country, do not apply to cryptocurrencies.
Now, as the pandemic grips the world and international travel is essentially banned. Cryptos are seen as an easy way in which to transfer money across different parts of the world. The demand for this might grow substantially should we see a further plunge in countries’ currencies.
What is blocking mass adoption?
In a previous OspreyFX article, it was noted that crypto markets are no longer considered a safe haven when it comes to crypto trading. On 12th March, Bitcoin lost more than 40% of its value and failed its biggest test since its inception.
This was a huge blow to all crypto traders. It even reinforced the previously outdated perception of gold as a ‘safe haven’ when it comes to trading.
Bitcoin did bounce back from that fateful day. However, its volatile nature continues to present a problem to the common consumer and to mass adoption of cryptos.
Ray DALIO, American businessman, billionaire and founder of Bridgewater Associates stated an important statement in January 2020;
“There’s two purposes of money, a medium of exchange and a store hold of wealth, and bitcoin is not effective in either of those cases now.”
This statement definitely strikes a chord today, especially when noting that the coin’s limited scaling will not allow it to spread widely to the masses.
What does the future hold for cryptocurrencies after this global upheaval?
Nothing is certain now and the uncertainty is even more pronounced when speculating about cryptocurrencies, their value and mass adoption patterns. As the world struggles to stay afloat during this crisis, major banks are kick-starting plans to issue digital currencies. This would mean effectively undermining the possibility of a broader crypto usage. This is because mass consumers might switch to such currencies instead of resorting to options like Bitcoin and Ethereum.
Will we ever see a decentralized currency system that allows cryptocurrencies to thrive? Or will the big players like banks and governments still retain their almighty authority? Only time will tell.