One of the key reasons why many people are moving away from fiat currencies is that cryptocurrencies offer them almost total anonymity. Furthermore, cryptocurrency transactions are one-to-one affairs, which take place on a peer-to-peer network structure. This cuts out the ‘“middleman’’ and allows for greater precision in establishing audit trails. Furthermore, it also provides more accountability and less confusion over who should pay whom.
Industries and businesses have recognized the potential of blockchain technology and started adopting cryptocurrencies as a viable investment. However, as the COVID-19 pandemic intensified in the Western world and threw the economy into disarray, more Bitcoin circulated through exchanges than ever before. This shows us that traders are looking to buy and sell due to the rapid changes in the global economy.
Some industries such as online gambling and merchant services have been affected by the crisis, as the transaction patterns of cryptocurrencies have changed overnight. Let’s take a look at what significant effects the COVID-19 crisis has had on industries that have embraced cryptocurrencies.
One might think that the COVID-19 crisis would bring a boom to the crypto betting industry, as many players were stuck at home during the quarantine period. Nevertheless, Bitcoin gambling services have slowed since the virus’s outbreak on March 9. Interestingly, the timing of these drops doesn’t show a correlation between gambling and the price of Bitcoin. Furthermore, crypto betting didn’t start to wane until some time after the price of Bitcoin dropped, and continued to fall even when Bitcoin started to recover.
This is mainly because the revenue of online betting services has always had a pretty weak correlation with the price of Bitcoin. Gamblers usually don’t approach gambling as a means of making a profit, but rather as a way to have fun. It’s hard to predict gambling behavior on a broad scale during an economic crisis, as there’s really a wide range of ways gamblers can react to financial pressure. Some people will gamble less to save money, while others find the small chance of winning a big jackpot even more appealing during recessions.
Merchant service providers allow businesses to accept Bitcoin from customers. Their crypto takings are a much better measure of how Bitcoin is performing and what the price is about to do. Savvy Bitcoin investors aim to buy low and sell high, although knowing when the price is about to increase or fall is never easy.
Merchant services haven’t been processing as much value in Bitcoin since the beginning of the COVID-19 pandemic. However, this drop hasn’t been nearly as dramatic as was expected. As such, the correlation between merchant services and the price of Bitcoin has reduced by nearly half. In fact, some experts believe the influence of merchant services on Bitcoin’s price (and vice-versa) happened by coincidence, which would mean the post-COVID-19 correctional relationship is no longer important.
The coronavirus pandemic has had a huge impact on the global economy, which has led to more and more people getting interested in blockchain technology. The global economic crisis will surely stimulate more interest and investment in this technology, and it wouldn’t be a surprise if many industries and sectors start relying on cryptocurrencies in the near future.