The emergence of COVID and both the lockdown conditions and no contact recommendations from the WHO caused cash to heavily fall out of favor. At the same time, stimulus efforts brought forth by governments and central banks has debased traditional currencies unlike ever before. It has reached such severe levels, the consumer price index for June 2021 reached levels not seen since 1991.
As fiat currencies as we know them begin to fail, two things are happening across the world: Bitcoin is exploding once again, and central-bank issued digital currencies are just around the corner. Some are even in use today as governments test out the infrastructure publicly for the first time.
All this together combined means a major changing of the guard is coming, especially when it comes to the future of digital payments. Here’s a closer look at all the ways COVID changes things forever more, but also why that’s not such a bad thing after all.
How The Pandemic Changed Cash And Coins Forever
When COVID arrived, it sent markets crashing and just about everything in motion haywire. Jobs, travel, and more were all disrupted. It even changed the way people behave. First and foremost, as the outbreak spread, the World Health Organization issued a statement recommending against the use of cash and coins, and instead relying on contactless payment options like Apple Pay or other NFC-based technologies. They also recommended services like Venmo, but nowhere did they recommend cryptocurrencies – but they should have.
Bitcoin, Ethereum, and other cryptocurrencies are another form of contactless payment, but have several benefits over cash which we’ll get to later. Unlike paper fiat money issued by the government, or coins that have been passed from person to person, you cannot physically touch a cryptocurrency. These assets are instead sent to and from over the internet, and on the blockchain is where these cryptographic assets are stored for safekeeping.
Lockdown Brings Boom In Trading Crypto In Stocks
Even with Bitcoin trading, no actual coins are ever exchanged from person to person physically, and instead BTC moves from one wallet to another. In other cases, when Bitcoin trading, no Bitcoin is traded at all and instead the price of the underlying asset is speculated over using derivatives like CFDs offered on PrimeXBT.
Trading cryptocurrencies, stocks, and other assets became an extremely popular pass time during the pandemic. Nearly every major platform saw an increase in new user registrations, trading volumes exploded, and asset prices were always on the news.
The popularity of day trading of meme stocks, coins, and other cryptocurrencies all have caused a boom in interest in finance among younger individuals, who are finding more success in today’s environment than their once successful boomer counterparts.
Changing Of The Guard, From Fiat Currencies To Crypto
Millennials prefer cryptocurrencies over traditional assets, and with them beginning to dominate the world’s wealth and not just the workforce and consumer market, finance will eventually begin to cater more to this age group. This age group grew up with the internet and during The Great Recession, in which Bitcoin was born.
While the government debases currency by printing an unprecedented amount of money in response to economic struggles brought on due to the pandemic, inflation is through the roof and soon, everyday people could begin to struggle. Boomers are beginning to cash out their retirements to cover living expenses, and it is putting downward pressure on the stock market.
Meanwhile, Bitcoin was designed to only ever haef 21 million BTC, making debasement an impossibility. No one can make more coins, and when the full supply is in circulation, that’s it. No government or third party can ever step in and issue more, and this is why Satoshi Nakamoto created the technology to be decentralized.
Because of this scarcity, Bitcoin behaves more like a form of digital gold than like a normal currency. However, Bitcoin even offers more benefits than gold itself.
Bitcoin, Ethereum, And The Future Of Finance
And that’s just scratching the surface of the crypto market, with Bitcoin as the biggest asset of them all. Right behind it, however, is Ethereum, which is quickly growing to be a force to be reckoned with and part of the future of digital payments.
Ethereum itself is used as a currency to pay for transactions across the Ethereum blockchain. ETH is paid in gas fees for things like accessing DeFi swaps, or minting DeFi tokens. This demand for ETH is helping Ethereum outperform even Bitcoin.
Other cryptocurrencies like Ripple’s XRP, are designed to disrupt the cross-border payments industry, while Litecoin is poised to be digital silver next to Bitcoin as digital gold. There are thousands of altcoins today each with its own use case and potential.
PayPal, Venmo, VISA, And More All Fall To Crypto
The uptrend in cryptocurrencies caused by these two major powerhouses has carried the rest of the industry forward and brought more and more money to the market than ever before. It has caused the likes of PayPal, Venmo, VISA, and Mastercard to all take an ‘if you can’t beat them, join them’ stance with crypto, listing coins and building infrastructure for long term support.
The future of digital payments is bright, and it is thanks to the decentralized technologies brought forth by Bitcoin. The dark cloud hanging over the world is the eventual emergence of central-bank issued digital currencies, which will do nothing but instill even more control over people through their money.
The perfect example of this is with China’s digital yuan, which the government there can control the spending habits of citizens. Right now China is launching a pilot program to test the effectiveness of a digital currency, and they have already tested its ability to control certain attributes.
If successful, and the digital yuan beats Bitcoin and the digital dollar, the world as we know it could fall under China’s tight grasp. Money as we know it is at stake, and unless Bitcoin wins, the future of digital payments could take a lot of twists and turns.