How Has The World Reacted To The Bitcoin Boon And What Are The Lessons For You?

Bitcoin is a digital, anonymous currency that’s garnering much attention as the future of money. It’s sexy, fun, and easy to trade, but it does have some glaring inherent risks. This may be why China recently outlawed this cryptocurrency and several other nations may follow suit. The world powers are scrambling to make sense of this digital currency.

World powers are having a bit of a hard time reacting to the rise of Bitcoin, a savvy, anonymous, decentralized digital currency, which came into existence in 2009.

Bitcoin is stored in a digital “wallet” and is “mined” by computers that solve mathematical puzzles. This currency has had a chartered career. It saw a phenomenal rise when its value skyrocketed from $13 in January 2013 to $1,242 on November 29, ’13, higher than the price of gold. But its value plummeted to $830 on the world’s largest Bitcoin exchange, BTC China. This was attributed to China’s ban on providing Bitcoin-related services and products on its banks.

This had caused quite a dent to the Bitcoin, as data showed that nearly 1/3rd of the world’s Bitcoin transaction was conducted on the BTC China at that time. 

This downsizing of Bitcoin’s value led to a lot of reactions from other world leaders like France. Though it saw a clear potential for growth in Bitcoin, the French Central Bank warned against using this cryptocurrency. It attributed this decision to the volatility inherent in this cryptocurrency and also due to a lack of regulation. The Bank of America Merrill Lynch, however, took a different line when it put out a statement that Bitcoin has the potential to become a major payment option for e-commerce, and it has what it takes to take on traditional payment methods like credit cards, for example.

Bitcoin Value Dropped After US Crackdown on Silk Road 

The US crackdown on Silk Road, a website that the US FBI felt was used for drug trafficking, considerably hurt Bitcoin. But this was only in the short run. Since the people associated with Silk Road made loads of money, this attracted many business people from all over the world. Silk Road thus proved to be useful publicity for Bitcoin in the long run. 

British tycoon Sir Richard Branson also jumped onto the Bitcoin bandwagon when he announced that the Galactic space flight venture by Virgin would accept this digital currency. 

How Should You React to Bitcoin?

Though the world leaders remain wary of Bitcoin because it can be used for money laundering, crime, selling and buying drugs, etc., the fact remains that it’s also a largely democratic form of money. There is also credence to the line of thought that central bank tinkering with the money supply has induced global recessions resulting in savings of ordinary hard-working people globally being washed away in seconds.

The global banking system is in many ways based on deep-seated corruption and profiteering. What does this mean for the average citizen, like you? Should you invest in Bitcoin, whatever your country thinks?

The answer is yes. Bitcoin is a digital currency. It can’t be held or touched, like traditional money. It’s also a volatile currency that’s created by anonymous programmers using a method that’s too complex for most people to understand. 

But, do know that digital currency is the future of money and that even if Bitcoin fails, one of the over 1600 cryptocurrencies globally will take over. The world and you, thus, have to acclimatize to the digital currency world and learn to profit from it.

Crypto Banks Answer the Call Amid Coronavirus-Fueled Economic Decline

Coronavirus effects can be seen everywhere. From traditional companies to technical giants like cryptocurrency banks, it has shown mixed kinds of results in every industry. Whatever the state is, it’s clear that the economic decline is not going to sort anytime soon.

Every business is affected by this pandemic. The economies around the entire world are sinking rapidly. Cryptocurrencies are volatile but the virus has left a significant effect on the growth of technical gold.

Almost all companies and employees are forced to work from home. And they don’t know when they are going to have their coffee in the office. Some of the companies are also shutting down frequently than ever before.

So, even though cryptocurrency can face uncertainty anytime, it is obvious to have significant effects on the crypto banking system. Let’s find out whether the effect is going to be positive or negative.

How SoftBank Is Going Through the Coronavirus Crisis?

A corporate giant SoftBank is also facing its worst times due to the pandemic. But this is not the only loss this company has faced until now. The SoftBank Group Corp. which is the parent company of Fortress Investment Group is one of the biggest names in the crypto industry.

Apart from its renowned status, it is also the biggest crypto company in Asia.  After a huge loss of $130 million in 2017, the crypto giant is again going in the dark. According to the resources, the company has reported a loss of 12.5 billion dollars in march 2020.

Galaxy Digital

SoftBank is not the only one that is facing loss. Galaxy Digital is a cryptocurrency bank that is facing the biggest loss this year. In addition to the pandemic-related crisis. The company has also faced financial losses in the year 2019.

The company reported a loss of 32.9 million dollars in the fourth quarter of the year 2019. That was the fourth loss in that year alone. Soon after leaving the 2019 losses behind, the year 2020 hit every crypto company with the virus.

The crypto company has claimed that the losses have not affected the operations much and they have asked the employees to work from home. According to another report, the Galaxy Digital has laid off 15% of its employees, and that shows the corona storm has struck the company at a deeper level.

Is the Loss Faced by Crypto Banks Is Way More Than Traditional Banks?

Crypto banking is affected by many factors already let alone the pandemic. Some investors were hoping that degradation in traditional funding will raise the crypto industry. But these investors are now disappointed. Since crypto banking is also on the verge of losses.

This effect was also seen on the Bitcoin, the largest circulated cryptocurrency in the world. Although cryptocurrency prices are rising even during the global crisis, the growth is still juggling with the traditional banking system. The situation has reached a point where growth has become a topic of debate between the investors and observers.

The continuous spread of the virus has affected both traditional as well as crypto banking. Because it has disturbed the otherwise stable market that was working continuously before the pandemic.

According to the latest consumer data, digital currency can boom during this situation. Whenever there is a situation like this, customers tend to buy bitcoins quickly. This can create a hedge to the financial market.

What Is the Impact on Crypto Banking?

Digital currency businesses are quick to adopt changes. While the virus was spreading like a wildfire, crypto and blockchain companies went decentralized. Even the biggest companies became protective of their employees. According to a crypto bank named Sygnum, their main concern is the security of their employees and customers. After which they are going to plan according to the profit and loss scenario.

Other major crypto banks have reported that due to the decentralized operation the employees can focus on the customers in lockdown. Customer demands have increased since the pandemic began. Some companies have also launched new products during this period. This proves that this period has been profitable too for some crypto banks.

People are more geared towards digital usage because their movement is limited. Since everyone is focusing on digital transactions, cryptocurrency is being used as usual. According to BitPay, an increase of 11-40% is seen in the first quarter of 2020.

Customers are paying bitcoins for various purchases. The pandemic has also shown some positive effects on some tech companies. May crypto companies are trying new crypto products digitally. It can also be termed as the time when new digital finance experiments are on the cards.

For some of these companies, this strategy seems to be working on the bright side. While some companies are eventually shutting down their business. Overall, this situation is not completely profitable or loss.