It goes without saying, but economic systems are inherently dynamic. Despite immense efforts to keep them stable, it’s natural for economies to shift and change regularly. However, one major haymaker that many people did not anticipate this year was the global pandemic.
COVID-19 has certainly affected countries of all socioeconomic statuses. While there is no single way to tell the exact extent of damage caused by the novel coronavirus pandemic, many top economists agree that it will continue to hurt the world economy.
In fact, it was predicted in the earlier stages that if the virus persisted to become a global pandemic, most countries would experience at least a 2.4% drop in the value of their gross domestic product (GDP) over 2020. This led economists to reduce their 2020 forecasts of global economic growth from around 3.0% down to 2.4%.
To put these values in perspective, the world GDP was estimated at around US$86.6 trillion in 2019—meaning that US$3.5 trillion will be lost in the economic output with just a 0.5% drop in the economy.
Additionally, it has been evident in the past months that the crisis substantially impacted business and trade sectors. This is mostly a result of the strict community quarantine regulations that are being implemented across numerous countries.
The mandatory restrictions in human interaction have made it difficult to transport and trade goods, leading to a fall in demand. While certain products and services remained as necessities that are readily available on local markets, consumers cannot purchase them due to lockdowns.
All these have disrupted the flow of goods. Moreover, industries that depended heavily on close contact interactions, like public travel and tourism, took massive hits.
With all that said, it’s safe to conclude that the dollar trade is surely getting quite unstable and may continue to face struggles until 2021. However, financial analysts and economists believe that there is a right way for consumers to mitigate losses during this crisis, and that is by investing more in cashless trading and digital currencies.
COVID-19 Pandemic Could Push Government Regulations
Now, you may be thinking, if the physical economy is considerably affected, then the digital economy is even less safe. The world of crypto trading is already volatile, to begin with, so it’s only natural to think that something as significant as the global pandemic can bring big changes.
However, the economic turmoil brought by the disease has compelled people to quickly turn to their governments for relief, which potentially opened the door for a new strategy: utilizing digital currency.
Embracing digital currency can provide a number of new policy tools that can help stimulate the economy, including allowing local governments to send money more quickly and efficiently to their citizens, as well as facilitating direct transmissions from governments to constituents.
For instance, the US Congress has already made its move to pass a new economic reform bill, which includes establishing its own cryptocurrency banking system.
As stated earlier, this strategy will make it easier for their citizens to receive cash assistance through digital banking as it decreases the waiting time. A prompter response will immensely benefit people who are in dire need of financial relief.
Cryptocurrency: A Must-Have Asset in the Post-COVID-19 World
It also seems that the very factor that harmed the physical economy—that is, restricted human interactions—had the opposite effect on the digital economy. The number of virtual transactions is growing substantially, and consumers are using their credit and debit cards to their maximum advantage.
Additionally, they are turning to secure mobile payment vehicles such as PayPal and Venmo to avoid having to handle communal cash. This triggered substantial public interest in cryptocurrencies like Bitcoin SV.
Furthermore, both regulators and banks can utilize cryptocurrencies as an effective way to balance the unsteady economy by making it a must-have asset in the portfolios of traders and investors.
It’s a generic loss mitigation measure to diversify one’s portfolio, and since common assets like stocks and real estate don’t appear to be very promising nowadays, investing on cryptos such as Bitcoin can be a useful safety net.
Modern-day consumers are also largely inclined to virtual banking transactions due to their eagerness and willingness to embrace technology. In addition, the pandemic has caused people to choose online transactions over traditional means to safeguard their health and safety.
Moreover, convenience is a standard that the younger generations actively pursue, so they tend to opt for investment ventures that are more easily scalable.
There is also information on cryptocurrencies available online, so traders and investors have the advantage to carefully select the types of digital assets they are going to add to their portfolio. Bitcoin SV, for instance, can be a great option due to its stability and massive scalability, which allow for highly secure instant transactions.
Also, in comparison to other digital assets, Bitcoin SV has shown remarkable performance over the past year.
It’s also recommended to consider other helpful metrics in selecting cryptos, such as their current price and market caps. Moreover, diversifying one’s portfolio by buying various types of cryptos is a reasonable risk reduction strategy.
The global pandemic has certainly shaken economies to their core. The limitations in close contact interactions have disrupted the flow of goods and caused demand to plummet quickly. This not only impacted giant industry players but the larger public, as well.
Despite these major economic changes, consumers can still protect themselves and their finances by leveraging virtual assets and making smarter choices. Also, governments and their citizens can benefit greatly by shifting to digital cryptocurrency in distributing financial aid. Aside from efficiency, crypto prevents the need for in-person contact that may spread COVID-19.
In the face of an ever-changing economy, consumers must look into a wide range of assets. While the pandemic indeed bolstered interest in cryptocurrency, it is still relatively a niche. Plus, although it offers multiple advantages, it is not free of risks.
Thus, it’s crucial for those who are interested in this venture to conduct research and consult experts before making big investing decisions.
About the Author
Kimmy is an experienced content writer with a demonstrated history of working in the internet industry. When she is not writing, she spends time outdoors with her dogs or crochets.