The World Economics of Fiat Currencies and Cryptocurrencies: Testing Times

Fiat Currencies and Cryptocurrencies

World Economy vs. Cryptocurrencies

The world economy is an established system rife with numerous recessions, big and small, unlike digital currencies that, though have had their fair share of highs and lows, are still evolving. Cryptocurrencies are a relatively new phenomenon, unlike fiat currencies that have existed since time immemorial. A few pointers that show why the world economy is still bigger than Bitcoins:

  • Cryptocurrencies are worth only 0.23% of all the world’s money
  • The entire world’s gold value is worth 70x more than Bitcoins
  • All cryptocurrencies are equivalent of only 0.59% of the world’s physical currency
  • Amazon’s entire market cap is $858B more than Bitcoins
  • Apple is $888B bigger than Bitcoins

Consider only the above pointers then, yes, the economy has a better chance to bounce back to routine, but that is not the case. With human interaction remaining dangerous, how could businesses possibly return to normalcy? Even post-COVID-19, people may still be less inclined to visit cinema halls and restaurants and to travel. But on the bright side, the revival is already underway. China has effectively tamed corona and has begun normal work, gradually. 

The COVID-19 pandemic showed no leniency toward the crypto market as well. Important crypto events were either postponed or canceled following the virus outbreak. For example, WeWork Blockchain Labs switched to online conferences, effectively missing out key on-ground partnerships. The rescheduling and cancellation of international forums could mean less collaboration and transactions for the blockchain industry. 

However, experts opine that during pandemics, investors usually tilt toward non-sovereign assets and currencies to secure their wealth. Classic examples: the 2013 and 2019 banking crises of Cyprus and Argentina, respectively, saw most of their population panic investing in cryptocurrencies. Lows aside, the increase in BTC value is directly correlated with the increasing fears over the virus outbreak. Bitcoins currently trade at $9,000, highest since November 2019, following a tumultuous traditional stock market. Invest your money in Bitcoin through the Bitcoin Revolution to make a good profit from it. It is a unique trading platform which can make you earn huge profit from Bitcoin. Check Bitcoin Revolution Review to know more about this unique platform.

Efficiency: Crypto Mining Vs. Fiat Printing

In many ways, crypto beats fiat. Fiat printing consumes far more resources than BTC mining, such as central and commercial banks, armored cars, millions of employees, and ATMs, among others, and relies on third parties for transaction services. Whereas, BTC is a decentralized P2P financial network that faces no such issues. Miners are incentivized with BTCs and transaction fees. Of course, more electricity is required to mine bitcoins, but the same is used only to confirm and validate transactions that most banks do worldwide. As blockchain technology matures, more energy-efficient mining methods, such as Proof of Stake, are being experimented to decrease the overall cryptocurrency energy output in the long haul.

Will Bitcoins Be Accepted as Legal Tenders Post-COVID19?

The subject is debatable. At $8,940, Bitcoin is the eighth-largest currency in the world, bigger than the monetary bases of Russia and Canada. Its adoption is on the rise worldwide, with total market capitalization soaring from $41B to $112B in 2019, but being accepted as a legal tender on a global scale is still far-fetched. Bitcoins could be a safe haven investment with its growth mimicking the growth of gold, the classic haven. Market movements, such as the introduction of favorable regulations, are linked to the developments within the crypto industry. 

However, given its highly volatile nature, lack of physical form, and untraceable transactions that encourage illicit drug trading and terrorism financing, central banks fear bitcoins could destabilize national economies and, subsequently, the world economy. Though cryptocurrency’s overall growth and role in remodeling the contemporary financial sphere are amazing, only time will decide its future in the world market.