The COVID-19 pandemic has had a global impact on many people and businesses. This pandemic initially battered the economy while crashing global markets. And Bitcoin was no different. Perhaps this can be seen in the price of this virtual currency, which dropped to $4,100 at one point, its lowest value since March 2019. However, when the stock market improved, this virtual currency recovered to around $6,600. For instance, some use bit alpha aito monitor the cryptocurrency market and buy and sell Bitcoin from your smartphone.
Although this global pandemic is interfering with small businesses, daily lives, and many economic sectors, some experts argue that the worst hasn’t come. Furthermore, many people believe that the next recession will be unpredictable, and some understand how to prepare for it. Some people and experts believe investing in Bitcoin is a great way to prepare for the next recession, and this is because they believe a recession will not affect Bitcoin.
Perhaps, this can explain why people are rushing to buy Bitcoin. At the same time, some people are even using apps to track the prices of this virtual currency. But why do some people believe Bitcoin will be able to survive a recession?
Satoshi Nakamoto Designed Bitcoin to Survive a Recession
Satoshi Nakamoto created Bitcoin in response to the Great Recession in the United States. Satoshi was inspired to create a decentralized digital currency through the widespread breakdown of the conventional financial system. Satoshi wished to provide the world with money that people could use and trust without the intervention of a third party. Satoshi was also successful in developing independent, non-fungible value storage.
Bitcoin’s Strength is also its Weakness
Because of its decentralization and lack of backing from anything, many people regard Bitcoin as a risky investment. Bitcoin, in theory, lacks any government guarantee or support from a business asset, which means an investor will lose everything if the company fails.
While this may appear to be a negative trait, it does have an upside. Bitcoin cannot tank if a random company or economy fails because it doesn’t link to any business or government. And this is a significant advantage in a volatile market.
Bitcoin’s algorithm has remained consistent over time, earning this virtual currency widespread acceptance. Since its inception, Bitcoin’s protocol has regulated its supply and ensured a consistent mining pace. Furthermore, the number of new blocks in Bitcoin decreases over time.
This computing power demonstrates how Bitcoin’s demand has naturally increased over time. Unlike the effects of sawmills on the lumber market or drilling activity on gas and oil supply, Bitcoin computing power has no impact on supply.
During A Recession, Innovation Leads To a Stronger Economy
The best antidote to a recession is adaptation and innovation. Individuals must adapt to new technologies to survive a recession. For example, the e-commerce and micro-gig economies boomed during the previous recession. That means that technology can help individuals and businesses adapt.
Blockchain is already essential, so it stands to reason that it could be the vehicle that transports people out of the next recession. And those who invest in Bitcoin may reap the most significant rewards if an economic downturn occurs.
Bitcoin Could Be Used to Store Value
Bitcoin’s price may remain stable during a recession because it is decentralized. Some people in less stable economies are transferring funds to blockchain-based digital currencies. This way, these people can keep the value of their money.
If the Fed fails, American households may turn to virtual currencies such as Bitcoin for value storage. And this would imply that Bitcoin and blockchain provide a recession-proof solution to fiat currency deficiencies.
No asset is entirely recession-proof. While some believe Bitcoin will survive a recession, there is no guarantee that it will weather the storm and emerge stronger. As a result, people will be aware if an economic downturn occurs, leaving Bitcoin stronger.