A growing number of Americans who qualify for Economic Impact Payment from the $2 trillion stimulus package are inclined to buy Bitcoin with the check
Even though the Bitcoin price slumped in response to the WHO’s declaration of a global coronavirus pandemic in March 2020, public demands to purchasing cryptocurrency assets remain high this year, with a renewed interest owing to the quadrennial halving event of Bitcoin and the fading optimism in the global market this year. In fact, some Americans are allocating their US$1,200 stimulus check for Bitcoin and other cryptocurrencies. In the first week of May, the Internal Revenue Service (IRS) has revealed a total of US$207 billion has been distributed so far, and the remaining US$1.8 billion are expected to reach beneficiaries over the next 3 to 5 months.
The ongoing coronavirus pandemic has brought about unique circumstances not seen since World War II, and the US, along with other countries, has responded by introducing large economic stimulus packages to bolster the impact caused by the pandemic. As Bitcoin and the cryptocurrency market gained the mainstream attention with its bull market in 2017/18, the cryptocurrency community believes that the scarcity of Bitcoin could serve as an alternative to the increasing circulating supply of fiat currencies like the US dollar As such many crypto advocates and experts are anticipating a new bull run in the foreseeable future over the looming global economy crisis.
The impact of stimulus measures
The novel COVID-19 coronavirus which originated from Wuhan, China could trigger an unprecedented global economic breakdown amid other crises such as the US-China trade war, oil price war and hyperinflations in several oil exporting nations. Furthermore, the world is facing never-before-seen quarantines and lockdowns in an effort to contain the infectious and deadly virus as more than 3 million people have been infected so far, with the US being the worst-hit nation. As a result, many working professionals are forced to work remotely from home and consumer-based industries like tourism, retail and F&B are experiencing severe losses and possibly business closures. Thus, it seems undeniable that the aftermath of the pandemic will change the face of the world’s economy and how the market functions in the future.
Eventually, governments around the world came up with various economic stimulus plans to revive the badly-hit economy with billions of dollars distributed to businesses and individuals to tide over the indefinite period of the global outbreak. However, it is worth noting that the stimulus measures may likely be effective to salvage the economy for a few months. Should the outbreak continue beyond that, the world should prepare for an uncertain period in the months ahead, which could endanger the economy with a risk of the worst global recession in modern history.
A rising star in the face of economic turmoils
In spite of the possibility of a major economic downturn, the cryptocurrency community remains hopeful that the increasing supply of fiat currencies in circulation may benefit Bitcoin, and indirectly, the entire cryptocurrency market. After all, the concept of a decentralised digital currency was originally created to remove intermediaries such as governments and financial institutions, effectively returning the power of control of one’s finances back to the people. Moreover the scarcity of Bitcoin’s supply is an ingenious way proposed by Satoshi Nakamoto, the creator of Bitcoin, to curb the existing issue of the fiat system where governments can decide to “print” more money anytime, risking the economy collapse due to potential inflation, and even hyperinflation of the said currency.
The upcoming Bitcoin halving event is slated to occur on May 13th, which will halve the amount of produced Bitcoins (BTC), reducing the block reward from 12.5 BTC to 6.25 BTC per block. Since lesser bitcoins are created, Bitcoin’s inflation rate will decrease in time, gradually cementing its position as a safe haven asset which could be used by investors as a hedge against economic uncertainties. Anthony Pompliano, co-founder and partner of Morgan Creek Digital, an institutional hedge fund entity, was one of the first cryptocurrency proponents who proposed Bitcoin as a reliable Fiat alternative.
Bitcoin’s value proposition
According to an article by Coindesk, Bitcoin core contributor James O’Beirne explained that the ongoing pandemic crisis has also inspired the Bitcoin community to question Bitcoin’s core value proposition, since Bitcoin’s performance mirrors equity stocks. If Bitcoin is susceptible to the same liquidity-induced sell-offs like stocks, the inflation hedge use case could become less compelling to the mainstream market, even if the traditional markets took a dive during a global recession. Businesses that rely on Bitcoin’s price valuation such as miners and exchange may discourage them from contributing to the ecosystem, since it will be less profitable for them to power the network. What follows thereafter is a domino effect on the trust and function of Bitcoin as an investment hedge or an effective payments network.
Apart from the finance perspective of Bitcoin, as well as other cryptocurrencies, the crypto community should take this opportunity to develop real-world use cases using blockchain and cryptocurrencies. An useful instance could be for blockchain to tackle the privacy issue that has been troubling many people. Ever since coronavirus spread across the globe, government surveillance has been ramping up through software applications that were seemingly developed to detect and manage virus-related issues. This special period in history has prompted more people to eradicate decades long privacy issues which have been occurring since the digital age began in the late 20th century. Blockchain and cryptocurrencies could be deployed in place of existing systems in order to solve the privacy issues as well as educating the public about available privacy tools built for this reason. Currently, many new cryptocurrency investors were unaware of crypto-specific privacy tools like Bitcoin mixers and have been trading ‘openly’ which could be easily exploited by blockchain analysis, government surveillance, and even hackers.
Untracing the personal information of a crypto purchase
Data privacy was one of the controversial topics which was touched on by democratic governments around the world from Europe to America. Although recourse to privacy law was slowly taking place to protect the personal information of users from big tech companies, the coronavirus pandemic has reversed the reality with governments seeking more control with less privacy for the people. Adding to the fact that a growing number of people converting stimulus cash to Bitcoin and other cryptocurrencies, the alleged ‘misuse’ of these monies may be scrutinized with grave repercussions in the foreseeable future. Therefore, it is crucial for those who have purchased Bitcoin and crypto during this period to act on measures which could protect their personal information with available privacy resources catered to cryptocurrency investors. One popular privacy tool in the market is called Bitcoin mixer, or Bitcoin tumbler.
Bitcoin mixers such as MyCryptoMixer is a unique cryptocurrency mixing service that ensures the user’s cryptocurrency becomes untraceable, removing the link between the origin address and the multiple receiving addresses that the user may assign to. This method of segmentation and differentiation has enabled many Bitcoin users to attain privacy when dealing with the decentralised and pseudonymous Bitcoin. From governments to hackers, Bitcoin owners have to deal with a wide array of entities which could otherwise use blockchain analysis tools to decipher and track the ownership of Bitcoin addresses. Therefore it is important to ensure the user’s anonymity when it comes to purchasing Bitcoin. Knowledge of the bitcoin addresses that an individual uses potentially reveals a lot about how they are making and spending their funds.
Opportunities abound to change the world with Crypto
As more individuals around the world expect to receive financial aid from the stimulus package offered by their governments, it is possible that new monites in the form of relief cash could be injected into Bitcoin and the broader cryptocurrency market. Although the impact of the stimulus plans could have a far reaching consequence to the economy, many believed that the crisis presents a perfect opportunity for cryptocurrency and the underlying blockchain technology to thrive, proving to the world how it could help and evolve the broken system which has been exposed by the coronavirus crisis today. While governments stepped up to push for more surveillance applications to tackle the coronavirus globally, people using cryptocurrencies have specific ready-made privacy tools such as Bitcoin mixers to ensure that their privacy and anonymity is protected, even if the implementation of the privacy law is halted due to the unique challenge that the world is currently now facing.