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Is It Safe To Invest In Bitcoin During A Pandemic?

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Coronavirus is not just a medical issue. In light of the effect it has had on numerous economies, it is not something to take lightly, especially when you think of the fact that this pandemic has also significantly affected the way people around the world travel, work, study, and shop.

Coronavirus is as much a threat to the economy as it is a threat to public health. And while the former is something that we can immediately control, the latter is much too volatile, with too many factors for an individual to have any semblance of influence over. After all, much like the tides, the markets ebb and flow, and as individuals, we have as much influence on the markets in the way that sand influences the water.

But even when we can’t influence the markets, we can at least predict their movement and we can act on those predictions to ensure that we reap the best possible benefits of opportunities that ebb and flow like the tides.

What Is Bitcoin?

Bitcoin is a digital currency that was created in January 2009 after the housing market crash, more commonly referred to as the Great Recession. The appeal that surrounds Bitcoin revolves around three things: the promise of lower transaction fees compared to traditional online payment systems, that the currency is handled by a decentralized authority, and that all transactions are secure, despite being publicly available.

This is important because this decentralized authority serves as a check-and-balance system that ensures transparency while maintaining security. This P2P technology facilitates instant transactions. These transactions, in turn, are monitored by independent entities who own computers that are capable of processing Bitcoin transactions. After all, how can you keep an accurate record of transactions without a central authority through which all transactions are processed? The answer, in the case of Bitcoin, is with everybody.

All peers in the Bitcoin network take note of all validated transactions on a public ledger. Each validated transaction is then added as a permanent and unchangeable entry to the blockchain such that when a transaction is successful, every peer in the Bitcoin network is made aware of this transaction.

These peers are also referred to as “miners.” These are people who process transactions via the blockchain in exchange for newly-released Bitcoin as well as transaction fees (also paid in Bitcoin).

Adding Finer Details: Bitcoin Halving

Bitcoin Halving refers to an event when the reward for Bitcoin mining is cut by 50% every 210,000 blocks or validated transactions. So, if miners were rewarded with 12 Bitcoins prior to the halving, they would now be rewarded with 6 Bitcoins.

As previously mentioned, all peers, computers, and nodes on the Bitcoin network are all given the entirety of Bitcoin’s blockchain. This ensures that no one can cheat the system because every peer would simply reject the attempt at falsifying a transaction. Miners are obviously essential to the decentralized framework of Bitcoin, so what is the purpose of halving the rewards they reap?

The halving mechanism is an essential aspect of the framework because it functions as a means to prevent inflation while also increasing the value of the currency because the currency is now more scarce.

The Scene, Completed: Why Is Bitcoin Halving Relevant During The Pandemic?

As previously mentioned, the significance of Bitcoin halving is that it is a means to prevent inflation while also increasing the value of bitcoin. Also, Bitcoin halving occurs every 210,000 transactions. While the Bitcoin halving is in no way influenced by the Coronavirus, it holds significant importance during the pandemic with the markets on unstable ground.

The Bitcoin halving event happened in 2012 and 2016, with the next one taking place on 11 May 2020. The Coronavirus had no influence over the occurrence of this year’s Bitcoin halving, just as sand has no influence over the ebb and flow of the tides.

HOWEVER, the significance of this lies in how the Coronavirus is adversely affecting fiat currencies and other trading platforms. While these platforms are experiencing a significant decline, the value of Bitcoin remains mostly predictable. And therein lies the primary reason that experts are suggesting that Bitcoin is going to be the asset class of the future.

Appraising The Scene: Is It Safe To Invest In Bitcoin During The Pandemic?

The primary determinants of whether Bitcoin is a safe investment during the pandemic lies in whether it can be considered a store of value and if it can actually be used as a form of payment. In other words, for an investment to be worthwhile, it should not only have value, but it should also be recognized as an acceptable form of payment.

These are important details to consider, especially since the market experienced a massive price drop in March which saw prices drop by up to 50% in a single day. That kind of volatility is bound to cause investors to panic. Bitcoin was no exception to this massive drop.

But, with the Bitcoin halving, the value of Bitcoin is more or less predictable, and experts estimate that Bitcoin isn’t going to drop in value any time soon, as was the case with previous Bitcoin halvings. In fact, Bitcoin managed to recover steadily a few weeks ago.

Amidst a crippled economy, Bitcoin seems to be one of the very few stable investments that you can make. Remember that while it’s impossible to influence the ebb and flow of the market, the ability to predict its movements has always given investors a fighting chance in how they can time their movements.

The only limitation is that the markets have not yet completely adopted Bitcoin as a universal form of payment in the way that cash and gold are. While banks are beginning to be more receptive toward cryptocurrencies, Bitcoin needs to become more than a mere store of value; it needs to be globally adopted, which is slowly happening with several countries seeing a significant increase in crypto-asset investments, as well as the fact that more and more locations now have a Bitcoin machine.

While Bitcoin may not have been seen as the safest investment in the past, the movement of the market, coupled with the fact that mass adoption is inching its way to fruition, definitely makes a compelling case for investing in Bitcoin during the Coronavirus pandemic.

Disclaimer: This a paid post, and should not be treated as news/advice


Akshay focuses on UK and Indian markets. As a crypto-journalist, his interests lie in blockchain technology adoption across emerging economies.
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